National Flood Insurance Program Information

National Flood Insurance Program Information

In 1968, Congress created the National Flood Insurance Program (NFIP) to help provide a means for property owners to financially protect themselves. The NFIP offers flood insurance to homeowners, renters, and business owners if their community participates in the NFIP. Participating communities agree to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the risk of flooding.

There are two ways that property owners may be able to reduce their insurance costs; Built in Compliance Certificates, Preferred Rate Policies.

Background:

  • Pre-FIRM buildings are those built before the effective date of our first Flood Insurance Rate Map; therefore, pre-firm is prior to January 17, 1979. (Floodplain 9-11)

  • Post FIRM buildings are those built after the effective date of our first insurance rate map; therefore, post-firm is after January 17, 1979.

  • Post FIRM rates are determined based on the elevation of the lowest floor (including basement) of the building in relation to the Base Flood Elevation. (Floodplain 9-14)

  • Elevation Certificates are required for most Post-Firm Buildings (Built after January 1979). The elevation certificate provides the data the insurance agent needs to determine the lowest floor of the building and calculate the flood insurance premiums. (Floodplain 9-19).

Elevation Certificates

The elevation certificate form is an administrative tool of the National Flood Insurance Program (NFIP). It is used as a basis for issuing or denying floodplains, development permits and to ensure compliance with local floodplain ordinances, issuance of certificate of occupancy, to record the lowest floor elevation of a structure, to establish flood insurance rates, and to support a request for a letter of Map Amendment or Revision (LOMA OR LOMR-F).

  • Pre-FIRM building owners who missed the grandfathering deadline & who believe their structure may be several feet above the base flood elevation. If their building is ABOVE the BFE, they can qualify for the post-FIRM rates and get a considerable discount. In fact, in some cases, if a building is above BFE, their rates may be better than the B, C or X zone rates, so it's worth it to compare rates with their agent. However, if their structure is below the BFE, then they won't receive a cost benefit by doing the elevation certificate. It's a risk the homeowner should consider fully before investing in the elevation certificate.

  • Post-FIRM building owners who believe their structure may be several feet above Base Flood Elevation. This example is more of a gamble for the building owner, however, because they qualify for the built in compliance certificate and will most likely get a cost savings for flood insurance via the grandfathered rates. However, if they believe their building is significantly ABOVE the BFE, then their rates can be cheaper in spite of being in an A zone. But with the cost of the elevation certificate and being unable to confirm their elevation until that certificate has been completed by a surveyor, then they run the risk of investing in the elevation certificate and not gaining a cost savings in their insurance rates if they are below BFE.

Any new construction in an (DRIRM) A zone requires an elevation certificate be completed to verify it is being built above the BFE. If the structure is not designed to be above the BFE, the city of Sioux Falls should require them to stop construction and deny the builder an occupancy permit if they do not comply. An elevation certificate is completed based on the construction drawings and then completed again at completion to verify it has been built above the BFE. These elevation certificates should be kept on file by the City.

Grandfathering (Saving on Flood Insurance)

In fairness to policyholders who built in compliance with the existing floodplain management standards for their flood zones and/or have continuously maintained Federal flood insurance (Loyalty Grandfathering), FEMA developed grandfather rules to avoid penalizing these policyholders with higher rates. These rules allow policyholders to benefit in the premium rating of their buildings.

For example, if a new policy is applied for, the rates can be based on the FIRM zone and the BFE on the old map in effect on the date the building was constructed provided that:

  • The building was built in compliance with the map in effect at the time of construction; and

  • The building has not been altered in any way that has resulted in a lowest floor, for rating purposes, situated lower than the BFE on that FIRM (e.g., enclosing the area below an elevated building); and

  • The building has not been substantially improved.

The property owner or insurance producer must provide proper documentation to the Write Your Own (WYO) company or NFIP Servicing Agent. The documentation must include: the date of construction; the date of the FIRM; the zone on that FIRM in which the property is located; the BFE, if any, for that zone; a copy of the map panel showing the location of the building; and the rating element that is to be grandfathered (e.g., zone, BFE, elevation difference). A letter from a community official verifying this information also is acceptable. (Built in Compliance Grandfathering) (Mandatory 13)

Built In Compliance Certificates

Use this for post-FIRM structures (after 1979) only that missed the grandfathering deadline (Sept. 2, 2009) in order to get B, C or X zone rates. Pre-FIRM customers are no longer eligible for the grandfathered rates.

Post-FIRM Building owners with a loan that is paid off and wish to keep this compliance form in their files for the next purchaser of the property so that the new building owner can qualify for grandfathered flood insurance rates in the future.

  • The built in compliance certificate can go to the insured and they take it to their insurance agent, who has to attach it to the insurance application. Emails sent to jschmitt@siouxfalls.org with property owners name and requested address will have emails sent back with a response or the required documentation. These are needed by Post FIRM (after 1979) applicants going from B, C, X to A.

Preferred Rate Policies

The Preferred Rate Policy (PRP) eligibility criteria have been expanded to include buildings newly mapped into a high risk area for up to two years after the map revision. This PRP Eligibility Extension was created to help ease the financial transition of property owners whose buildings are newly mapped as high-risk and who would have no longer qualified for the low-cost PRP under the old rules.

Policies issued as standard-rated policies or converted to standard-rated policies following a map change on Sept. 2, 2009, could be converted to the lower-cost PRP for two years beginning on the first renewal effective on or after January 1, 2011.

Buildings meeting these same conditions that were not previously insured may be issued as a new business PRP on or after January 1, 2011, during this same eligibility period.

  • The PRP can go to the insured and they take it to their insurance agent, who has to attach it to the insurance application. Emails sent to jschmitt@siouxfalls.org with property owners name and requested address will have emails sent back with a response or the required documentation. To qualify for the PRP Eligibility Extension, property must be proven to be currently or previously zoned as moderate-low flood risk (located in flood zones B, C or X).