Industry Magazine Grand General Agency Spring 2016 | Page 27

THE DEFINITIVE GUIDE TO FLOOD INSURANCE

THE DEFINITIVE GUIDE TO FLOOD
INSURANCE
Please Don’t Ask Me About Flood Insurance!
MOST agents have had that day when a
customer calls and says they’re trying to close
on a house, but they need flood insurance.
Do you feel stress when this happens? You
shouldn’t because this is a great opportunity
to help your customer. The amount of
information required to get a policy in place
varies by property, which is why you need
an expert to help navigate the government
regulations. If you have all of the necessary
information, you can provide the lender with
everything needed to save that closing. But
what information do you need?
There are a lot of details involved in
writing a flood insurance policy through the
National Flood Insurance Program (NFIP)
and you actually need specific training in
order to sell it. You can get this training
directly from the government, or take a
class from a “write-your-own” provider (See
Page 25 for some upcoming classes that
meet this requirement). In this article, we
will hit the high points of the NFIP.

What is the NFIP?

The National Flood Insurance Program
has been around for about 50 years. There
have been many rule changes over the
years, but the policy itself is very similar
to what it was when it all started. It was
created because flood insurance was not
available through private companies due to
adverse selection and bad loss experience.

SPRING
SPRING 2016
2016

What properties are eligible for flood
insurance?

Flood insurance is available for
both
residential
and
commercial
properties. Communities are designated
as participating or non-participating.
A participating community has been
mapped by the government and met any
requirements that were noted by Federal
Emergency Management Agency. Nearly
all properties in a participating community
are eligible for flood insurance through
the NFIP. Non-participating communities
have not been mapped or approved by the
federal government. Flood insurance is
only available through private companies
for these communities.

What is a “flood zone”?

All properties are in a “flood zone”.
Properties are classified as “Special
Flood Hazard Areas” (typically labelled as
some type of A or V zone) or “Non-Special
Flood Hazard Areas” (typically a B, C or
X zone). A SFHA was once referred to as
“100-year flood plain”, which didn’t mean
it would only flood once every 100 years,
but rather that there was a 1% or greater
chance of it flooding in any given year. A
dwelling within a SFHA will be required
to have flood insurance if it is purchased
with a loan that is backed in any way by the
federal government. A dwelling in a NSFHA

may or may not be required to obtain flood
insurance, but if it is required, it can usually
be obtained with a relatively inexpensive
policy called a “preferred risk policy”.

What is a “Zone Determination”?

A zone determination is a certificate
which tells in what “flood zone” a property
is located. Most companies that write flood
insurance will run these for free. Lenders
will run them anytime they are considering
a loan on a property.

What is an “Elevation Certificate”?

Basically, an elevation certificate will
tell how far a property is above (or below)
the “base flood elevation” of a community.
Quite often, the elevation numbers on \™