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DHS FEMA NFIP Services - eWaterwark Article
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Check Out These Changes to the NFIP
Lynd Morris, NFIP Bureau and Statistical Agent
The Flood Insurance Manual is the NFIP document that spells out all of the fine print about
how flood insurance risks are rated and policies are written. If you want to understand the NFIP,
you'll need to be familiar with the Flood Insurance Manual because, when enhancements or
clarifications are made to the NFIP, the manual is the first place to go to find the details about
what has changed.
As of May 1, 2006, several manual changes were made that may affect you. Following is a description of
the most significant of these. [Editor's Note: Since this article was published, more changes have
been made to the Flood Insurance Manual. You can read about these in the
"NFIP Rule Changes" article.]
New Rates
Insurance premium rates increased an average of 4.1 percent for policies written or renewed on or
after May 1, 2006. Rating examples in the RATE, CONDO, and END sections of the Flood Insurance
Manual were updated accordingly. This premium increase varies by zone as described in the sidebar
at the end of this article.
Updated Contact Information
Several NFIP Bureau and Statistical Agent Regional Office addresses and telephone numbers have been
updated in the Reference section.
New Table Matches Building Types to Policies
A new table has been added to the General Rules section of the Flood Insurance Manual to
simplify the process of matching the NFIP policy forms to the types of buildings that are insurable
under each. For example, you can insure a residential townhouse under the Dwelling Form, a motel under
the General Property Form, and a residential condominium building under the Residential Condominium
Building Association Policy.
Covering Condos as Construction is Completed
Picture this: The condominium building that is being constructed in your community is almost finished.
The developer purchased NFIP coverage against any flood losses that might have occurred during
construction by using the General Property Form, which provided limited coverage. Now the building
is almost complete and the individual unit owners who have formed a condominium association want to
increase their flood insurance protection, even though they haven't moved in yet. How soon can they
purchase a Residential Condominium Building Association Policy (RCBAP) from the NFIP and have higher
limits of coverage for their property?
Different states have different definitions of when the control of a condominium transfers from the
builder/developer to the unit owners. New language in the General Rules section of the
Flood Insurance Manual cites the NFIP definition of "condominium association" and explains
that if a condo association meets the definition, it is eligible for the more comprehensive coverage
under the RCBAP.
New Elevation Certificate
The NFIP's Elevation Certificate (EC) is an important document for property owners whose building(s)
may be constructed in an area identified on the Flood Insurance Rate Map (FIRM) as having an increased
risk of flooding. Several revisions--especially pertinent to surveyors, insurance agents, and public
officials--were made to this form to ensure that flood risks are correctly recorded and the appropriate
premium charged if flood insurance coverage is purchased for the structure(s).
Although the new form and additional requirements (photos and specific measurements of enclosures)
are being implemented immediately, they will not become mandatory until January 1, 2007. You can find
a detailed description of the revisions to the EC in the "Revised EC Improves Lowest Floor
Determinations" article on pages 13-15 of the Watermark's 2006, Number 1 issue.
New PRP Conversion Guidelines
As FEMA's map modernization initiative updates flood risks across the U.S., some property owners are
learning that their buildings are less likely to flood than was indicated by older maps, thus making
them eligible for the NFIP's moderately-priced Preferred Risk Policy. However, in many other cases,
upstream development and other changes to the floodplain are resulting in map changes that make
buildings ineligible for the PRP.
A new set of guidelines has been added to the PRP section of the Flood Insurance Manual that
explains how to convert a policy that no longer meets PRP eligibility criteria to a standard-rated
policy.
CRS Continues to Grow
The number of communities participating in the NFIP's Community Rating System (CRS) continues to grow,
with 10 new (or reinstated) communities and 25 communities improving their class ratings since
October 1, 2005. See "CRS Gains" for details.
Online Resource
These and other changes to the Flood Insurance Manual are provided in detail on the NFIP website
or you can order a paper copy by calling FEMA's Map Service Center (800-358-9616).
Lynd Morris has worked with the NFIP's Bureau and Statistical Agent since 1983. She has been
Watermark's primary writer and production coordinator since 1998.
NFIP May 1, 2006, Premium Increases
V Zones (coastal high-velocity zones)
Larger rate increases have been implemented again this year as a result of the Heinz Center's
Erosion Zone Study, which clearly indicates that current rates significantly underestimate the
increasing hazard from steadily eroding coastlines.
- Post-FIRM V Zones: Premiums increased 6 percent.
- Pre-FIRM V Zones: Premiums increased 9 percent.
A Zones (non-velocity zones, which are primarily riverine zones)
There have been modest increases to keep Post-FIRM rates at actuarial levels and slightly decrease
the amount of subsidy in our Pre-FIRM rates.
- Post-FIRM AE Zones: Premiums increased about 2 percent as indicated by our actuarial rate model.
- Pre-FIRM AE Zones: Premiums increased about 6 percent.
- AO, AH, AOB and AHB Zones (shallow flooding zones): No change. Experience continues to be
favorable in these zones.
- Unnumbered A Zones (remote A Zones where elevations have not been determined):
Premiums increased about 5 percent. These increases are designed to keep rates in line with
Post-FIRM AE Zones.
- A99 Zones (approved flood mitigation projects, e.g., levees still in the course of
construction): Premiums increased about 6 percent.
- AR Zones: Premiums increased about 7 percent.
X Zones (zones outside the Special Flood Hazard Area)
Moderate increases were implemented.
- Standard Risk Policy: Premiums increased about 6 percent.
- Preferred Risk Policy (PRP): No changes.
Mortgage Portfolio Protection Program (MPPP)
MPPP rates were revised to keep them in line with increases to A and V Zone policies.
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| Last Modified:
Friday, 21 January 2011 |
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