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Cost of Flood: Insurance Agents

This page provides important information to help National Flood Insurance Program (NFIP) policyholders, insurance agents and others understand letters all NFIP policyholders will be receiving each year, starting in January 2017.

Policyholders will receive the letters as notification that a review of their property's flood risk has been done. There will be an explanation of what was found and how the flood risk will impact what they pay for flood insurance. For some, having an Elevation Certificate (EC) may lead to lower flood insurance costs immediately or in the future.

Find what you need: This page has been created to help insurance agents address questions and concerns policyholders may have about letters they will be receiving approximately two months after their flood policy renews each year, starting in January 2017. On this page you will find:

  • Information about your role and responsibilities, as an insurance agent, concerning Elevation Certificates.
  • Links to copies of the letters policyholders will receive.
  • Answers to questions you may get about each letter.
  • Information about the clear communication of risk initiative and associated guidance.
  • Details about the re-underwriting process.

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Elevation Certificates: Insurance Agents' Responsibilities

As an insurance agent for the National Flood Insurance Program, it is your responsibility to help your clients understand and utilize Elevation Certificates. Here are some things to know and do:

  1. For each of your NFIP clients, use the information on this and the policyholder page, as well as any rating tools you ordinarily use in conjunction with the Flood Insurance Manual, to determine, whether getting an EC right away is best, or if waiting until a future date would be best. These resources can help you guide your client’s decision-making process. If you need additional guidance, contact your underwriting department.
  2. For each client, if an EC might be financially beneficial, determine if there’s already one in existence for that building (if your insurance company does not have one, there might be one on file at the policyholder’s local floodplain manager’s office) and if there is, determine if it can be used (i.e., the building elevation hasn’t changed).
  3. If your client decides to get an EC, explain who (licensed engineer, architect, or surveyor) can provide one, how to get it, and what to do with it once they have it.
  4. Once your client has an EC, review the rate he/she would get utilizing it, each year at the time of renewal. Agents are responsible for determining the best rate and coverage for their clients, so this is a vital step that must be done every year.

LETTER A (Buildings Newly Mapped Into A High-Risk Flood Area)

Read LETTER A.

It may also be very useful to look at the LETTER A graph on the policyholders' page depicting if or when an Elevation Certificate could benefit your client.

Background: Federal law requires that certain NFIP flood insurance premiums reflect a property’s true flood risk. Your client is currently paying premiums that reflect a lower risk than what is shown on the most recent flood map (Flood Insurance Rate Map*). This increase in risk can mean a significant rise in the cost of your client’s flood insurance policy. Because this increase could result in a financial burden, annual premiums will increase 15 percent until they reach true flood risk rates. After that, policyholders will continue to see annual increases in premium due to adjustments like inflation. An Elevation Certificate (EC), when used with a flood map, helps determine the true flood risk associated with a specific building. Read more in the Newly Mapped fact sheet.

You should know:

  • Your client is currently receiving a discounted premium that will be increasing each year by 15 percent.
  • For some, having an Elevation Certificate may eventually be financially beneficial, but it will probably take at least a few years before a rate based on it will be less expensive than the discounted rate, even with the yearly increases.

Questions and Answers

1. Question: Why did my client receive this letter?

Answer: FEMA is sending letters to your client to communicate their known flood risk and how it relates to the premium they are being charged. Your client received LETTER A because the flood map (Flood Insurance Rate Map*) for their property was revised newly mapping their property into a high-risk flood area. Policyholders receiving this letter have flood insurance premiums calculated under the Newly Mapped rating procedure as described in the NFIP’s Flood Insurance Manual. In addition to educating your client about their flood risk, the letter also describes the impact map changes have on flood insurance premiums, and explains why it may eventually be financially beneficial--though, in their case, probably not for a few years-- to get an Elevation Certificate.

2. Question: How much will my client’s premium increase per year without an Elevation Certificate?

Answer: The increases will be 15, not to exceed 18, percent per year.

3. Question: Will obtaining an Elevation Certificate benefit my client? Also see the graphs on the policyholders' page.

Answer: It could, eventually. The elevation information provided on the EC reflects the true risk for flood damage, and when it’s used with the current flood map for the area, it allows you to calculate a premium that more accurately reflects the property’s true flood risk. It may eventually be financially beneficial to get an Elevation Certificate, but for most policyholders using the Newly Mapped procedure it will probably take years before having one will save them money on their flood insurance.

