By Tim Kolacz
In the past few months, we have noticed clients getting letters in the mail from FEMA asking that their building be inspected and given a Flood Elevation Certificate. These Certificates are done by a licensed inspector who comes out and determines the elevation of the building in relation to a pre-established Base Flood Elevation report. The letter states that the elevation certificate could help in stemming the tide on premium increases if the certificate determines that they are not in a flood zone. Conversely, if the building is determined to be in a flood zone, the opposite could happen and what used to be in a zone of low risk flooding, could become the highest of risk for flooding.
When the Flood Certificate is ordered, the inspector comes out, does the work necessary and then gives the certificate to the person who ordered it. It never goes further; unless the purchaser gives it to FEMA or their broker to send to the flood carrier.
However, in some cases, FEMA has taken this into their own hands. FEMA is now starting to re-map, or review the current mapping in most areas prone to flood across the US. Of particular note are areas along the coast and in long known flood plains. This can mean the coast of San Diego county or the floodplains running through downtown Los Angeles. Yup, good ol’ LA has areas that run in a long strip that are considered flood plains. These are being mapped as the current policies come up for renewal. This is causing havoc as some of these in force polices are going from the lowest risk flood zone to the highest risk flood zone. And it’s not just FEMA that wants these inspections done.
Financial institutions, like banks, are asking that the most recent flood zone be used before they lend money to a purchaser of property. This is supposed to make it easier to lend money to the purchaser and to also ensure that if there were to be a flood, the lender would receive payment for their loan amount.
However, in practice, what we are seeing is that there are places that have been written as the lowest risk zone for 10+ years now being moved immediately into the highest risk zone overnight. The financial impacts are enormous. Not only do the premiums increase, but the deductibles increase as well.
So what can you do? The first thing to do is to have your broker, or me, take a look at your property’s location against a flood map from FEMA. Then have that map reviewed for any updates in the past 30 years, as most flood maps have been around since the 80’s and early 90’s. Then have the internal operations of your brokers agency review and verify that what is being presented is actually correct.
We recently were given a set of buildings that all were in the highest risk zone, VE, with one building in the middle of the group being in the lowest, zone X. When we did our internal investigation, we determined that all of the buildings should have been in zone X. We sent our findings to the current carrier who in turn gave that information to FEMA. The VE determination was reversed and all buildings are in Zone X. The cost savings is substantial.
So be aware of changes to the flood zones, fight if they change your zone, fight some more to see if it can be changed or perhaps Grandfathered into the old zone if needed, and make sure that if it really does change that you know that it is correct.
Tim Kolacz can be reached at email@example.com or at 951-779-8730.