Key Fundamentals of Flood Insurance

Transcription

1 a Welcome to Key Fundamentals of Flood Insurance An entry-level approach for real estate professionals [Photo credit: Oliver Gruener] We will get started in a few minutes. Presented Meanwhile, by: let s perform a warm up exercise. 1 Training Agenda Here s our agenda for today What you need to KNOW Buying flood insurance Requiring flood insurance Maintaining flood insurance Determining flood premiums What you can FIND Community Status Book Map Service Center Floodsmart.gov What you can DO Letter of Determination Review Letter of Map Amendment Letter of Map Revision LOMA Out as Shown 3 1

2 NFIP Flood Insurance Manual Access the NFIP Flood Insurance Manual: Online at the Flood Insurance Library: 4? KNOW FIND DO Your questions and more 5 2

3 KNOW Buying Flood Insurance Who can buy it? 6? Who Can Buy Flood Insurance Community Participation All Zones 7 3

4 Participating Communities FEMA agrees to make flood insurance available COMMUNITY agrees to adopt and enforce floodplain management regulations 8 Community Status Book Report 9 4

5 ? Who Can Buy Flood Insurance Community Participation All Zones 10 SFHAs and Non-SFHAs Special Flood Hazard Areas and Non-Special Flood Hazard Areas SFHAs (High Risk) AE (replaced A!-A30) A, AH, AO, A99, AR VE (replaces V1-V30) V, VO Non-SFHAs (Low-to-Moderate) B, C, X 11 5

6 SFHAs appear as dark shading on a Flood Insurance Rate Map (FIRM)

7 CBRS System Coastal Barrier Resource Act/Otherwise Protected Areas Ability to write NFIP policies may be restricted in some: Coastal Barrier Resources Act (CBRA) areas Otherwise Protected Areas (OPA) Coastal Barrier Resources Act and Coastal Barrier Improvement Act enacted: October 18, 1982 November 16, 1990 Buildings may be ineligible for coverage in participating communities, IF constructed on or after identification date. 14 KNOW Buying Flood Insurance Who must buy it? 16 7

8 ? Who MUST Buy Flood Insurance A or V Zones 17? Who MUST buy flood insurance Used as security for a loan 18 8

9 What is a designated loan? A loan secured by a building or mobile home that is located or to be located in a Special Flood Hazard Area in which flood insurance is available under the Act. Please note: Emphasis on a building or mobile home as collateral 19 Determining the Flood Zone - MIRE 20 9

10 Standard Flood Hazard Determination Form 21 Significance of the Building Location AE AE AE River Street 22 10

11 KNOW Buying Flood Insurance How do property owners buy it? 23 How do? property owners purchase flood Insurance Write Your Own Company NFIP Direct Servicing Agent Licensed Property and Casualty Agent 24 11

12 Can my buyer take over the seller s existing flood insurance policy? Policies covering building property may be assigned to purchaser with seller s written consent No assignment for: Buildings in course of construction For detailed information, please see the General Rules section of the Flood Insurance Manual Contents only policies 25 When do flood insurance policies become effective? There is a 30 day waiting period before any new or modified flood insurance policies go into effect. Exceptions are provided for: Insurance in connection with a loan transaction. (MIRE) Insurance purchased within 13 months of a map revision (1 day wait). For detailed information, 26 please see the General Rules section of the Flood Insurance Manual 12

13 How much flood insurance coverage is available? Residential (1-4 family) Building Contents Other Residential Emergency Program $35,000 $10,000 Regular Program $250,000 $100,000 Building $100,000 $500,000 Contents $ 10,000 $100,000 Non-Residential (Business/Other Non-Residential) Building Contents $100,000 $100,000 $500,000 $500, Defining Pre-FIRM and Post-FIRM Pre-FIRM Post-FIRM Built before initial FIRM or On or before 12/31/1974 On or After the initial FIRM or After 12/31/ whichever is LATER 28 13