4. Question: When should my client purchase an Elevation Certificate?

Answer: Talk to your client about their options. They may ask about if having one could be financially beneficial to them, and if so, when it would be.

You should consider the information below when helping your client decide the right time for purchasing an EC:

  • There's no down side to having an Elevation Certificate. Even if they get one, they can still pay the discounted rate if it’s lower, for as long as it’s lower, as long as the policy does not meet the lapsed policy* criteria.
  • There’s no way to know when having an Elevation Certificate could be financially beneficial until your client gets one.
  • An Elevation Certificate will provide information that will determine the property’s true flood risk.
  • Even though your client is experiencing annual premium increases, future premiums will likely be less than the true risk rate for at least a few years from now. This means it will likely be quite some time before rating based on true flood risk, as would be done using an Elevation Certificate, would be financially beneficial.
  • Until the policyholder obtains an Elevation Certificate, annual increases related to true-risk rating will continue indefinitely.

5. Question: If the use of an Elevation Certificate results in a higher premium can I continue to renew the policy as is until the true-risk rate is reached?

Answer: Yes, your client may continue to pay the lower rate, as long as the policy does not meet the lapsed policy* criteria.

6. Question: If my client purchases an Elevation Certificate and it qualifies them for a lower premium, can they receive refunds for prior-policy terms, even though they did not have an Elevation Certificate?

Answer: No, only a partial refund will be issued for current policy term, as of the date of the EC, but prior-year refunds are not available.

7. Question: What happens if my client allows their flood policy to lapse (meet lapsed policy* criteria)?

Answer: If your client allows the policy to lapse for more than 90 days, or twice for any length of time, an Elevation Certificate may be required and they will no longer be eligible for the discounted rate. Learn more here.

8. Question: How can my client obtain an Elevation Certificate?

Answer: The first thing they should do is to contact their local floodplain manager and find out if one is on file for the property. If not, they can hire a land surveyor, engineer, or architect to complete one. The floodplain manager often works for or in a community's local building, permitting, engineering or land use department.

9. Question: What resources are available to help me and my client better understand their situation?

Answer: Your client is encouraged to review LETTER A information on the policyholders' page, which includes graphs to help explain the cost of flooding and more information related to Elevation Certificates.

LETTER B (Buildings Standard Rated And Located Outside Of The High-Risk Flood Area)

Read LETTER B.

Questions and Answers

1. Question: Why did my client receive this letter?

Answer: FEMA is sending letters to your client to communicate their known flood risk and how it relates to the premium they are being charged. Your client received LETTER B as their building is standard-rated and located outside of the high-risk flood area (Special Flood Hazard Area) on the current flood map. The letter advises your client of their flood risk and makes them aware of the PRP rating for eligible properties. Your client may not be eligible for the Preferred Risk Policy (PRP) due to loss history requirements. Underwriting requirements for using PRP rating are in the PRP section of the NFIP’s Flood Insurance Manual. You may receive a call from your client asking about the PRP rating option, please contact the insurer with questions about how the eligibility criteria applies to your client.

2. Question: How does the policyholder benefit from keeping a flood insurance policy if the risk is moderate to low?

Answer: More than 20 percent of NFIP flood claims come from properties located outside the high-risk flood zone. Purchasing and maintaining flood insurance is always an excellent decision, even in moderate- to low-risk flood areas because flooding can happen anywhere.

3. Question: Can I convert a standard-rated policy to a PRP mid-term?

Answer: Yes, by either endorsement or a policy/rewrite cancellation for eligible properties. The procedure for converting a standard-rated policy to a PRP is in the Preferred Risk Policy section of the NFIP’s Flood Insurance Manual.

4. Question: Are prior-year refunds available for policy conversions?

Answer: Yes, your client may qualify for prior-year refunds of up to 5 years, but only if no claim has been paid or is pending on the policy term being endorsed or canceled.

5. Question: What resources are available to help me and my client better understand the eligibility requirements for a PRP?

Answer: The NFIP’s Flood Insurance Manual is your best source for answering questions about the PRP.

LETTER C (Buildings Grandfather Rated, and In A High-Risk Flood Area)

Read LETTER C.

