CFM REVIEW COURSE UNIT 7: FLOOD INSURANCE

Transcription

1 CFM REVIEW COURSE UNIT 7: FLOOD INSURANCE

2 FLOOD INSURANCE AND FLOODPLAIN MANAGEMENT Fld insurance is nly available in NFIP-participating cmmunities Cverage: Fld insurance is available fr all insurable structures and their cntents (separate plicies) 10% f building cverage may apply t a detached garage r carprt. Other ut building must be insured under a separate plicy Fld Insurance is a single peril and separate plicy frm Hme Owner s Insurance

3 DEFINITION Building is defined as a walled and rfed structure, including a manufactured hme, that is principally abve grund and affixed t a permanent site. walled and rfed tw r mre rigid walls, rf fully secured s that the building will resist fltatin, cllapse and lateral mvement

4 NOT INSURABLE STRUCTURES Gas r liquid strage tanks Structure mre than 50% value undergrund Tents Tennis & swimming pl bubbles Swimming pls and ht tubs Buildings ver water r seaward f mean high tide Fences Dcks Driveways Open pavilins fr picnic tables and bleachers Sheds Campers Trailers (unless attached t site) Landscaping Gazebs

5 CONTENTS COVERAGE Cvers: Remvable items inside f insurable building Renter can insure cntents even if the structure des nt have fld plicy Nt cvered: Livestck Vehicles Jewelry, artwrk, furs mre than $250 Mney r valuable papers Mst cntents lcated in basement

6 BASEMENTS Belw grund n all sides Building cverage structural elements nly! Cntents cverage washers, dryers, freezers, sme utilities nly! Enclsures utility cnnectins and structural elements nly!

7 FLOOD INSURANCE There is a waiting perid after the purchase f fld plicy befre it is effective At clsing f mrtgage: Nne Required by lender due t map change: 1 day ALL thers (even cash purchases): 30 days Insurance rates are based n: Structure Type Fld Zne Lwest Flr Relative t Reference Elevatin Pre-FIRM r Pst-FIRM

8 PRE-FIRM VS. POST-FIRM Pre-FIRM cnstructed befre effective date f first firm r befre 12/31/74, whichever is later Subsidized insurance rates in fldplains Rates are NOT based n elevatin May use Pst-FIRM rates if premium calculatin ends up cheaper

9 PRE-FIRM VS. POST-FIRM Pst-FIRM cnstructed after effective date f first firm r after 12/31/74, whichever is later Insurance rates are actuarial Rates are based n elevatin in fld znes Relative t BFE in AE znes Relative t HAG in A znes Rates nt based n elevatin in B,C,D,X

10 DETERMINATION OF POST-FIRM DATE COMMUNITY SPECIFIC FIRM S Frm FIRM panel Map Dates als available frm Cmmunity Status Bk

11 DETERMINATION OF POST-FIRM DATE COUNTYWIDE FIRM S

12 MANDATORY PURCHASE REQUIREMENT Fld Insurance is MANDATORY fr all structures that: Have a federally-backed mrtgage and Are determined t be in SFHA as shwn n effective FEMA maps Required insurance is the lesser f: Mrtgage Amunt Replacement Cst f the Structure Maximum limits available: Currently $250K residential, $500K nn-residential

13 FLOODPLAIN MANAGEMENT & FLOOD INSURANCE Building Cnstructin: Get it right and insurance premiums will be affrdable Get it wrng and premiums will be very expensive Exceed minimum standards and insurance will be relatively cheap

14 CHANGING ZONE DESIGNATIONS Lcate the structure utside the SFHA Elevate structures n fill such that the tp f the fill is at r abve the BFE and btain a Letter f Map Revisin Based n Fill May lwer the cst f fld insurance r eliminate the mandatry purchase f fld insurance requirement

15 REMOVING A STRUCTURE FROM THE REGULATORY FLOODPLAIN Letter f Map Amendment (LOMA): if NATURAL GROUND arund structure is utside f r abve regulatry fldplain LAG must be abve BFE Letter f Map Revisin Based n Fill (LOMR-F): if structure is utside r abve regulatry fldplain due t FILL LAG and lwest flr must be abve BFE Nte that elevating a structure thrugh methds ther than fill des nt remve the structure frm the fldplain.

16 ELEVATION AND FLOODPROOFING Elevate lwest flrs f structures abve the BFE Add freebard f ne ft r mre t reduce insurance premiums and meet Clrad requirements Fldprf nn-residential structures a minimum f 1-ft abve the BFE

17 CUTTING THE COST OF FLOOD INSURANCE OTHER CONSIDERATIONS In SFHA Zne A, btain a cmmunity-issued BFE fr lwest flr elevatin purpses Take advantage f NFIP Grandfathering fr the map in effect at the time f cnstructin Fr Pre-FIRM structures that are built abve BFE, Pst- FIRM rates can be used if they result in a lwer premium

18 COST COMPARISON $250,000 building cverage nly (des nt include cntents), AE (high t mderate risk) zne, single family, ne-stry structure withut a basement at: 4 feet belw BFE; at BFE; and at 3 feet abve BFE. (Rating per FEMA fld insurance manual, Octber 1, 2012). The illustratin is based n a standard NFIP deductible.

