National Flood Insurance Program 3. FEMA All rights reserved

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1 National Flood Insurance Program 3

2 Poll Question 1 A very upset property owner comes to you with a letter from the Bank. The letter states he has now been moved into a high risk zone and Flood Insurance is required. A quote shows the premium at $10,000/year. What do you do next? a. Jump for joy b. Hide under the desk c. Leave it to Beaver d. Remember that the NFIP s Grandfather Rules will help save money and recalculate his premium using the Grandfather Rules. 5

3 Training Agenda for Grandfather Rules Section 1 - What are the Grandfather Rules? Section 2 - PRP Eligibility Extension & Grandfather Rules Section 3 -Grandfather Rules Section 4 - Resources 6

4 Section 1 What are the Grandfather Rules? 7

5 What are the Grandfather Rules? Definition "An exemption based on circumstances previously existing. NFIP Flood Insurance Manual Online at the Flood Insurance Library:

6 What is Grandfathering? Not to penalize those that: Built in Compliance Maintain Continuous Coverage

7 What is Grandfathering? Why Grandfather?

8 When can I Grandfather? Those Maps are a-changing... Risk Mapping Better delineates Base Flood Elevation (BFE) Provides for more accurate rating Allows property owners to make more informed decisions

9 When can I Grandfather? Those Maps are a changing...

10 When can I Grandfather a Property? Those Maps are a changing... Risk Mapping Levees are being de-accredited

11 When can I Grandfather a Property? Those Maps are a-changing... Map Modernization Levees are being de-accredited Coastal Re-Mapping

12 When can I Grandfather a Property? Effects of Map Changes on Insurance Buildings move into a high-risk zone (A or V) from a low- or moderate risk zone (B,C,X) Buildings move into a low- or moderate risk zone (B, C, X) from a high-risk zone (A or V) There is a change in Base Flood Elevation (BFE) There is no change.but are they fully insured?

13 RATING Two Rating Approaches Pre-FIRM Old Standards Built before initial FIRM or On or before 12/31/1974 Post-FIRM New Standards or In Compliance On or After the initial FIRM or After 12/31/1974 whichever is LATER

14 Section 2 PRP Eligibility Extension 17

15 Preferred Risk PRP rates can not be Grandfathered. Building must be located in zones B, C or X on FIRM: At time of original application & At each subsequent renewal Previous flood loss criteria apply If map changes to SFHA, convert to standard policy using appropriate zone (B, C, X) PRP Eligibility Extension?

16 Extension of PRP Eligibility WYO Bulletin:W dated 07/15/2010 Effective 01/01/2011 Eligibility details for 2 year PRP Eligibility Extension after map change 19

17 Two-Year PRP Eligibility Extension 10/01/ /01/ /31/ Ongoing (1) Buildings newly designated within a SFHA due to map revision on or after 10/01/2008, and before 01/01/2011 Eligible for PRP for 2 policy years effective between 01/01/ /31/2012 (2) Buildings newly designated within a SFHA due to map revision on or after 01/01/2011 Eligible for PRP for 2 policy years Eligible for PRP for 22 policy years from effective date of map from effective date of of map change change 20

18 PRP Eligibility Extension Policy Mr. Del Luge 9/25/09 New Map Effective Date 1/1/11 PRP Rule Effective Date PRP Standard X Zone (Grandfathered) PRP 2 Years Standard X Zone Zone X $343 $1439 $343 $343 Zone AE $1439 9/15/09 Policy Date 9/15/10 Renewal Date 9/15/11 Renewal Date 9/15/12 Renewal Date 9/15/13 End of PRP Extension 21

19 Determining Eligible Property Holders NFIP and WYOs will attempt to identify all eligible policyholders in communities with new maps that are effective 10/1/2008 or later. WYO Companies will be sending out letters 90 days prior to Policy renewal to all Policyholders identified by them as being eligible. 22

20 Required Documentation Acceptable forms of documentation for the current and prior map information include: A Letter of Map Amendment (LOMA) A Letter of Map Revision (LOMR) A Letter of Determination Review (LODR) A copy of flood map marked to show the location and flood zone of the building A signed and dated letter from a local community official indicating the address, flood zone, map panel and map effective date 23

21 Required Documentation 24

22 Required Documentation Acceptable forms of documentation for the current and prior map information include: An Elevation Certificate (EC), indicating the address and flood zone of the building, that is signed and dated by a surveyor, engineer, architect, or local community official A flood zone determination certification that guarantees the accuracy of the information A FIRMette produced on the FEMA Map Service Center web site, that shows the flood zone of the building on the map in effect immediately prior to the current effective map. The previous and current zones must each be documented with 1 of the items from the list above Ask your WYO Company 25

23 Section 3 Grandfather Rules 26

24 Grandfathering Low risk zones to higher risk zones 27

25 Grandfather Rules Benefit Options Two Windows of Opportunity Use the current rating criteria for that property; or Have the premium rate determined by: Continuous Coverage when coverage was first obtained; or Built in Compliance the BFE and/or flood zone on the FIRM (old map) in effect when the building was originally constructed

26 Grandfather Rules - Pre-FIRM Options Policy in effect before the effective date of a map change is eligible to be grandfathered if: Continuous coverage is maintained No substantial damage or improvement Policy can be assigned to a new owner

27 Grandfather Rules Pre-FIRM Continuous Coverage 03/15/1986 Initial FIRM Date 05/11/2011 New Map Effective Date 1970s 1980s 1990s 2000s 2010s Pre-FIRM A Zone Rated Policy 1/1/11 Zone A Grandfathered Pre-FIRM A Rated Policy Zone VE 5/01/1974 Construction Date 3/15/1986 New Policy 3/15/2012 Renewal Date