It may be helpful to review the information on the policyholders' page for LETTER C, as well as the section entitled, How Can I Pay Less for My Flood Insurance?

Background: Your client is being rated using the grandfather rating procedure and is paying a premium that reflects a lower risk than that indicated on the most recent flood map (Flood Insurance Rate Map*). However, that rate will be increasing each year because of recent NFIP legislation, including HFIAA*. It may be more affordable immediately or sometime soon for your client to get an Elevation Certificate and have the policy rated based on the current flood map. Read more about the Grandfathering Rule.

You should know:

  • Flood insurance rates are going up, including for properties that are grandfather rated.
  • Rating the policy using an Elevation Certificate (which includes building information like the elevation) and basing it on the current flood map may reduce your client’s annual premium.
  • If your client gets an Elevation Certificate and a rate based on it is higher than the discounted (based on grandfathering) rate they have been receiving, they can still pay the discounted rate if it’s lower, for as long as it’s lower, as long as the policy does not meet the lapsed policy* criteria. 

1. Question: Why did my client receive this letter?

Answer: FEMA is sending letters to your client to communicate their known flood risk and how it relates to the premium they are being charged. Your client received LETTER C because they are being rated using the grandfathering rating procedure. The current flood map shows their property to be at high risk for flooding. The letter educates your client about their flood risk and about how an Elevation Certificate may lead to an immediate or eventual savings on their flood insurance premium.

2. Question: How might obtaining an Elevation Certificate benefit my client? Also see the graphs on the policyholders' page.

Answer: The elevation information provided in the EC helps determine the building’s true risk for flood damage and allows you to calculate a premium that more accurately reflects this risk.

3. Question: When should my client purchase an Elevation Certificate? Also see the graphs on the policyholders' page.

Answer: About half of the policyholders who receive this letter will immediately benefit (financially) from having an Elevation Certificate. Most policyholders will eventually benefit from having an EC, but there’s no way to know who will benefit or when until one is obtained.

You should consider these things when helping your client decide the right time for purchasing an Elevation Certificate:

  • The EC will provide information that will allow you to calculate a premium based on the specific characteristics of your client’s building.

4. Question: If the use of the EC results in a higher premium, can I continue to be rated using the grandfather rating procedure if it results in a lower premium?

Answer: Yes, but only if the policy does not meet the qualifications of a lapsed policy* under Commonly Used Terms on this page.

5. Question: What happens if my client allows their flood policy to lapse?

Answer: If your client allows the policy to lapse for more than 90 days, or twice for any length of time, he/she may no longer qualify for the grandfather rating procedure and an EC may be required. Learn more here.

6. Question: here can my client purchase an Elevation Certificate?

Answer: The first thing to do is to check with their local floodplain manager to see if one is on file for the property. If not, your client can hire a land surveyor, engineer, or architect to complete one. The floodplain manager often works for or in a community's local building, permitting, engineering or land use department.

7. Question: What resources are available to help me and my client better understand their situation?

Answer: More information about LETTER C, including when having an Elevation Certificate could be beneficial, can be found on the policyholders' page.

LETTER D (Primary Residential Pre-FIRM Buildings In A High-Risk Flood Area, Paying A Discounted Rate)

Read LETTER D.

It may be helpful to review the information on the policyholders' page for LETTER D, as well as the section entitled, How Can I Pay Less for My Flood Insurance?

Background: Your client is currently paying a discounted flood insurance rate and will notice gradual, incremental increases to their flood insurance premiums until those premiums reflect the true flood risk associated with their insured building. The rate has been discounted by the federal government because the building was constructed prior to when your client’s community adopted FEMA’s minimum floodplain management requirements. Today, as rates transition to reflect true flood risk, many of your clients who are receiving LETTER D will benefit from using an Elevation Certificate to determine their building’s true flood risk and switching to a rate based on it soon.

You should know:
Your client's premium is currently discounted, based on rates that are being phased out using annual premium increases of between 5 and 18 percent. There will come a time, and for many of your client this will be immediately or soon, when switching to a rate based on using an Elevation Certificate will be beneficial.

