I got a call from a home owmer to do an elev. certificate whose home is under contract to be sold. It was built in the 50's and is plus/minus 3' below the BFE. I did an EC for a house two doors down. They told me the realter/insurance agent who is the same company is requesting an EC.
I just got off the phone with the owner of the agency and he tells me as of Jan. 1 if a structure is rated "prefirm" when it is sold and flood insurance is necessary it will be based upon a Elec. Cert. using the current BFE. In other words no more prefirm rates when sold.
Have any of you heard of this.
http://www.fema.gov/national-flood-insurance-program-2/pre-flood-insurance-rate-map-firm#1
Pre- Flood Insurance Rate Map (FIRM) buildings are those built before the effective date of the first Flood Insurance Rate Map (FIRM) for a community. This means they were built before detailed flood hazard data and flood elevations were provided to the community and usually before the community enacted comprehensive regulations on floodplain regulation. Pre-FIRM buildings can be insured using "subsidized" rates. These rates are designed to help people afford flood insurance even though their buildings were not built with flood protection in mind.
http://www.floodsmart.gov/floodsmart/pages/choose_your_policy/policy_rates.jsp
PRE-FIRM PRIMARY RESIDENCE – STANDARD RATED POLICY (A ZONES)
The following criterion was used for calculating example premiums: Pre-FIRM Primary Residence, single family structure, no basement or enclosures, $2,000 deductible building and $2,000 deductible contents. Note: if your community participates in the CRS, your premium may be even lower.
The Community Rating System (CRS) is a voluntary incentive program that recognizes and encourages community floodplain management activities that exceed the minimum NFIP requirements. As a result, flood insurance premium rates are discounted to reflect the reduced flood risk resulting from the community actions. To learn more about CRS and to see if your community participates, go to FEMA’s CRS Web page, at http://www.fema.gov/national-flood-insurance-program/community-rating-system.
Buildings that are Post-FIRM, require the use of an elevation certificate for rating. However, property owners of Pre-FIRM buildings reserve the right to purchase an elevation certificate and use elevation rating, if the premium is more beneficial. Please contact a licensed insurance agent for further information.
Note: Single-family dwellings that are primary residences and insured to the maximum amount of insurance available under the program or no less than 80% of the replacement cost at the time of loss may qualify for replacement cost claim settlement. All other buildings and contents will be adjusted based on their Actual Cash Value (depreciated cost) Please refer to the policy for further explanation and requirements.
DDSM:beer:
Subsidized Rates to begin disappearing in 2013
http://www.nhcgov.com/PlanInspect/Documents/Insurance%20Committee%20Doc.pdf
Also, in detail:
I do a lot of work in coastal Florida, where there are a lot of PreFirm houses. Some areas didn't have FIRM maps until the late 70s ... but I still get a lot of requests for El Certs in those areas. Some lender require an El. Cert, no acceptations. Some insurance agencies won't issue a Pre Firm policy without one. I think it's a 'cover their butt' kind of thing, so that the client can not come back to them if they find out later that their PreFIRM home did qualify for a better rate.
Anyway, I use the comment section to explain the situation. I'll put a note that says something like "Note Regarding PreFIRM status: County records indicate this residence was constructed in 1965. The initial date of the {community} FIRM map is 1/1/19xx. This property should be evaluated to determine if PreFIRM status applies."
I don't assume that all houses built prior to the initial date are PreFIRM, because FEMA rules state that if significant changes are made to the house, like a large addition, they may void their PreFIRM status.
Edit: I didn't read the above links before posting, but it looks like PreFIRM rates will no longer apply to investment property, summer homes, and commercial. I had not heard that before. Interesting.
Starting August 1, 2013,
Note that new policies written on pre-FIRM buildings due to a sale or deliberate lapse will be issued at full risk rates.
(Comment: Surveyors should be pricing their EC's and LOMA's based on their value. The full risk rates are not going to be cheap)
Ouch ... that's going to kill the resale value of many of these homes. I've seen $6-7,000/yr quotes on these homes that are not PreFirm or Grandfathered. This is a pretty big deal.
> Starting August 1, 2013,
>
> Note that new policies written on pre-FIRM buildings due to a sale or deliberate lapse will be issued at full risk rates.
>
>
> (Comment: Surveyors should be pricing their EC's and LOMA's based on their value. The full risk rates are not going to be cheap)
Marc,
Where are you getting that info?
