Property owners in coastal and low-lying areas around the nation are experiencing sticker shock these days from a one-two punch of bad news about flood insurance. Many homeowners are finding out that a FEMA re-mapping process is categorizing their properties as flood risks for the first time. At the same time, the 2012 Biggert-Waters Act, a wide-ranging reform to the financially troubled National Flood Insurance Program (NFIP), is triggering radical increases in the premiums for the coverage many homeowners are required to have in order to receive a mortgage.

Now, a special report from NBC News charges that FEMA's administration of the flood insurance program is unfairly biased toward wealthier property owners and their well-connected lawyers and consultants, while ordinary folks are finding the agency's bureaucratic hurdles too complicated and costly to negotiate.

If your premiums go up because of a change to the Flood Insurance Risk Map (FIRM), you can appeal the change. But that's expensive and complicated. And according to Part One of the NBC report, the well-heeled owners of big, expensive shorefront buildings have a definite advantage in that game (see: "Why Taxpayers Will Bail Out the Rich When the Next Storm Hits," by Bill Dedman).

"As homeowners around the nation protest skyrocketing premiums for federal flood insurance, the Federal Emergency Management Agency has quietly moved the lines on its flood maps to benefit hundreds of oceanfront condo buildings and million-dollar homes, according to an analysis of federal records by NBC News," the network reports. "In more than 500 instances from the Gulf of Alaska to Bar Harbor, Maine, FEMA has remapped waterfront properties from the highest-risk flood zone, saving the owners as much as 97% on the premiums they pay into the financially strained National Flood Insurance Program. NBC News also found that FEMA has redrawn maps even for properties that have repeatedly filed claims for flood losses from previous storms."

Even as Hurricane Sandy was bearing down on the Jersey shore, the NBC News report says, a FEMA official reclassified a mile of Alabama beach that had been hit by storm flooding twice before, placing the shoreline back into FEMA's low-risk category. The move cut one high-rise condo building's flood premium from $143,190 a year down to just $8,457 a year—even though the building had collected on its flood insurance twice before, claiming $11,562 in damages after Hurricane Katrina and $250,000 after Hurricane Ivan.

What explains the favorable floodplain rulings from FEMA? According to NBC News, it's favorable treatment obtained by well-connected insiders (see part two of the NBC report, "Meet the Flood Insurance 'Robin Hood' Who Saves Condo Owners Millions," by Bill Dedman). Case in point: a Florida company called Flood Zone Correction, Inc., and its president, Dan Freudenthal. Representing only commercial property owners and working on commission, Freudenthal earns a portion of the money saved by his clients from premium reductions, and he boasts of his connections to high-level FEMA officials, says NBC. "When he encounters resistance from a local official, Freudenthal calls Washington," the network reports. "'I just got off the phone with the head of the insurance side of NFIP and one of the head mapping people at FEMA,' he said in one email to a town official … Freudenthal (pronounced FROOD-en-thal) told NBC News that he has filed successful applications for flood map changes for about 100 coastal condo projects in Florida, Alabama, Texas, South Carolina, and Georgia, in addition to hundreds of inland properties."

Small property owners who don't have the benefit of a well-connected advocate can find themselves high and dry, reports NBC (see: "For Average Joes, Fighting FEMA Flood Maps Isn't Easy or Cheap," by Miranda Leitsinger). Stewart Neff, the chairman of the board of Supervisors for the small Pennsylvania town of Warrior's Mark, told the network he was blindsided by the consequences of a FEMA map update for his town. "I'm afraid I was somewhat naïve on this," he said. "I wasn't prepared to analyze this map."

Locals say the creek FEMA added to the map for their town, which the agency said created a flood risk for property owners in the area, does not exist. But they missed their date for an appeal, and for regular wage earners, the $1,000 to $5,000 cost of a private engineering survey they need to contest the FEMA determination is too high an obstacle—even though their flood insurance premiums are set to go up by hundreds of dollars a year if they don't fight the decision and win.

With odds of succeeding in an appeal uncertain, and no agent who's willing to take their case on spec, average homeowners tend to give up. Said homeowner Paul Weamer, who decided to give up the fight: "It just seemed like the whole thing's rigged against you. If somehow you end up in FEMA's sights, there's not much you can do to get out of that, other than pay."