1. Question: Why did my client receive this letter?

Answer: FEMA is sending letters to your client to communicate their known flood risk and how it relates to the premium they are being charged. Your client received LETTER D to explain their current policy rating and discuss how and when Elevation Certificates can be useful. Your client will see an annual premium increase of between 5 and 18 percent for their primary residences constructed or substantially improved on or before Dec. 31, 1975, or before the effective date of the community’s initial Flood Insurance Rate Map* (pre-FIRM*), whichever is later. If the client gets an Elevation Certificate he or she can continue to pay the discounted (but increasing yearly) rate for as long as it’s lower than a rate based on the true flood risk (determined by using the EC).

2. Question: When should your client get an Elevation Certificate? Also see the graphs on the policyholders' page.

Answer: Many clients receiving LETTER D will benefit from using an Elevation Certificate to rate their policy instead of paying the discounted rate they have been paying. The question is, when they will benefit? It may be soon, or it may not be for a while. The only way to know when it will be financially beneficial to have an Elevation Certificate, will be to get one. The graph and other information found on the policyholders' page for LETTER D, may be helpful.

Consider the information below when helping your client decide when to get an EC:

  • There’s no down side to having an Elevation Certificate because if a rate based on using it is higher than the discounted rate, they can continue to pay the discounted rate if it's lower, and as long as their policy doesn't meet the lapsed policy* criteria.
  • Rating the policy based on the Elevation Certificate will result in a rating based on their true flood risk that will likely be less than the increasing discounted rate immediately, soon, or in the next few years.
  • The EC will provide information that will lead to a true flood risk determination for the building.
  • The only way to know when having an Elevation Certificate will be financially beneficial is to get one.
  • Until your client gets an Elevation Certificate, there's no way to predict when the 5 to 18 percent yearly increases will stop.

3. Question: If the use of the Elevation Certificate results in a higher annual premium, may I continue to renew the policy at the lower premium?

Answer: Yes, use whichever rating option is most beneficial to your client.

4. Question: If my client purchases an Elevation Certificate and it qualifies them for a lower premium, can they receive refunds for prior-policy terms, even though they did not have an Elevation Certificate?

Answer: No, only a partial refund will be issued for current policy term, as of the date of the EC, but prior-year refunds are not available.

5. Question: What happens if my client allows their flood policy to lapse?

Answer: If your client allows the policy to lapse for more than 90 days, or twice for any length of time, an Elevation Certificate may be required and they will no longer be eligible for the discounted rate. Learn more here.

6. Question: Where can my client get an Elevation Certificate?

Answer: They should first contact their local floodplain manager to see if one is on file. If not, your client can hire a land surveyor, engineer, or architect to complete one. The floodplain manager often works for or in a community's local building, permitting, engineering or land use department.

7. Question: What resources are available to help me and my client better understand their situation?

Answer: Your client received LETTER D. Your client will find information, including graphs to help them determine when getting an Elevation Certificate could be financially beneficial, on the policyholders' page.

LETTER E (Non-Primary Pre-FIRM Buildings In A High-Risk Flood Area, Paying A Discounted Rate)

Read LETTER E.

It may be helpful to review the information on the policyholders' page for LETTER E, as well as the section entitled, How Can I Pay Less for My Flood Insurance?

Background: Federal law requires that NFIP flood insurance premiums that don’t already reflect true flood risk gradually increase until they do. Your client is currently paying premiums that are discounted by the federal government because the building was constructed prior to when the community adopted FEMA’s minimum floodplain management requirements. These rates do not reflect actual the flood risk associated with your property and per HFIAA* they will be increasing 25 percent per year to move you toward paying a rate based on true flood risk. An Elevation Certificate (EC) provides the information needed to determine a property’s true risk for flood damage, and may help reduce the cost of your client’s flood insurance policy immediately or soon.

You should know:

  • Your client’s premium is currently discounted and the discount is being phased out using 25 percent per year increases.
  • Rating the policy based on the Elevation Certificate will result in a rating based on their true flood risk that will likely be less than the increasing discounted rate immediately, soon, or in the next few years.
  • Having an Elevation Certificate will help most of these policyholders in the near future.
  • An Elevation Certificate is necessary to determine the true-risk rate.
  • The only way to know when an Elevation Certificate may be financially beneficial is to get one.
  • There’s no down side to having an Elevation Certificate because if a rate based on using it is higher than the discounted rate, they can continue to pay the discounted rate if it's lower, and as long as their policy doesn't meet the lapsed policy* criteria.

