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DHS FEMA NFIP Services - eWaterwark Article
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NFIP Procedure Changes
The following changes to NFIP procedures are effective October 1, 2007. All of the changes are
documented in the October revisions to the NFIP
Flood
Insurance Manual, posted on the FEMA website.
Stakeholder Resources
The list of NFIP stakeholder information resources in the Flood Insurance Manual Reference
section (see page REF 4) has been expanded to include web addresses for the FEMA Information
Resource Library, the NFIP Watermark and eWatermark newsletters, and the NFIP
Training Station for flood insurance agents. Also, the mail and email addresses for flood map
specialists at the FEMA Map Assistance Center have been added.
Tenant Coverage
Information has been clarified in the manual about the improvements and betterments to a leased
building a tenant can make and how a tenant may purchase additional coverage for improvements and
betterments. These clarifications appear in the General Rules (GR 12) and Definitions (DEF 5)
sections.
Agent Contracts
New text has been added on pages GR 13 and DEF 2-3 of the manual to explain the contract agent rule,
under which terms of the contract between a Write Your Own (WYO) Company and a producer govern the
producer's authority to accept risks on behalf of the company and, for accepted risks, the policy
waiting period and effective date of coverage.
Reauthorized Certificate
The Residential Basement Floodproofing Certificate (FEMA Form 81-78) has been reauthorized. This
certificate may be used in approved communities through June 2010. The certificate and instructions
for its use are in the Special Certifications section (pages CERT 3-8) of the manual.
Canceling and Rewriting Policies
Reason Codes 22 and 24 in the Cancellation/Nullification section of the manual now specify that
a canceled and rewritten policy must be rewritten with the same WYO Company.
Nonrenewal and Cancellation
When an NFIP policy approaches its expiration date, WYO Companies and the NFIP Servicing Agent
mail a Renewal Notice to the policyholder, the agent, and any mortgagee listed on the policy.
However, there are exceptions to this procedure:
- Building in the course of construction
- Tentatively rated policy
- Suspended community
- Provisional rating
- Group Flood Insurance Policy
- Preferred Risk Policy ineligibility
- Section 1316 property
Since policies in those categories are either ineligible for renewal or, if eligible, require
additional underwriting information, Renewal Notices are not generated for them. The problem has
been that mortgagees had no way of knowing when flood insurance on a property securing a loan was
going to expire.
The Mortgage Clause of the Standard Flood Insurance Policy (SFIP) states, "If we decide to cancel
or not renew this policy, it will continue in effect for the benefit of the mortgagee only for 30
days after we notify the mortgagee of the cancellation or nonrenewal." At the request of lender
organizations, language has been added to the Policy Renewals section (REN 1) of the manual stating
that within 5 days of the nonrenewal (or cancellation) of a policy, an appropriately worded
expiration notice must be sent to any mortgagee listed on the policy, with copies to the agent and
the policyholder.
Acceptable Documentation for Multi-Property LOMRs or LOMAs
Sometimes, a Letter of Map Amendment (LOMA) or Letter of Map Revision (LOMR) is issued for a group of
properties removed from a Special Flood Hazard Area (SFHA) without listing the properties' street
addresses, or listing only lot numbers, boundaries, intersections, or rural addresses. What
documentation is required for canceling or endorsing a flood insurance policy affected by a
multi-property LOMA or LOMR?
On May 31, 2007, in response to requests from WYO Companies and the NFIP Servicing Agent, FEMA
clarified the documentation requirements in WYO Clearinghouse Bulletin W-07035. The bulletin stated
the Agency continues to require all documentation listed in the Cancellation/Nullification section
of the Flood Insurance Manual, or the Endorsement section, when the carrier retains a
policy formerly in an SFHA and re-rates it as a Preferred Risk Policy or a standard-rated policy
in Zone B, C, or X. For policies affected by a multi-property LOMA or LOMR, the bulletin listed
the additional documentation required to prove a property is part of a particular LOMA or LOMR.
