Flood Insurance and Flood Zone Designations-The basics of Flood insurance, history of the NFIP, Options available in 2017 & 2018. WWW.NationalFloodInsurance.Org

1. Flood Insurance 101
Kim Burke
National Flood Insurance, LLC

2. What We Will Cover…
➢ Who is the NFIP?
➢ What is a Flood?
➢ Flood Basics
➢ Flood Zones
➢ Flood Zone Remapping
➢ Flood Insurance Reform
➢ NFIP vs. Private Options
➢ Helpful Resources

3. What is the National Flood Insurance
Program (NFIP)?
The NFIP is a Federal program, managed by the Federal
Emergency Management Administration (FEMA), and has
three components: to provide flood insurance, to improve
floodplain management and to develop maps of flood
hazard zones.

4. Why the NFIP?
The National Flood Insurance Program was created in 1968 because private flood insurers stopped
writing such coverage as a result of the losses that they suffered. Private insurers simply got tired of
paying claims on homes subject to flooding and were scared off by the continued catastrophic nature
of flood losses.
Without flood insurance in areas prone to flooding, it’s nearly impossible to obtain a mortgage and,
thus, when private insurers abandoned the marketplace all those years ago there was an immediate
impact to property owners, realtors, lenders, and others that forced the government to step in and
create a subsidized solution called the National Flood Insurance Program (NFIP). Today the NFIP
operates under the Federal Emergency Management Administration (FEMA) and within the
Department of Homeland Security. In 1983, NFIP created a popular Write Your Own program that
allowed private insurers to sell and process flood insurance by using NFIP’s rates, rules, and
regulations.

5. What is a
Flood?
According to the National Flood
Insurance Program (NFIP)...
● A general and temporary condition of partial
or complete inundation of 2 or more acres of
normally dry land area or of 2 or more
properties (at least 1 of which is the
policyholder's property) from:
*Overflow of inland or tidal waters; or Unusual and
rapid accumulation or runoff of surface waters from
any source; *OR--Mudflow ;or
● Collapse or subsidence of land along the
shore of a lake or similar body of water as a
result of erosion or undermining caused by
waves or currents of water exceeding
anticipated cyclical levels that result in a flood
as defined above.

6. Flood Basics;
Elevation Certificates, BFE, Grandfathering
What is BFE?
Base Flood Elevation is a measurement, determined by FEMA flood studies, that represents
the point above sea level to which water will rise when a flood occurs.
What is FIRM?
FIRM stand for Flood Insurance Rate Map represents the date the original flood mapping for
an area was done by FEMA. Built Before=Pre-Firm, Built After=Post-Firm
What is an Elevation Certificate?
An elevation certificate is a form prepared by a land surveyor indicating the elevations of a
structure and its key components so they can be compared to the BFE for the land the structure
was built on.
What is Grandfathering?
Allows Policyholders the option of using risk data from previous FIRMs if they maintained
continuous coverage or if the building was constructed “in Compliance” with requirements of the
zone and BFE reflected on previous FIRM.

7. Flood Zones
The Federal Emergency Management
Agency develops Flood Insurance
Rate Maps to show potential Flood
Areas. These maps are used by home
lending organizations and Insurance
companies to determine if Flood
Insurance may be mandatory for a
homeowner. An A or V zone
determination would be considered
Mandatory.

8. Flood Zones…
The Country is divided into low-risk
zones and high-risk zones. The zone
designation indicates the structures
risk of flooding from the nearest
water sources.
Low Risk Zones: (.2% annual chance)
● B, C, & X
● 25% of Catastrophic losses occur in low
risk zones
High Risk Zones: (1% annual chance)
● A & V Zones, Anything other than
B, C, & X

9. Flood Zone Remapping
Remapping is occurring now and will
continue for years. With the
continually changing landscapes, the
risk of flooding changes, too. That
means that some property owners
may not be aware of the significant
change in their risk factor.
Remapping is an effort to maintain
accuracy in evaluating those risks.
The FEMA Remapping project (also
called Map Modernization) is a
multi-year initiative that will update
flood zone maps in more than 20,000
communities across the country. To
accomplish this, FEMA is working
closely with various associations and
private sector partners to produce
detailed, digital flood hazard maps.