28 Grandfather Rules Pre-FIRM Continuous Coverage Rating Comparison Pre-FIRM VE Zone $4,620/annually Over 30 years = $138,600 Pre-FIRM A Zone $2,235/annually Over 30 years = $67,050 Annual Difference = $2,385 Savings over 30 years = $71,550

29 Grandfather Rules Pre-FIRM Options 03/15/1998 Initial FIRM Date 07/01/2011 New Map Effective Date 1980s 1990s 2000s PRP Policy PRP Policy PRP Policy Grandfathered Standard X Zone X Zone Zone AE 6/10/1992 Construction Date PRP RULE 1/1/11 6/ New Policy 6/ Renewal Date 6/ Renewal Date 6/ Renewal Date

30 Grandfather Rules Pre-FIRM Options 03/15/1998 Initial FIRM Date 07/01/2011 New Map Effective Date 1980s 1990s 2000s X Zone PRP 2 years Pre-FIRM AE Zone Rate Zone AE Grandfathered X Zone 6/10/1992 Construction Date PRP RULE 1/1/11 7/ New Policy

31 Grandfather Rules Pre-FIRM Substantial Improvement 1976 Initial FIRM Date 09/01/2009 New Map Effective Date 1970s 1980s 2000s Pre-FIRM AE Zone Rate GRANDFATHERED Pre-FIRM AE Zone Rate Post-FIRM VE Zone Rate AE Zone Zone VE 1972 Construction Date 8/ New Policy 10/ Policy Renewal 12/2011 Renovation Date 10/ Policy Renewal

32 Grandfather Rules Post-FIRM Options Allows a property owner affected by recent map changes to: LOCK in a Flood Zone LOCK in a Base Flood Elevation

33 Continuous Coverage If policy was obtained prior to the effective date of the map change: Rates can be based on current zone/bfe Can be purchased up to the day before the map s effective date Can be assigned to a new owner 36

34 Grandfather Rules Post-FIRM - Continuous Coverage 1978 Initial FIRM Date 1994 New Map Effective Date 2010 New Map Effective Date 1970s 1980s 1990s 2000s 2010s GRANDFATHERED Post-FIRM Post-FIRM AE Zone Rated AE Zone Rated BFE +10 BFE 10 1/1/11 Unnumbered Zone A AE Zone BFE +10 AE Zone BFE Construction Date 1994 New Policy 2010 Grandfathered Policy

35 Grandfather Rules Post-FIRM - Built in Compliance 1993 Initial FIRM Date 2011 New Map Effective Date 1980s 1990s 2000s GRANDFATHERD Post-FIRM AE Zone + 1 Elevation 1/1/11 Zone AE BFE 10 Zone AE BFE Construction Date 2011 New Policy

36 What s the best rate? OPTION 2 OPTION 1 Buy Insurance BEFORE map changes Use OLD zone or BFE at time of construction Best Rate? OPTION 3 Use NEW Zone or/bfe REMEMBER that Zone X may not be the best rate! 39

37 Which Zone Do You Use? Pre-FIRM Example At BFE At BFE Locked X Zone (Standard X Zone) $1,439** New AE Zone (At BFE) $1,534 **After PRP eligibility is no longer available *$200K/$80K Building/Contents -Jan

38 Which Zone Do You Use? Post-FIRM Example +2 above BFE +2 above BFE Locked X Zone (Standard X Zone) $1,435** New AE Zone (+2 BFE) $570 **After PRP eligibility is no longer available *$200K/$80K Building/Contents-Jan

39 Grandfather Rules - Summary Pre- FIRM Continuous Coverage Post-FIRM Continuous Coverage Built to Compliance

40 Conversion High-Risk to a Low-Moderate Risk Zone 43

41 Conversion For properties moving from high to low-moderate risk zones. Created to encourage policyholders to maintain coverage The risk is not eliminated only reduced! 44

42 Conversion - Procedure Ensure property is eligible for PRP Chose proper PRP building limit (Note: contents may be included) Rewrite existing SFIP as a PRP, using last renewal date before map change 45

43 Conversion - Procedure No gaps in coverage A refund to the policyholder Strengthened customer loyalty Agent keeps commission on old and new policy 46

44 Properties with No Change CHANGE 47

45 Properties with No Change Still at risk If currently has flood insurance: Replacement cost? Contents? If not currently covered for flood: Qualify for a PRP? Reject coverage? 48

46 Section 4 Resources 49

47 Resources FloodSmart.gov Consumer site Agent site: Map Change and Levee Outreach Toolkits FEMA Resource Library FEMA Workshops Map Service Center (including historic maps) FEMA Map Information exchange (FMIX) FEMA MAP NFIP iservice

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50 FloodSmart.gov

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52 FloodSmart.gov 55 55

53 FEMA s Map Service Center 56

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60 FEMA s Map Service Center 63

61 FEMA s Map Service Center Historic Flood Maps 64

62 Historic Flood FEMA s Maps Map Service Center 65

63 Historic Flood FEMA s Maps Map Service Center 66

64 NFIP iservice 67

65 Resources NFIP Training The NFIP/H2O webinars and instructor-led training seminars may be accessed at: (click on the upcoming tab) Agents: Lenders: H2O Trainers: Melanie Graham: Dorothy Martinez: Rich Slevin: Rich Waalkes: Sonja Wood: 68

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