Finding Your LOMC
Did you know that most Letters of Map Change (LOMC) are posted on the FEMA Map Service Center (MSC)
website? To look up LOMAs and LOMRs, visit the
MSC, and under
"More Information," click on "How do I find a LOMC?"
The list of additional documentation is now included in Reason Code 19 in the
Cancellation/Nullification section of the manual. The revised text specifies that a copy of the
LOMA or LOMR plus any of the following are required for a property when the specific building,
street address, lot number, or rural address is not identified in the LOMA or LOMR.
- A letter an insured received from their community official stating their structure was removed
from the SFHA by a multi-property LOMR or LOMA.
- A letter from the applicable community official, written on official letterhead, stating the
building was included in the area removed from the SFHA by the multi-property LOMR or LOMA, which
listed only boundaries/intersections of streets, lot numbers, or rural addresses.
- In cases, and only in cases, where (1) a community official could not or would not provide a
letter, or (2) the structure has a rural address, the following set of two documents may be
submitted:
- A copy of a legal notice, such as a real estate assessment notice or a water/sewer notice,
which shows the lot number, street or rural address, or other legal designation of the location
of the structure, and
- A letter from the mortgage lender that (1) shows the lot number, street or rural address,
or other legal designation of the location of the structure, and (2) states the structure was
within the boundaries of the area removed from the SFHA by the LOMR or LOMA.
Letters from community officials must match the street address and lot number with a specific
multi-property LOMR or LOMA, stating the individual building street address, lot number, or rural
address (e.g., RR, Box #, Hwy) was included in the area covered by the LOMR or LOMA. The
documentation listed above must be submitted with all other required documentation listed in the
Flood Insurance Manual.
The NFIP Servicing Agent and the WYO Companies may accept zone determinations in lieu of the
documentation cited above.
CRS Community List Update
The Community Rating System (CRS) rewards community floodplain management activities that exceed
the minimum NFIP requirements by discounting flood insurance premiums in those communities to
reflect the reduced flood risk. As communities engage in more activities that earn CRS credit,
they improve their class standing and earn residents greater discounts on NFIP premiums. Between
October 1, 2006, and September 30, 2007, 29 communities joined the CRS and 48 communities already
participating improved their class ratings.
The list of eligible communities has been updated in the CRS section of the manual.
| Distribution of New Communities |
| Class |
Insurance
Premium Discount |
New Communities |
| 9 |
5% |
6 |
| 8 |
10% |
20 |
| 7 |
15% |
3 |
Of the 48 CRS communities that improved their class ratings, 16 communities moved from Class 9 to
Class 8 (a 10-percent premium discount); 20 communities moved from Class 8 to Class 7
(a 15-percent premium discount); 6 communities moved from Class 7 to Class 6 (a 20-percent premium
discount); and 4 communities moved from a Class 6 to a Class 5 (a 25-percent premium discount).
King County, Washington, moved from Class 3 to Class 2, earning residents a 40-percent discount on
their annual flood insurance premiums.
Sometimes communities engage in so many new creditable CRS activities that they jump more than one
class. The City of Anna Maria, Florida, jumped from Class 7 to Class 5. This class improvement
earned residents a new premium discount of 25-percent.
For more information about the Community Rating System, visit the
CRS Resource Center.
Building Replacement Cost Value and Number of Units
Separate explanations of replacement cost provisions and coinsurance provisions have been made on
page CONDO 7 of the Condominiums section of the Flood
Insurance Manual.
On April 18, a related change was announced in WYO Clearinghouse Bulletin W-07027 in response to
requests from members of the lending community and their Federal regulators to help them better
assess the adequacy of residential condominium insurance limits purchased by borrowers. No later
than October 1, 2007, the Declarations page of each Residential Condominium Building Association
Policy issued or renewed must state the building replacement cost value and the number of units
within that building.
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| Last Modified:
Friday, 21 January 2011 |
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