The costliest and deadliest hurricane since 1928 to hit the United States was named Katrina and it tore through New Orleans on August 29, 2005, leaving in its wake 1,833 dead and an estimated $151 billion in total damages, including $75 billion in the New Orleans area alone.
As occurs after any flooding incident, whether or not hurricane-related, governments redraw flood zone maps and make changes to permitting and construction regulations. After the new maps and other changes are approved by the Federal Emergency Management Agency (FEMA), new insurance ratings are issued.
At the end of September new flood zone maps for New Orleans will become effective and mortgage lenders will use the so-called Flood Insurance Rate Maps (FIRMs) to write new policies. The new FIRMS have moved nearly 60,000 single-family residences out of the old flood zone (technically called a Special Flood Hazard Area, or SFHA) and 762 into the new SFHA.
That means that property with a reconstruction value of $12.96 billion is no longer included in the SFHA, according to data compiled by CoreLogic. The reconstruction of the 762 homes now included in the SFHA is nearly $89 million.
CoreLogic explains what that means:
For the properties which will move out of SFHAs come September 30, 2016, flood insurance may no longer be required by lenders. However, flood insurance is still recommended since the reclassification only indicates that the flood risk is reduced, not eliminated. In addition, a change from the SFHA classification means the cost of insurance should be significantly reduced.
More details are available in the CoreLogic presentation.