Questions and Answers

1. Question: Why did my client receive this letter?

Answer: FEMA is sending letters to your client to communicate their known flood risk and how it relates to the premium they are being charged. Your client received LETTER E as their buildings were constructed or substantially improved on or before Dec. 31, 1975, or before the effective date of the community’s initial Flood Insurance Rate Map* (pre-FIRM), whichever is later. The letter alerts your client to their flood risk, the 25 percent annual premium increase, and that having an Elevation Certificate could be beneficial immediately or in the near future.

2, Question: When should the policyholder purchase an Elevation Certificate (EC)?

Answer: For some of your clients, purchasing an EC sooner rather than later may be financially beneficial because the 25 percent per year increases to their discounted rate may soon make it higher than the true flood risk rate they would be paying utilizing an EC. There’s no way to know when having one will be beneficial, but if your clients wait too long to get one and end up overpaying for flood insurance, they won’t be able to get a refund for the overpayment.

The information below may help your client decide when to obtain an EC:

  • The discounted rate your client is paying may be more expensive than a rate based on true flood risk (determined by getting an Elevation Certificate) immediately or soon. See the graphs on the policyholders' page for LETTER E.
  • The EC will provide information needed to help determine the property’s true risk.
  • The only way to know when an Elevation Certificate will be financially beneficial is to get one.
  • The larger 25 percent per year increases cannot stop until you use an Elevation Certificate to rate the policy based on its true flood risk.

3. Question: If the use of the Elevation Certificate results in a higher annual premium, may I continue to renew the policy at the lower premium?

Answer: Yes, use whichever rating option is most beneficial to your client.

4. Question: If my client purchases an Elevation Certificate and it qualifies them for a lower premium, can they receive refunds for prior-policy terms, even though they did not have an Elevation Certificate?

Answer: No, only a ;partial refund will be issued for current policy term, as of the date of the EC, but prior-year refunds are not available.

5. Question: What happens if my client allows their flood policy to lapse?

Answer: If your client allows the policy to lapse for more than 90 days, or twice for any length of time, an Elevation Certificate may be required and they will no longer be eligible for the discounted rate. Learn more here.

6. Question: Where can my client get an Elevation Certificate?

Answer: The first thing to do is to check with their local floodplain manager to find out if there is one on file. If not, your client can hire a land surveyor, engineer, or architect to complete one. The floodplain manager often works for or in a community's local building, permitting, engineering or land use department.

7. Question: What resources are available to help me and my client better understand their situation?

Answer: Policyholders can find information pertaining to LETTER E, including graphs that can help them determine when getting an Elevation Certificate could be beneficial, on the policyholders' page.

LETTER F (Buildings Mapped Outside Of A High-Risk Flood Area, And Insured With A Preferred Risk Policy [PRP])

Read LETTER F.

Background: Your insured’s property is located in an area of moderate to low risk for experiencing a major flood event known as the Base Flood, or one having a 1-percent or greater chance of occurring in any given year.  This is good news for three reasons:

  • The likelihood for a major flood loss is reduced because the property is located outside of a high-risk flood area,
  • Your insured is currently enjoying a lower cost flood insurance premium because they purchased a Preferred Risk Policy (PRP), and
  • As long as the building has an acceptable flood loss history, you can continue to renew their coverage using the PRP rating structure.

You should know:

  • Moderate to low risk of flooding doesn’t mean you have no risk! In fact, nearly 20 percent of all NFIP flood insurance claims come from areas outside of mapped high-risk flood zones*.
  • It is important your insured understands their flood risk and that they keep their flood insurance coverage.
  • PRP rating is reserved for properties with an acceptable flood loss history and that are located in B, C and X zones.  Please refer to the PRP Section of the NFIP Flood Insurance annual (insert link) to read the underwriting criteria for PRP rating.
  • When a property no longer meets the underwriting criteria for PRP rating, it must be converted to a standard rated B, C or X zone rated policy, which is more expensive.

Questions and Answers

1.  Question: Why did my client receive this letter?

Answer: FEMA is sending letters to your client to communicate their known flood risk and how it relates to the premium they are being charged. Your client received LETTER F because their building is located in an area of moderate-low risk and they are receiving the lower policy premium through the PRP rating structure.

