The National Flood Insurance Program collects annually about $3.5 billion in premiums. Four times in the past eight years, however, claims paid out have exceeded premiums collected. In 2005, after Hurricane Katrina, claims totaled $17.7 billion. The claims paid for superstorm Sandy are expected to reach $7 billion. In order to stop subsidizing flood insurance claims, the federal government is expected to increase rates substantially for building owners in flood zones.
But for Hoboken property owners, there could be some relief if the City of Hoboken takes action. Flood insurance premiums can be reduced by as much as 45% if the City chooses to participate in the Federal Emergency Management Agency’s (FEMA) Community Rating System (CRS) and scores the highest marks possible.
The National Flood Insurance Program’s CRS is a voluntary incentive program that recognizes and encourages community floodplain management activities that exceed the federal government’s minimum requirements. The primary goals of CRS are to reduce flood damage to insurable property and encourage a comprehensive approach to floodplain management.
Communities participating in CRS can earn points by undertaking a number of measures. Open space preservation and acquisition & relocation programs in flood zones earn points. A series of outreach and education programs to inform building owners in flood area are a fundamental part of the rating system. Elevation certificates for the construction of new buildings are another element. Changes to zoning and building codes also lead to higher ratings for municipalities.
FEMA’s flood maps, newly released at the end of last year and revised for the first time in 25 years, form the basis for municipal participation in CRS. For Hoboken, 79% of the city falls within the flood zone. Although most of the town falls within the Advisory Base Flood Elevation (ABFE) A Zone, the entire coastline along the Hudson River is in the ABFE V Zone which is the Coastal High Hazard Zone that requires stricter standards and higher elevations for building. The proposed Monarch Towers, Union Dry Dock, the Stevens Institute waterfront parcel and much of the Hoboken Rail Yards are in the Coastal High Hazard Zone.
The premium reduction is similar to the classifications used for fire insurance. A Class 1 provides a 45% premium reduction. A Class 10 provides no reduction. The CRS Class is based on the number of floodplain management activities a community implements. In many cases, these are activities already implemented by the community, the state or a regional agency. The more activities implemented, the better the CRS class.