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Welcome to the Flood Zone!

A nationally distributed resource for those interested in flood zone issues, land surveying, real estate, history, and educational opportunities. If you no longer wish to receive this newsletter, simply click the unsubscribe link in the footer of this message.

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Jim Headshot

Message from Jim

A tentative rate policy is applied when agents/producers are unable to provide all required underwriting information necessary to rate a policy. It cannot be endorsed to increase coverage limits or renewed for another policy term until all information is received. A flood loss cannot be settled before the full-risk premium is determined. (NFIP Flood Insurance Manual, Rev. 2012)

Tentative rates are generally much higher than Regular Program rates since they are not based actuarial data. For example, a pre-FIRM single family residential non-elevated building with no basement in Zone A, using Regular Program rates, would be rated at $0.76 per $100 of coverage for the building and $0.79 per $100 of coverage for contents, up to the basic limit. If tentative rates were applied, this premium would be increased 526% to $4.00 for building and 759% to $6.00 for contents. Notice the whole dollar amounts! This is a clear indicator that without proper data, risk becomes a guess. In the NFIP Flood Insurance Manual, tentative rates for V Zone basic limits can reach $11.00 per $100 of coverage.

This is the logic behind obtaining an Elevation Certificate. It is my understanding that 90%-95% of tentative rates will be decreased with an Elevation Certificate since it allows the agent/producer to more accurately rate risk based on building construction and elevations. This is also an opportunity to evaluate whether the improvements being used for loan collateral which horizontally scale in a flood zone are a good candidate for Letter of Map Amendment Removal, or to make recommendations as to how premiums can be reduced or eliminated, if possible.

Remember, the lender or the agent cannot know if map error exists or an incorrect flood determination has been made without further investigation. In many ways, the Elevation Certificate is the best solution to better understand risk and options when horizontally scaled in the flood zone.

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fill

Flood Q & A:

Q: If a structure was built on fill which was added to the property before the first flood map went into effect for that community, and the property owner wanted to apply to FEMA for removal of the structure from the flood zone, would they apply for a Letter of Map Amendment (LOMA) or a Letter of Map Revision Based on Fill (LOMR-F)?

A: Since the fill was placed before the flood map went into effect, it would be considered "natural ground", and the property owner would apply for a Letter of Map Amendment.

Not sure what the difference is? Click here to review the "Letter of Map Amendment & Letter of Map Revision Based on Fill Process" on FEMA's website.

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23814280 SA

NFIP Terminology: Submit-for-Rate Policies

The insurance premium rate tables used for the National Flood Insurance Program (NFIP) do not cover cases where the building is two or more feet below the Base Flood Elevation (BFE). The insurance agent must send the application for flood insurance to the company headquarters for a special, individualized rating. This procedure is known as Submit-for-Rate (also known as Submit-to-Rate).

Information from: NFIP Specific Rating Guidelines, April 2016

The Write Your Own (WYO) Companies and the NFIP Direct Servicing Agent must obtain all the required information to properly rate and issue Submit-for-Rate risks. These policies must be re-rated annually upon renewal. If the rates are unpublished or the policy is rated with special rates, a request must be submitted 60 days prior to the expiration date of the policy to the NFIP Bureau and Statistical Agent (BSA) Underwriting Department for rate verification.

The following information is required for all Submit-for-Rate risks:

NFIP Application
Elevation Certificate Form
Photographs
Submit-for-Rate Worksheet
Elevated Building Determination Form
Miscellaneous (variance statement for Post-FIRM buildings, list of machinery and equipment, breakaway wall certification, V-Zone Risk Factor Rating Form, etc.)

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Resources

Below is a fantastic infographic on flood maps, how they are created, approved, and issued. If the text is difficult to read, click here to open the text version in Microsoft Word. You can also click on the photo to view it on FEMA's website.

FEMA Infographic 022614-01

FEMA News Photo. Published 3/19/2014. Accessed 5/24/2016.

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In the News

Groups Join to Push Flood Insurance Reform

By Phil Gusman, Property Casualty 360, April 8, 2016

This article outlines a very important concept in reform of the National Flood Insurance Program: Unity. Author Phil Gusman states, "In NFIP discussions, unity is as important as mitigation, privatization, mapping, and other issues." Stakeholders are coming together with interest in exploring a "multifaceted approach" that addresses all sides of the issue. Josh Sacs, legislative director for the National Wildlife Federation, for example, asserted that while he focuses on the "ecological and conservation benefits of mitigation, he also recognizes mitigation keeps insurance rates lower, which dovetails with the interests of other groups". It's a step in the right direction! Read more...

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June Flood Funny

juneflood

Cartoon from "Science and Ink" by Nick D. Kim

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