2. Question: Where can I find the procedure for converting a PRP to a standard rated policy? 

Answer:  The procedure for converting a PRP to a standard rated B, C or X zone policy is found in the PRP Section of the NFIP Flood Insurance Manual (insert link).  You can always contact your flood insurance carrier with questions related to NFIP flood insurance products and procedures.

3. Question: What resources are available to help me and my client better understand their situation?

Answer: Policyholders can find information pertaining to LETTER F on the policyholders' page.

What should I do if my client believes he/she has received the wrong FEMA letter (e.g. LETTER A, LETTER B, LETTER C, etc.) or information (e.g. flood zone) in the letter is incorrect?

Verify the correct information with the policyholder and contact the insurance company.

What Does This Term Mean? (Defining terms found on this page and in your letter)

Base Flood

Base Flood: The flood having a one percent chance of being equaled or exceeded in any given year.

Base Flood Elevation (BFE)

Base Flood Elevation (BFE): The computed elevation to which floodwater is anticipated to reach during the base flood. Base Flood Elevations (BFEs) are shown on Flood Insurance Rate Maps* (FIRMs) and on the flood profiles. The BFE is the minimum elevation a community must adopt for building standards and is the regulatory requirement for the elevation or floodproofing of structures. The relationship between the BFE and a building's elevation determines the flood insurance premium. Elevation Certificates show more precise BFEs for individual buildings, so when used together with FIRMs*, true flood risk and a risk-based flood insurance premium can be determined.

Basement

Basement (as defined by the National Flood Insurance Program): Any area of the building having its floor subgrade (below ground level) on all sides. The lowest floor of a residential building, including the basement, must be above the Base Flood Elevation (BFE). Basements below the BFE are only allowed in communities that have obtained a basement exception from FEMA. Floodproofed non-residential basements are allowed.

Slab-on Grade

Slab-on Grade (Diagram of house, below): The simplest definition is that a slab-on-grade building has no basement or basement walls; the building is built on one slab of concrete and one usually walks either straight into the first floor from outside, or up just several steps.

Diagram of a house build slab on grade style.

Caption: This house has no basement or crawlspace and the first floor is at ground level. It's a typical slab on grade style building.

Crawlspace

Crawlspace: Crawlspace foundations are commonly used in some parts of the nation to elevate the lowest floors of residential buildings located in Special Flood Hazard Areas* above the Base Flood Elevation*. Crawlspaces should be constructed so that the floor of the crawlspace is at or above the lowest grade adjacent to the building. Crawlspaces that have their floors below BFE must have openings to allow the equalization of flood forces.

Recent FEMA guidance now allows crawlspaces to have their floors up to two feet below the lowest adjacent grade under certain circumstances although this is discouraged. Below-grade crawlspace foundation walls are exposed to increased forces during flood conditions, such as hydrostatic and saturated soil forces. Guidance on the National Flood Insurance Program (NFIP) minimum requirements for crawlspace construction in the high-risk flood zone is provided in Technical Bulletin 11, Crawlspace Construction for Buildings Located in Special Flood Hazard Areas.

Buildings that have below-grade crawlspaces will have higher flood insurance premiums than buildings that have the interior elevation of the crawlspace at or above the lowest adjacent exterior grade.

Elevation Certificate

Elevation Certificate: An EC is an important tool that documents your building’s elevation. Knowing a building's precise elevation can help insurers make more informed decisions about a building's true flood risk and therefore determine how much to charge for flood insurance. Learn more about Elevation Certificates --who needs one and where and how to get one.

The Federal Policy Fee

The Federal Policy Fee (FPF): is used to offset costs involved in administering the NFIP. The FPF also been included in your premium since you first obtained coverage, although it has increased gradually in cost over time.

Flood Insurance Rate Map

Flood Insurance Rate Map (FIRM):The official map of a community on which FEMA has delineated both the special hazard areas and the risk premium zones applicable to the community. You can view flood zones and Base Flood Elevations on the flood map for your address at the Flood Map Service Center.

