FEMA flood insurance discounts range from 5% to 45% and is determined by the participating
community’s level of participation. In other words, communities can lower their premiums by taking
action to mitigate future flood losses.

FEMA issues a class rating to each community based on the activities they take. Essentially, the
community earns points towards a discount. A class 1 rating earns the 45% discount, and a class 10
rating earns no discount. Class 9 earns a 5% discount.

How to Earn Credits

What can a community do to earn credits? The first is having elevation certificates for new construction.
Have written procedures for managing floodplain-related certificates for new construction in the
floodplain. The second item is having a map information service for those that inquire. I count 19 items a
flood plain manager can do for the community that earns credits toward flood insurance. For more
information, check out https://www.fema.gov/floodplain-management/community-rating-system

SW Florida FEMA Flood Insurance Discounts by Community

So how do our local communities score on the discount scale? Most SW Florida communities scored as
a class 5 and earned FEMA flood insurance discounts of 25%. Estero earned a class 6 which earns a 20%
discount. Fort Myers didn’t do as well and only earned a 5% discount. So flood insurance policies in Fort
Myers would be more than Lee County, all else being equal.

This is why floodplain managers had to enforce the 50% rule for damaged properties after Hurricane Ian.
Had they not done so, they risked losing credits under the Community Rating System which would have
affected the discounts all insured policy holders pay. The better the community does earning points
towards a discount, the less everyone pays who hold a National Flood Insurance Policy (NFIP).

What Can You Do Individually?

You can contact your community or municipality and ask questions about how they are managing their
floodplain policy. Perhaps plans are in place to increase activities to obtain more credits. The credits are
divided into four main categories:

Public Information, Mapping and Regulations, Flood Damage Reduction, Warning and Response. FEMA
updates their certification on a regular basis. The above numbers are current as of October 2023.

FEMA Risk Rating 2.0

I met with FEMA last week. They told me they are evaluating properties on a continued basis. Not only
does FEMA evaluate the floodplain management plan of the community, but they also look at each
property. They use tools such as satellite imagery, topographical measurements, and proximity to
nearby waterways to determine risk levels. The published FEMA maps can change at any time. I happen
to live in flood zone x, so flood insurance is not required on my property. However, I get a policy anyway
because I never know when FEMA might change the map.

Grandfathered Rates

Current NFIP policy holders are grandfathered in even if FEMA changes the map. In these cases, rates
can only go up 18% per year. Let’s say you have a policy that costs $800/yr. FEMA changes the map, like
they did a few years ago, and now your flood insurance would be $3,000/yr. In this hypothetical
example, next year’s policy would cost you $944 ($800+18%) If you didn’t have flood insurance, and not
it is required by your lender, it would cost you $3,000.

Flood Policies Assumable

NFIP policies are assumable, so if you have a policy that is grandfathered in, it makes your property
more attractive than another nearby property with similar rating at a much higher rate. Private flood
policies are not typically assumable, so be careful not to give up your NFIP policy unless it makes sense
for you.

If you are considering selling your home, talk with an experienced agent who knows how to handle and
market assumable flood policies. It can make a difference in your sales prices. An experienced agent can
help you in so many ways, and flood insurance is just one example.

Always call the Ellis Team at Keller Williams Realty 239-489-4042 and we’ll give you the information you
need to get Top Dollar for your home!

Good luck, and Happy Selling!

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