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New FEMA policy on CRS Flood Insurance Discounts Nationwide

There is a new policy on flood insurance rating for certain buildings in our community. Flood insurance policy holders in our community receive discounts on their annual premiums depending on their flood zone and our community’s CRS classification. In short, the more communities do to prevent and reduce flood losses, the more their residents benefit with reduced premiums.

Effective May 1, 2008, FEMA will institute a new policy: Flood insurance policies for buildings that are rated as having the lowest floor one foot or more below the base flood elevation (BFE) will no longer be eligible for the community’s CRS discount. Some clarifications:

  • In most cases, the affected structures are non-compliant, i.e., in violation of the NFIP construction criteria. They may have received a variance from the community. If so, the variance applicant was advised that “the issuance of a variance to construct a structure below the base flood level will result in increased premium rates for flood insurance” as required by 44 CFR 60.6(a)(5).

  • This new policy only affects elevation rated buildings. Typically, these are new construction or “Post-FIRM” buildings, not older buildings that qualify for the Pre-FIRM “subsidized” rates.

  • It only affects buildings in the mapped Special Flood Hazard Area. Buildings in B, C or X Zones are not rated based on the elevation of their lowest floors.

  • It does not affect properties in V Zones that have approved breakaway walls and the enclosures are unfinished and used only for building access, storage and parking, but were rated based on the enclosed area being the lowest floor.

The policy does not affect buildings that were compliant when they were built, but later a new map changed the flood zone and/or raised the base flood elevation to a level above the lowest floor. These structures can be “grandfathered” so they keep premiums based on the flood zone and/or BFE at the time of construction.

The policy will impact approximately 38,000 structures in 830 of the 1,080 CRS communities. Our community is one of those affected.

Policyholders with May renewals will receive renewal billing notices in March or April. Most will not know why there is an increase as their renewal statement may not mention it or their premiums are paid by a mortgage escrow account. However, upon receipt of payment of the annual renewal the issued declaration page will have a zero for the CRS discount.

Please contact your insurance agent to verify how your structure has been rated. It is possible that there is an error in the lowest floor or base flood elevation. It is possible that the building has not been fully “grandfathered” to reflect that it was built in compliance before a map change. If these errors can be corrected to show that the building is not one foot or more below the base flood elevation, then the property owner should ask their insurance agent to correct the policy.  You may need to contact our office for supporting documentation to correct the errors.

If the policy is correctly rated, there may be ways to retrofit the structure to bring it into compliance. For example, the lowest floor used for rating may be the floor of an attached garage or an enclosed parking area in a high rise structure. If the owner puts in flood openings or otherwise modifies the enclosure to reduce or eliminate the potential for water damage, the building can be re-rated. Not only will the policy have the CRS discount, the fact that the lowest floor for rating purposes is above the BFE will greatly reduce the premium.

For more information please call Sharon Hogan at (352) 483-9081 or Donna Bailey at (352) 483-9083.

Additional Resources

Homeowner's Guide to Retrofitting:  Six Ways to Protect Your House from Flooding, FEMA-312
Chapter 6, for example, describes how flood openings can be installed to wet flood proof the lowest floor and bring the building into compliance. This book can be downloaded from FEMA's website at www.fema.gov/hazard/flood/pubs/lib312.shtm.

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