Flood or Flooding

Flood or Flooding: A general and temporary condition of partial or complete inundation of normally dry land areas from:

  1. The overflow of inland or tidal waters;
  2. The unusual and rapid accumulation or runoff of surface waters from any source;
  3. Mudslides (i.e., mudflows) which are proximately caused by flooding and are akin to a river of liquid and flowing mud on the surfaces of normally dry land areas, as when earth is carried by a current of water and deposited along the path of the current.

A flood inundates a floodplain. Most floods fall into three major categories: riverine flooding, coastal flooding, and shallow flooding. Alluvial fan flooding is another type of flooding more common in the mountainous western states.

Flood Zones

Read about the map zones is in the Flood Maps section of the most recent Flood Insurance Manual.

Homeowner Flood Insurance Affordability Act of 2014 (HFIAA)

Homeowner Flood Insurance Affordability Act of 2014 (HFIAA): This law means policyholders currently paying artificially low (or discounted) flood insurance rates will notice gradual, incremental increases to their flood insurance premiums until those premiums reflect the true flood risk associated with their insured building. The incremental increases to premiums for most properties receiving these discounted policy rates will be no less than 5 to 15 percent annually within a single risk class, but no more than 18 percent annually for an individual policyholder. Approximately 80 percent of National Flood Insurance Program policyholders paid a true flood risk rate in 2014 and are minimally impacted by the law.

Increased Cost of Compliance (ICC)

Increased Cost of Compliance (ICC): If your home or business is damaged by a flood, you may be required to meet certain building requirements in your community to reduce future flood damage before you repair or rebuild. To help you cover the costs of meeting those requirements, the National Flood Insurance Program (NFIP) includes ICC coverage for most policies. One way these funds can be used it to elevate a property, which can help protect the building from flood damage and sometimes reduce the cost of flood insurance.

Lapsed Policy

Lapsed Policy: If you ever allow your flood insurance policy to lapse for either more than 90 days, or twice for any number of days, you may be required to provide an EC and you may no longer be eligible for the discounted rate you have been paying.

Lowest Floor

Lowest Floor: The lowest floor of the lowest enclosed area (including basement). An unfinished or flood resistant enclosure, used solely for parking of vehicles, building access or storage in an area other than a basement area is not considered a building's lowest floor as long as the enclosure is not built in such a way that it renders the structure in violation of the applicable non-elevation design requirements.

Communities are required to obtain the elevation of the lowest floor (including basement) of all new and substantially improved structures.

All new and substantially improved structures must have the lowest floor elevated to or above the Base Flood Elevation* (BFE). Non-residential buildings may be floodproofed below the BFE.

Newly Mapped Procedure

Newly Mapped Procedure:In the first year after a map revision, this option provides the lower-cost Preferred Risk Policy (PRP) base premium (not including fees and surcharges) for properties that have been newly mapped into a high risk flood area (i.e., Special Flood Hazard Area*). Every year after, premium increases of up to 18 percent will be applied until the premium rates reflect true flood risk rates.

Non-primary Residence

Non-primary Residence: A residential building that is not the primary residence of the policyholder.

Pre-FIRM

Pre-FIRM: Pre- Flood Insurance Rate Map (FIRM) buildings are those built before the effective date of the first Flood Insurance Rate Map (FIRM) for a community. This means they were built before detailed flood hazard data and flood elevations were provided to the community and usually before the community enacted comprehensive regulations on floodplain management. Pre-FIRM buildings can be insured using discounted rates. These rates are designed to help people afford flood insurance even though their buildings were not built with flood protection in mind.

Here's a helpful, short video about pre and post-FIRM buildings.

Post-FIRM

Post-FIRM: Post-Flood Insurance Rate Map (FIRM*) buildings are new or substantially-improved construction built after the effective date of the first FIRM for a community. Insurance rates for Post-FIRM buildings are determined by the elevation of the lowest floor in relation to the Base Flood Elevation* (BFE). Look up map effective dates for your state and city.

Here's a helpful, short video about pre and post-FIRM buildings.

Primary Residence

Primary Residence: A single-family building, condominium unit, apartment unit, or unit within a cooperative building that will be lived in by the policyholder or the policyholder's spouse for:

  1. More than 50 percent of the 365 calendar days following the current policy effective date; or
  2. 50 percent or less of the 365 calendar days following the current policy effective date if the policyholder has only one residence and does not lease that residence to another party or use it as rental or income property at any time during the policy term.
    A policyholder and the policyholder's spouse may not collectively have more than one primary residence.