The Bow Tie Surveyor
This is the same issue appearing in New Jersey post Sandy. Shore area homeowners are being told to rebuild at the "new" ABFE but ity will change when the revised maps from Sandy are completed.
Due to the Bibbert Waters Act of 2012 a summary of which follows.
Flood Insurance
Removes subsidized rates (pre-FIRM rates) for the following classes of structures and allows rates to increase by 25% per year until actuarial rates are achieved: The effective date is July 1, 2012.
• Any residential property that is not the primary residence of an individual
• Any severe repetitive loss property
• Any property that has incurred flood related damages that cumulatively exceed the fair market value of the property
• Any business property
• Any property that after the date of the Bill has incurred substantial damage or has experienced “substantial improvement exceeding 30 percent of the fair market value of the property.
• Any new policy or lapsed policy, or any policy for a newly purchased property.
• Any policy for which the owner has refused a FEMA mitigation offer under HMGP, or for a repetitive loss property or severe repetitive loss property.
o Severe Repetitive Loss means four or more claims payments of over $5,000 or two claims that exceed the value of the property.
Increases the limit for annual rate increases within any risk classification of structures from 10 percent to 20 percent. Effective date is July 1, 2012.
Defines Severe Repetitive Loss properties for single family residences as 4 or more claims, each for more than $5,000 and cumulatively more than $20,000. For multi-family residences, the Director may provide a definition by regulation.
Allows for premium payments either annually or in more frequent installations.
Places limits on a bank’s force placement of flood insurance. Forced placed insurance would be cancelled and the premiums refunded upon proof of a borrower’s existing flood insurance coverage.
Flood rates could be as high as $31,000 per year without raising the dwelling. The act basiccaly removes any Federal subsidy for flood insurance and places the burden on the homeowner.
The second link in my previous post (Summary of Biggert-Waters) was from the Association of State Floodplain Managers website (ASFPM).
See the Link under "Current Events"
ASFPM is the largest private non-profit association exclusively focused on flood related mitigation. It's the accrediting body for the Certified Floodplain Manager program. It very closely monitors FEMA and Congress on flood and flood insurance related issues. It also maintains a calendar for flood related training and educational events. You can learn more about them on their website.
In Illinois we have a statewide ASFPM chapter, IAFSM.
http://www.illinoisfloods.org/
It was at the IASFM conference two weeks ago that I became aware of many of these changes.
That's going to have a huge impact on Florida.
That Is Good For Us Who Have Been Subsidizing Them
I cannot afford my own vacation home but was forced to subsidize the rebuilding of other people's vacation homes.
Paul in PA
Yeah, I'm tired of subsidizing
People that live in tornado alley too. Or river basins that flood. Where should we all live that's safe, Paul?
No Where Is Truly Safe
But you decide what is safest for you, buy your own insurance and no one else should subsidize your insurance.
Over the last few years quite a few homes along the Delaware River have been raised. Very few have been razed.
Paul in PA
That Is Good For Us Who Have Been Subsidizing Them
It's not about vacation homes. If you read the full text, it will eventually be extended to businesses, property with previous damage, "grandfathering" based on prior flood maps, and for owner/occupants, it will "reset" to full rates when the property is sold ... No one is going to pay $8,000/yr to insure a 1970s home, it's going to make older homes along the coast unsellable. Book it.
Let's say you are Zone B today. Next year FEMA reissues maps and puts you in a AE with your floor elevation -3 ... Guess what ... you're screwed, $4,000 premiums unless you want to pay to have your house jacked up.
Let's say you bought your home 5 years ago under a PreFIRM or Grandfather clause, and have been paying $1200/yr for a house that is -6 under BFE. It looks like you'll be allowed to continue at that rate if it's your primary home, but good luck trying to sell that after 2014 when the rate will be $7,000 or $8,000 for a new buyer...
That Is Good For Us Who Have Been Subsidizing Them
> Book it.
Wait till the FIRM is replaced by the Risk MAP
The vision for Risk MAP is to deliver quality data that increases public awareness and leads to action that reduces risk to life and property.
Not only flooding...but any RISK.
Fire prone?
Earthquake zone?
Tornado?
Hurricane?
Civil unrest?
Will the NFIP be revised/modified/upgraded to the NRIP?
DDSM:beer:
