Flood insurance depends on level of risk

Everyone lives in a flood zone.

The question, especially for people living directly below the Oahe Dam, is whether that zone carries a floodplain designation by the federal government that accurately reflects its risk of flooding, in light of U.S. Army Corps of Engineers river management policies.

Homeowners along the Missouri River recently got a crash course in FEMA's National Flood Insurance Program and its flood insurance rate maps, which establish whether their houses are located in a low-, moderate- or high-risk flood zone. For many of them, the lessons will come at great expense.

Mortgage lenders rely on those maps to determine a property's risk for flooding and, unless a bank requires it, the vast majority of homeowners forgo flood insurance.

By law, all FDIC-chartered banks require that flood insurance be purchased for any property located in any Zone A floodplain - a high-risk designation - before loaning money on it. Anyone can voluntarily purchase flood insurance, regardless of their zoning.

"People generally don't buy it unless they're forced to," Rapid City insurance agent Mike Gould said.

The problem for homeowners in Marion's Garden, and the other low-lying housing developments that are currently threatened by 150,000 cubic feet of water per second being released from the Oahe Dam, is that their land often is not classified as Zone A.

Ostensibly, that is because contract engineers who created those flood insurance rate maps for FEMA, and revised them less than 10 years ago, took the Oahe Dam and its flood control capabilities into consideration as a mitigating factor when determining the hydrology of the area, said Barb Fitzpatrick, senior floodplain specialist for FEMA's Region 8.

State and federal officials have not yet established a total number of structures in Stanley and Hughes counties that are threatened by the high water levels coming out of the Oahe Reservoir, Fitzpatrick said, but it is no doubt far greater than the number of NFIP policy holders in those two counties.

Stanley County has 96 flood insurance policies in effect, 89 of them written on structures within the city limits of Fort Pierre. Hughes County has 45 active policies, 32 of them within the city of Pierre.

Standard homeowners insurance does not cover flood damages because private insurers eventually found the risks too great and the profits too low for that market.

Back in 1968, Congress decided that the only entity large enough to insure Americans against flooding was the federal government, so it created the NFIP.

Today, the NFIP is more than $18 billion in debt to the federal treasury, due largely to catastrophes like Hurricane Katrina, but residents in more than 21,000 U.S. communities and counties are eligible to buy flood insurance as a result of the federal program.

Flood insurance rates are set by the NFIP and vary by geographic region and by flood risk zones and many different designations within each category.

In Rapid City, a residence in a low to moderate risk zone could have an annual premium as low as $129 to $1,636; a property in a high-risk zone has an annual premium range of $1,755 to more than $11,000, according to the NFIP. The average premium for federally backed flood insurance is $550 per year.

Coverage limits for flood insurance are $250,000 for homes and $500,000 for businesses. Contents coverage is a separate premium and tops out at $100,000.

Although it is operated by the federal government, people buy flood insurance from private agents, who are paid a 15 percent commission for the task.

To learn more about flood insurance and its costs, visit the floodsmart.gov website. Homeowners can access a flood zone map of their property at www.msc.fema.gov or call the center at 800-427-4661 for assistance.

Flood insurance has a 30-day waiting period before it takes effect. "You can't wait until the day before the floodwaters hit to buy it," Gould said.

To be eligible for payments for this flood event, homeowners along the river had to have bought flood insurance 30 days before June 1, the date which FEMA has designated as the official "flood in progress" date because of water releases by the U.S. Corps of Engineers.

Fitzpatrick said FEMA likely won't have new policyholder numbers for the area until August.

U.S. Rep. Kristi Noem is asking FEMA to explain that June 1 date, which will adversely affect thousands of her constituents.

"I would like to know, in specific detail, how this date can be determined as a universal start date for an event that is occurring, or going to occur, in several states over hundreds of miles," she said in a letter to FEMA administrators.

FEMA is in the process of updating floodplain insurance maps for all of Pennington County, a process that was last performed in Hughes and Stanley counties in the early 2000s, Fitzpatrick said. "Those are relatively new maps," she said.

The new Pennington County maps are expected to be finalized in 2012, according to FEMA.

Whether or not this year's unusually high water releases from the Missouri River will require flood map revisions along its banks is an excellent question, Fitzpatrick said, but not one that she can answer right now. There are no current plans to revise them. "They may be updated in the future, but that will be a discussion between FEMA and the state and the communities later on, after the flooding situation there is under control."

Contact Mary Garrigan at 394-8424 or mary.garrigan@rapidcityjournal.com