National Flood Insurance ProgramWhat you and Your Clients Need to Know about Rising

Risks, Rising Rates and their Effects on Closing Costs….

Sandy Emerson, NFS StoneRiver Regional Field Relations Manager

HISTORY OF THE NFIP

Established when Congress passed the National Flood Insurance Act of 1968

The Flood Disaster Protection Act of 1973 amended the 1968 Act

Administered by the Federal Insurance Mitigation Administration, a component of the Federal Emergency Management Agency (FEMA)

1983: The Write-Your-Own Program established

Who Needs Flood Insurance?

All Owners of Insurable Property

Definition of a Flood

Flood insurance covers direct physical loss caused by “flood.” In simple terms, a flood is an excess of water on land that is normally dry. Here’s the official definition used by the National Flood Insurance Program:

A flood is “A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from:

Overflow of inland or tidal waters; Unusual and rapid accumulation or runoff of surface waters from ANY source; 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.”

*Mudflow is defined as “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…”

taken from the NFIP Summary of Coverage document

Single Peril Policy

DIRECT PHYSICAL LOSS BY OR FROM FLOOD

Pre-FIRM and Post-FIRM

Pre-FIRM:Buildings built or substantially improved prior to

December 31, 1974 OR prior to the date the community entered the regular program

Insured has the option of using Pre-FIRM or Post-FIRM rates, whichever provides the best rates

Post-FIRM:Building was built or substantially improved after the

community entered the regular programZone must be determined from the FIRM; Rates for

coverage are based on the zone

Elevation Certificates When are Elevation Certificates required? Where do I get an Elevation Certificate? Why are Elevation Certificates Required?

Click to edit Master title style

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Insurance Insurance Claims Claims

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Facts to Know and Remember

Flood Policies duration (1 year) Policy Expiration and Renewal Process

30 day grace period without a lapse in coverageReinstatement if paid between 31st and 90th days

Federal Policy Fee: Mandated by Congress$40 on all standard flood insurance policies$20 on the PRP

Full Premium must be submitted/uploaded with the application or the endorsement

Effective Dates - New Policies

30-Day Waiting Period from the date of application and presentment of premium for Voluntary Purchase

Exceptions to 30-Day Waiting Period

Loan Closing Lender Portfolio Review Map Revision

Cancellations

A flood policy may be cancelled at any time BUT

A refund of premium money will only be made when a valid reason for cancellation is listed

Offer Flood Coverage

Everyone is in a flood zone A Zones and V Zones – SFHA’s

• 1% chance of flooding in any given year B, C, X, D and A99 Zones – Non SFHA’s

• .2% chance of flooding in any given year

Run a zone determination on every risk Offer flood insurance Document rejection with an Agency

Responsibility Waiver form

Resources

NFS, Stoneriver PO Box 2057 Kalispell, MT 59903-2057

800.637.3846 Write Your Own Company FEMA Websites

www.agents.floodsmart.gov• Co-Op Program• Referral Program

www.nfipiservice.com www.fema.gov/business/nfip http://bsa.nfipstat.com

What is BW 12….

The Biggert-Waters Flood Insurance Reform Act of 2012 is a law passed by Congress and signed by the President July 6, 2012

Many of the changes are designed to make the National Flood Insurance Program (NFIP) more financially stable

Another purpose of these modifications is to ensure flood insurance rates more accurately reflect the real risk of flooding

Who Needs Flood Insurance?

All Owners of Insurable Property

Flood Risks are Changing• Risk may have increased since the last flood maps were created.

Flood Insurance Rates Will Reflect those Changes• With new flood insurance rate maps (FIRM), rates on properties will

rise.

Insured's Can No Longer Rely on Subsidized Rates• Most subsidized rates for older properties will be eliminated. These

are structures that were built before the flood maps were created for the Community.

Building or Rebuilding higher lowers your risk and could save you money • Consider the impact of flood insurance premiums when making

construction decisions.

What Your Clients Need to Know…

Homeowner’s Guide to Elevation Certificates

Thank You!