19 TYPES OF POLICIES Preferred Risk Plicy Structures lcated utside f SFHA n current map and have N significant histry f flding are eligible Standard Plicy all thers Grandfathering will nt preserve eligibility fr Preferred Risk Plicies.

20 DEDUCTIBLE Standard Deductible $500 all nn-sfha $500 Pst-FIRM SFHA $1,000 Pre-FIRM SFHA Can elect different deductible t change premium

21 PREMIUM CALCULATION Multiply building cverage * rate Multiply cntents cverage * rate Multiply abve by deductible factr Add ICC cverage premium (varies by zne) Apply CRS discunt, if applicable Add $50 prbatin fee, if applicable Add plicy fee (varies by zne)

22 SUBMIT TO RATE All pst-firm structures with the lwest flr mre than 1-ft belw the BFE (r with basement in A zne) must be rated by FEMA headquarters in Washingtn, D.C. Premiums may run 3-t-5 times the rate shwn fr the ne ft belw case All Submit t Rate situatins are cpied t lcal FEMA Reginal ffice and the State will likely be a red flag fr rdinance vilatins

23 REPETITIVE LOSSES Repetitive Lss: tw r mre lsses within the last ten years that exceed $1,000 Cmmunities with 10 r mre repetitive lss prperties must implement a repetitive lss plan

24 INCREASED COST OF COMPLIANCE (ICC) If the cmmunity declares a building substantially damaged r a repetitive lss DUE TO FLOODING: An wner with an ICC plicy wh files fr an insurance claim can receive an ICC benefit ICC benefit pays the cst t bring the building int cmpliance with current fldplain cdes and rdinances Currently $30,000 available, may be increased Mitigatin ptins: fldprfing (nn-residential nly), relcatin, elevatin, demlitin

25 PROBATION/SUSPENSION When a cmmunity is ut f cmpliance with its fldplain regulatins, FEMA can place the cmmunity n prbatin. $50 surcharge added t all new and renewed fld insurance plicies, therwise insurance remains unchanged When a cmmunity n prbatin des nt remedy its deficiencies, FEMA can place the cmmunity n suspensin. N new r renewed plicies can be written until cmmunity is remved frm suspensin.

26 SECTION 1316 Allws FEMA t deny fld insurance t a prperty in vilatin f fldplain management regulatins State r lcal authrity must make declaratin f vilatin and request 1316 Declaratin stays with prperty until vilatin is fficially reslved

27 DISCONNECTS BETWEEN REGULATIONS AND INSURANCE Use f better available data: Regulatins require t use it Insurance must use effective FEMA map, even if better infrmatin is knwn t exist Fldprfing: Regulatins cnsider fldprfing t be identical t elevatin Insurance subtracts 1 ft frm fldprfing elevatin

28 DISCONNECTS BETWEEN REGULATIONS AND INSURANCE Treatment f basements: Regulatins cnsider basements like any ther flr Insurance prvides limited cverage fr basements V-Znes enclsures > 300sf: Regulatins allw them Insurance impses a large penalty n premiums

29 CBRA ZONE INSURANCE CBRA Zne is undevelped area f the cast designated as part f the Castal Barrier Resurce system US Fish and Wildlife Services can interpret the bundaries and FEMA can crrect map errrs, but nly Cngress can change designatin (LOMA/LOMR cannt change designatin) Disaster assistance limited t emergency relief n lans r grants t rebuild Fld insurance NOT AVAILABLE fr any structure built after zne identificatin (includes cnversin due t substantial damage/imprvement)

30 COMMUNITY RATING SYSTEM The gal is t encurage cmmunities and states t exceed the minimum standards f the NFIP by the use f fld insurance premium adjustments The bjective is t reward cmmunities that are exceeding the minimum standards CRS Discunt: Structures in SFHA: 5% fr every rating belw 10 (i.e. 10% fr 8, 15% fr 7, etc.) Structures utside f SFHA: 5% fr Classes 7-9, 10% fr 6 and abve)

31 MINIMUM REQUIREMENTS FOR PARTICIPATION IN THE CRS A cmmunity must be in the Regular Phase f the NFIP A cmmunity must be in full cmpliance with the minimum standards f the NFIP Cmmunities must maintain FEMA s Elevatin Certificates fr all new and substantially imprved cnstructin after the date f applicatin fr CRS classificatin.

32 PROGRAM SUMMARY The CRS classes fr lcal cmmunities are based n 18 creditable activities, rganized under fur categries: Public Infrmatin, Mapping and Regulatins, Fld Damage Reductin, and Fld Preparedness.

33 CREDIT POINTS CLASS PREMIUM REDUCTION SFHA* PREMIUM REDUCTION NON-SFHA** 4, % 10% 4,000 4, % 10% 3,500 3, % 10% 3,000 3, % 10% 2,500 2, % 10% 2,000 2, % 10% 1,500 1, % 5% 1,000 1, % 5% % 5%

34 NEW CRS MANUAL First full verhaul f the manual since the CRS began Majr Changes: -Prerequisites fr Class 9, 6, 4, and 1 -Activity Changes -Pints Redistributin -BCEGS (Building Cde Effectiveness Grading Schedule)

35 CRS CONTRACTOR Fr mre infrmatin abut jining CRS, cntact the Insurance Services Office representatives fr yur FEMA Regin. Website: