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Determining Flood Risk

  • Standard homeowners' insurance does not cover damages from floods. Yet, floods are the No. 1 hazard in the United States. Floods do not respect geographical boundaries and they can impact a neighborhood, community or entire river basin, thus affecting contiguous states. If a building owner is in a low or moderate risk flood plain, the government arranges for a preferred risk policy, which is discounted with a lower premium. To qualify for a preferred risk policy, a property owner will need to prove that the flood risk is reduced and supply an Elevation Certificate. An Elevation Certificate can be obtained from a licensed surveyor.

Who Needs an Elevation Certificate?

  • If a structure is in a flood plain and built before December 31,1974, it is considered a Pre-FIRM (Flood Insurance Rate Map) building. Pre-FIRM is a designation given to structures built earlier than the flood plain rating for the community. Post-FIRM means that the building was constructed after a community FIRM was created. For insurance rate purposes, it may be to the building owner's advantage to get an Elevation Certificate, because if the risk is low or medium, insurance premiums may be lowered by using post-FIRM rates. In the case of a structure built before the FIRM was complete, it may be automatically grandfathered in but, if an Elevation Certificate is done by FEMA and the risk is low or moderate, it may still be cheaper to get flood insurance using Post-FIRM rates. All new construction in flood plains require Elevation Certificates.

Who is Required to Get Flood Insurance?

  • In 1968, the United States congress created a mandatory flood insurance program for property in high risk flood areas. It is known as the National Flood Insurance Program (NFIP). Homes and buildings in high risk flood areas that received a mortgage from a federally regulated source or insured lenders must get flood insurance. Calculations show that a high risk area has at least a 1 percent chance of flooding in any given year ("100 year flood"). If an individual feels that a high risk assessment is improper for their property, the only way to amend the coverage is by obtaining an Elevation Certificate. Structures in low or moderate risk flood categories are not required to get flood insurance but, since 25% of all floods happen in low or moderate risk areas, owners may want to consider getting flood insurance. To get an appropriate insurance rate, the property has to have a FEMA-completed Elevation Certificate stamped by a licensed Surveyor, Engineer or Architect. Even if the structure is not in a flood plain, a lender can require, as a condition of the mortgage, that the building has flood insurance. An Elevation Certificate is not usually needed in this situation, but may be useful by categorizing it correctly to get the best rate.

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