10. Impactful Legislation
Flood Insurance Reform Act of 2012
Biggert Waters Act; Changes effective June 1st 2014 For Pre-FIRM
subsidized properties ONLY the definition of primary residence changes
to “A building that will be lived in by the insured or insured’s spouse for
more than 50% of the 365 days following the policy effective date” (was
previously 80%)
**For claim settlement the insured still must reside in the property 80%
of the 365 days preceding the loss in order to be paid replacement cost
on the dwelling. A signed verification or proof of primary residence will
now be required (license, auto registration, proof of vehicle insurance,
voter registration or 2 others) Deductible changes In some programs the
minimum deductible may now be $1250 or $1500 versus $1000.

11. Impactful Legislation
Flood Insurance Affordability Act of 2014
Homeowners Flood Insurance Affordability Act of 2014 Major
Elements include Preventing FEMA from raising average rates above
15% for a class of properties and above 18% on individual policies
per year Requiring FEMA to refund policyholders
for ‘overpaid’ premiums
Provisions requiring pre-FIRM property owners to pay the full risk
rate if they voluntarily purchase a private policy.
Cont…

12. Impactful Legislation
Flood Insurance Affordability Act of 2014
Implementation Guidelines: In order to enable new purchasers of properties to retain
Pre-FIRM rates, a new purchaser will be allowed to assume the prior owner’s flood insurance
policy and retain the same rates until guidance is finalized.
Refunds: Refunds apply to: policyholders in high-risk areas who were required to pay their
full-risk rate after purchasing a new flood insurance policy on or after July 6th , 2012
Refunds may apply to: policyholders who renewed their policy after the Homeowners Flood
Insurance Affordability Act was enacted on March 21st , 2014 and whose premium increased
more than 18 percent.
The new law requires gradual rate increases to properties now receiving artificially low (or
subsidized) rates instead of immediate increases to full-risk rates. A new surcharge will be
added to all policies to offset the subsidized policies. A policy for a primary residence will
include a $25 surcharge. All other policies will include a $250 surcharge. The fee will be
included on all policies, including full-risk rated policies until all Pre-FIRM subsidies are
eliminated.

13. ● Flooding is the most common type of
natural disaster worldwide - about 40% of
all natural disasters involve flooding.
● 75% of all Presidential disaster
declarations are associated with flooding.
● Homeowners Insurance typically does not
include flood related damage.This means
you need a separate flood insurance quote
and policy in addition to your homeowner
insurance policy.
● In a 30-year mortgage, a home has a 26%
chance of being damaged by a flood
compared to a 9% chance of fire.
● Only 12% of U.S. homeowners have flood insurance,
according to a 2016 poll conducted by the Insurance
Information Institute.
● Hurricane Katrina, the most costly US hurricane
to-date, caused severe destruction along the Gulf
coast from central Florida to Texas, with majority of
the damage coming from storm surge and levee
failure in Mississippi and Louisiana.
● Flooding in Florida is one of the state’s most
frequent hazards – especially in cities like Miami
and Tampa where there is relatively flat terrain with
nowhere for accumulated water to drain.
Flood Facts…

14. Insurance Options; National Flood Insurance Program vs. Private Options
NFIP Coverage:
Federally backed policy
$250,000 for Building
(includes debris removal)
Replacement cost as long
as the building is insured
for 80% of the replacement
cost at the time of loss;
otherwise actual cash
value. $100,000 for
Contents Always actual
cash value (no coverage for
contents in a basement)
additional stipulations on
Replacement Cost Value is
must be single family
dwelling, occupied 80% of
the year, and 80% of RCV or
maximum available from
NFIP.
Private Coverage:
Ability to offer higher coverage
limits. Often including
Replacement Cost on your building
and personal property, as well as
broader coverage for other
structures on your property.
Additional living expense coverage
for homeowners and Business
Income Expense coverage for
commercial properties are also
available through private
insurers.Convenience factors;
private insurers generally don’t
require the 30-day waiting period
that is mandated when enrolling in
the NFIP. Furthermore, the ability
to send out a single adjuster to
assess wind and flood damage is
also an added value.

15. Resources
NFIP Website: https://www.floodsmart.gov/floodsmart/
Map Service Center https
://msc.fema.gov/webapp/wcs/stores/servlet/FemaWelcomeView?storeId=10001&catalogId=1000 1
Flood Map Update Scheduler:https://
www.floodsmart.gov/floodsmart/pages/flooding_flood_risks/map_update_schedule.jsp
Preliminary FEMA Map Products http://hazards.fema.gov/femaportal/prelimdownload
Flood Facts: http://www.NationalFloodInsurance.org
Flood Facts: http://www.insurancejournal.com/news/national/2017/06/15/454580.htm