The Reserve Fund Assessment

The Reserve Fund Assessment: A Reserve Fund was created in order to build reserves to help meet expected future obligations in higher-than-average loss years. An assessment to go toward this fund was included in your premium beginning in 2014. The Reserve Fund Assessment is currently 15 percent of the premium subtotal for nearly all policies.

Special Flood Hazard Areas (SFHA)

Special Flood Hazard Areas (SFHA): The land area covered by the floodwaters of the base flood is the SFHA on NFIP maps. The SFHA is the area where the National Flood Insurance Program's floodplain management regulations must be enforced and the area where the mandatory purchase of flood insurance applies. The SFHA includes Zones A, AO, AH, A1-30, AE, A99, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, VO, V1-30, VE, and V.

Surcharge

Surcharge: The Homeowner Flood Insurance Affordability Act of 2014 *mandated that a surcharge be applied to every NFIP policy to offset discounted policies. A policy purchased by a homeowner for a single-family dwelling or condominium unit that the homeowner occupies as a primary residence will include a $25 surcharge. A contents-only policy purchased by a tenant for a single-family dwelling, condominium unit, or apartment that the tenant occupies as a primary residence also will include a $25 surcharge. For rating purposes, a primary residence means a single-family building, condominium unit, or apartment that will be lived in by the insured or the insured’s spouse for more than 50 percent of the 365 calendar days following the current policy effective date.

Policies for all other buildings will include a $250 surcharge. This includes policies covering non-residential buildings, condominium buildings, non-condominium multi-family buildings, two-to-four family buildings (even if the policyholder occupies one of the units as a primary residence), and buildings that are occupied by the insured or the insured’s spouse for 50 percent or less of the year.

Additional Resources

In addition to the Questions & Answers for the letters your policyholders will receive from FEMA (below), here are some related fact sheets and bulletins you may find helpful:

Who should agents contact if they need assistance with answering policyholder questions about these letters?

If you are an agent and you would like help answering specific policyholder questions, contact your insurer. Your insurer will help you answer questions and provide assistance with making any necessary updates to the policy.

If, after contacting their insurer, an agent still has questions or needs clarification, who should he/she contact?

The local FEMA regional offices are available to answer questions regarding NFIP flood insurance:

Region I: (CT, ME, MA, NH, RI, VT)

Robert.desaulniers@fema.dhs.gov

Region II: (NJ, NY, the Commonwealth of Puerto Rico, the U.S. Virgin Islands territory and eight Tribal Nations)

1-800-427-4661: (NFIP Call Center)

Region III: (DC, DE, MD, PA, VA, WV)

1-800-427-4661: (NFIP Call Center)

Region IV: (AL, FL, GA, KY, MS, NC, SC, TN)

Dorothy.douglas@fema.dhs.gov, or call 770-220-5457.

Region V: (IL, IN, MI, MN, OH, WI)

1-800-427-4661: (NFIP Call Center)

Region VI: (AR, LA, NM, OK, TX)

1-800-427-4661: (NFIP Call Center)

Region VII: (IA, KS, MO, NE)

Christopher.parsons@fema.dhs.gov

Region VIII: CO, MT, ND, SD, UT, WY)

1-800-427-4661: (NFIP Call Center)

Region IX: (AZ, CA, HI, NV, & the Pacific Islands)

1-800-427-4661: (NFIP Call Center)

Region X: (AK, ID, OR, WA)

Deborah.Gauthier@fema.dhs.gov

How Do I Discuss Cost-Saving Options With My Client?

One way to reduce flood insurance premiums is to take steps to mitigate damage to the building. Some mitigation actions include removing or modifying an enclosed area below the building’s elevated floor (i.e., installing flood vents or replacing enclosure walls with lattice) and filling in a sub-grade crawlspace.

Another way is to raise the deductible. See the Rating Section, page Rate 12, of the Flood Insurance Manual for more information on deductibles.

However, policyholders don’t always realize the impact that high deductibles can have on their claim. For this reason, the NFIP recommends that you advise policyholders of the impact and document their response.

Read more about How Can I Pay Less for My Flood Insurance? on the policyholders' page.

Last Updated: 
11/14/2018 - 12:32