Updated digital flood hazard maps, DFIRMs, may bring changes in flood insurance requirements for property owners. It is important for local insurance professionals to stay in touch with the community or county to learn how their clients will be affected by the new maps and what the best options are.
Mapped to a Higher Risk: The Grandfathering Option
When properties are mapped into a high-risk area, flood insurance will be required for most mortgage holders. Before the new DFIRMs go into effect, insurance agents and brokers should compare the two sets of maps (the current effective map and the new preliminary map) to see if any clients will be affected and should therefore be alerted to the upcoming change. If a building is going to be mapped into a high-risk zone or if the Base Flood Elevation (BFE) is increasing, the owner should be encouraged to purchase (or maintain) a policy now. That way the owner is not only protected now but can “grandfather” or lock in that zone or elevation and maintain eligibility for the corresponding insurance rate when the map changes. For homes built before the community’s first flood map was issued (known as Pre-FIRM buildings), purchasing a flood policy before the new maps become effective is the only way to lock using rates associated with the earlier zone . Note, however, that sometimes the new maps may actually provide for a better premium than through grandfathering. For more details, agents can refer to FEMA’s NFIP Map & Zone Grandfather Rules and the National Flood Insurance Program’s Producer Manual.
Mapped to a Moderate - Low Risk: Convert to a Preferred Risk Policy
If properties are being mapped out of a high-risk area, the policies may be eligible for conversion to Preferred Risk Policies (PRP) when the new map becomes effective. The owner will receive a refund for the difference in the premium paid, while remaining covered.
Insurance agents and brokers should remember that they must always rate flood insurance policies using information from the Flood Insurance Rate Map currently in effect….not from the preliminary flood map.
New Vertical Datum
As part of the Nationwide Map Modernization Effort, the new DFIRMs are using a new vertical datum as the base for all elevations (NAVD88). This datum is a much more accurate one than the almost 80-year old one used for the previous flood maps (NGVD29). As a result, a building’s base flood elevation could show one measurement on the old map (i.e., 25’) and another measurement on the new map (i.e., 28’) and its actual elevation will have never changed. So, before grandfathering a property where elevation is involved, make sure that the elevation on the elevation certificate and the BFE on the FIRM are both using the same vertical datum. If not, there are conversion factors that can be obtained from the Flood Insurance Study.