You’ve been mapped into a Special Flood Hazard Area, now what?
Must you resign yourself to paying flood insurance premiums for as long as you own the property?
FEMA’s approach to floodplain mapping is not granular enough to provide a confirmed determination for each property owner. If you have a current Elevation Certificate in hand that indicates that the property is not actually at risk because the elevation data indicates the structure was properly ‘floodproofed’ during design and construction, then you likely meet the minimum qualifications to request removal of the property or structure from the floodplain through the Letter of Map Change process.
FEMA allows all property owners, except those placed in AO flood zones, to submit a Letter of Map Change request for issuance of a LOMA or LOMR or LOMR-F depending upon the individual circumstances of your situation. Those circumstances will also determine whether FEMA will charge a fee for the submittal process.
Our flood expert started as a licensed flood insurance agent in 2005 and has submitted or assisted in the submittal of hundreds of Letter of Map Change requests. During that time, only two requests have been denied by FEMA; one of those was successfully argued and the denial was overturned, and the other is still under review as of this writing.
Our success is your success! If you’d like to explore the possibility of getting rid of your mandatory flood insurance premium give us a call and we can discuss the next steps.
The short answer? It depends on your situation.
The longer answers:
I want to purchase flood insurance:
- If you qualify for a ‘Newly Mapped’ policy, no Elevation Certificate is required to place coverage. Additionally, if you qualify for a ‘Newly Mapped’ policy and have an Elevation Certificate, the EC won’t make a difference in your premium for several years.
- If you are purchasing a property that requires mandatory flood insurance and the last map revision was more than 12 months ago, you will need a current Elevation Certificate to place a National Flood Insurance Program (NFIP) policy.
- If you have a property like that described in #2 above you have the option in most states to purchase flood insurance through an alternate carrier that does not require an Elevation Certificate. This option is available in all states except AK, DC, HI and KY with some geographical limitations and only available for homes in an A/AE/AO flood zones. The good news is that this carrier offers increased structure and contents limits beyond those offered by NFIP ($250,000 structure/ $100,000 contents). The alternate carrier currently offers up to $750,000 structure/ $200,000 contents.
I want to remove my property from the floodplain:
- A current Elevation Certificate will be required along with several other legal documents to submit your Letter of Map Change to FEMA requesting removal of the property from the floodplain.
- The Elevation Certificate must be on the most recent Department of Homeland Security approved Elevation Certificate form, and must include the benchmark datum used, pictures taken after the most recent FEMA map revision date and be stamped and be signed by a Registered Land Surveyor or Civil Engineer with stamp and signature dated more recently than the most recent FEMA map revision date.
- Even with an Elevation Certificate, a property in an AO (alluvial fan) floodplain cannot be removed from the floodplain without additional documentation of ‘As Built’ measures to remediate or provide erosion control.
Have you recently been mapped into a FEMA floodplain?
Don’t panic, there may be options.
When FEMA maps your home into a Special Flood Hazard Area (SFHA) it’s because the calculated Base Flood Elevation (BFE) suggests that your home, based on surrounding topography, is in an area with an increased risk of flooding. Or, also defined as the 100 year floodplain – or has a 1% risk of flooding in any given year.
[SFHA – A Special Flood Hazard Area (SFHA) is an area identified by the United States Federal Emergency Management Agency (FEMA) as an area with a special flood or mudflow, and/or flood related erosion hazard, as shown on a flood hazard boundary map or flood insurance rate map.
BFE – The computed elevation to which floodwater is anticipated to rise during the base flood. Base Flood Elevations (BFEs) are shown on Flood Insurance Rate Maps (FIRMs) and on the flood profiles. The BFE is the regulatory requirement for the elevation or floodproofing of structures. The relationship between the BFE and a structure’s elevation determines the flood insurance premium.]
That 1% risk in any given year may seem low but, statistically speaking, if you live in the same home for the life of a 30 year mortgage you have a 1 in 4 (26%) chance of being flooded. That’s why you are considered to be in a ‘high risk’ area.
However, not all property owner risk is equal. Why?
FEMA does not manage the SFHA at the property level when establishing floodplain boundaries. So, if you think your property has been inappropriately drawn into the floodplain there are a series of steps that can be taken:
1) Acquire an Elevation Certificate
2) Review the Elevation Certificate to determine: Does the property qualify to request removal from the floodplain?
3) If ‘YES’ to #2 above, submit to FEMA requesting removal of the structure/property from the SFHA
4) Wait for FEMA Flood Zone Determination Letter informing you of the decision
In the meantime, if flood insurance is required by your lender, take advantage of ‘Newly Mapped’ program rates rather than allowing the lender to provide force-placed coverage. Force placed coverage is typically provided by the lender at a cost of $2400-$3600 annually while ‘Newly Mapped’ coverage is only $475 as of the date of this post.
‘Newly Mapped’ coverage is available as an option for 12 months from the date of the FEMA map revision. However, a lender is required to implement force-placed coverage 45 days after their initial notice to you that the property has been placed in an SFHA. So, don’t allow the lender to provide force-placed coverage thinking you have plenty of time to take advantage of the ‘Newly Mapped’ program.
Not only is force-placed coverage expensive, but it can be difficult to get the lender to refund the force-placed premium even if you are able to get out of the floodplain within 12 months of the FEMA map revision date.
Have questions or need assistance with any of the above? Give us a call, we can help!
Unlike other property and casualty policies like home or auto insurance, flood insurance can only be cancelled if you meet very specific requirements and refunds are only issued, in a handful of circumstances, if you meet even more stringent requirements. For example, if you have a successfully received a Letter of Map Change from FEMA and you are in a mandatory flood insurance area, you may cancel your current flood insurance policy and you may then request a premium refund.
However, keep in mind that your lender has the right to require that you keep flood insurance in place. In that case, the Letter of Map Change is still helpful because it also allows you to place a less expensive ‘Preferred Risk’ flood insurance policy.
So, whether your lender allows you to get rid of your flood insurance or not, once the Letter of Map Change has been issued, you will be able to request a premium refund from your flood insurance carrier for the policy premium paid as the result of the ‘mandatory flood insurance’ requirement.
But, you may have to turn around and spend a portion of that refunded premium to put the less expensive flood insurance in place. Sound complicated? It can be and usually is unless you are very familiar with the process.
Congress recently changed the amount of refund given to a property owner for flood insurance premiums paid. These changes are published in the April 1, 2016 NFIP changes documentation provided by FEMA. As indicated, you are due a full refund LESS the Federal Policy Fee, Probation Surcharge and HFIAA Surcharge.
Additionally, unless you received your Letter of Map Change within the last 60 days of the prior policy term, you will only be eligible to receive reimbursement of applicable flood insurance premium for the current policy term.
Questions? Give us a call!