14 Full Risk Rates Full-Risk Rates vs. Subsidized Rates Represent the building s true flood risk. Do not represent the building s true flood risk. Premium reflects the risk assumed by the program and all administrative expenses. Determined with limited underwriting information Takes into account the full range of possible flood losses. Discounted rates that have traditionally been available for Pre-FIRM buildings in A or V zones. Subsidized 29 Base Flood Elevations (BFEs) BFE = 1% Chance Flood 30 14

15 Subsidized Rates Pre-FIRM Full-Risk Rates Post-FIRM $4,108/yr 4 ft above BFE $592/yr $4,108/yr 1 ft below BFE $4,424/yr $4,108/yr 4 ft below BFE $10,628/yr 31 * AE Zone (04/01/15 rates) Bldg- $250,000 Contents- $100,000; Single-story with no basement, crawlspace or enclosure rates; Zone AE; $2K deductible Bldg./Contents Reform Legislation Impact Limits increases to 18% 25% 25% Annual increases Annual Increases Individual premium increases Includes Reserve Fund Assessment Does not include: HFIAA surcharge Federal Policy Fee Subsidized rates for: Non-primary residences Business properties Severe repetitive loss Substantially Improved 32 15

16 Community Rating System (CRS) Classifications and Discounts Encourages communities to exceed minimum NFIP requirements > 1,300 communities participate in CRS Class 1 Class 4 (30%) Roseville, CA Charleston County Class Class 5 (25%) 2 Myrtle Tulsa, Beach OK Hilton King County, Head Island WA Pierce County, WA CRS classes 1 10: Class 1 = 45% premium discount Class 9 = 5% discount 10: No discount CRS Website: 33 Newly Mapped Procedure Effective April 2015 Newly Mapped procedure Properties in B, C, X, and D zones on the old map to an SFHA on new map Must meet specific loss eligibility requirements 34 16

17 Grandfather Rules Continuous Coverage vs. Built-in Compliance Rules allow rating benefit for policyholders after: Map revisions Base Flood Elevation changes Grandfathering allows a property owner to: Lock in a flood zone from previous flood map Lock in a Base Flood Elevation from a prior map 35 FIND KNOW FIND DO Mapping Resources 36 17

18 Mapping Resources Community Status Book 37 Visit the Map Service Center

19 Mapping Resources Search by Address Mapping Resources Search by Address 19

20 FIND Mapping Resources Floodsmart.gov 41 Mapping Resources

21 Mapping Resources 43 Mapping Resources

22 Mapping Resources 45 Mapping Resources

23 DO KNOW FIND DO Map Challenges 47 DO Letters of Map Change What is a LODR? 48 23

24 LODR - Letter of Determination Review LENDER 45 DAYS 49 Letter of Determination Review AE AE River AE River Road 50 24

25 Letter of Determination Review AE 45 DAYS AE River AE River Road 51 DO Letters of Map Change What is a LOMA? 52 25

26 LOMA - Letter of Map Amendment 26

27 55 27

28 57 DO Letters of Map Change What is a LOMR? 58 28

29 LOMR - Letter of Map Revision DO Letters of Map Change What is a LOMA Out as Shown? 60 29

30 LOMA Out as Shown AE AE River AE Riverside Road 30

31 Resources 64 31

32 National Flood Insurance Program Home Page 65 FloodSmart Online at:

33 Questions & Answers Questions & Answers About Flood Insurance for Real Estate Professionals Online at FloodSmart: Click Here 67 NFIP Flood Insurance Manual Access the NFIP Flood Insurance Manual: Online at the Flood Insurance Library:

34 The Flood Insurance Library The Flood Insurance Library includes: Manuals Handbooks Community Rating System Community Status Book Forms Guidelines Publications Standard Policies Summary of Coverage The link to the online Flood Insurance Library is: 69 Reform Act Legislation and more Online at:

35 Contact Information Rich Slevin Melanie Graham Sonja Wood Rich Waalkes Aaron Montanez 72 Any views or opinions presented in this webinar are solely those of the speakers. They do not represent the Federal Emergency Management Agency (FEMA), The National Flood Insurance Program (NFIP), any Federal Entity for Lending Regulation or Government Sponsored Enterprise (GSE). Always consult your regulatory entity for definitive guidance