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#2140884 - 08/04/17 06:22 PM Insurance rated differently from our determinatoin
Bec Offline
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The Great White North
Insurance conundrum. We are making a loan where the borrower has had flood insurance since at least 2016. Perfect, right? Not so much. The flood insurance is a preferred risk policy that has a FIRM zone "X" and a Current Flood Zone "X", but the actual flood zone on our determination is "AE". It also indicates that it is not grandfathered. So I need the Current Flood Zone to match our determination of AE, don't I? Or show that the policy is grandfathered. The provider says that we can have a rating changed until it comes up for renewal in November...that doesn't help me at all.

The insurance does come with a letter that states "According to a report your insurer sent to FEMA, a recent review of your policy and your building's flood risk shows it is located in an area at moderate to low risk for floods on the current flood map and you have a preferred risk policy. Preferred risk policies offer the most favorable premium available through the NFIP and are only available in moderate- to low-risk areas for properties with an acceptable flood loss history."

Even with whatever they are trying to say there, we still need the current flood zone to match our determination, right?
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Flood Compliance
#2140886 - 08/04/17 06:26 PM Re: Insurance rated differently from our determinatoin Bec
Skittles Offline
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Yes. Unless it is grandfathered (and you said it isn't) you cannot originate the loan unless the zone matches.
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#2140910 - 08/04/17 07:44 PM Re: Insurance rated differently from our determinatoin Bec
rlcarey Offline
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Or your determination is wrong???
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#2140926 - 08/04/17 09:04 PM Re: Insurance rated differently from our determinatoin Bec
Inherent_Risk Online
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Any chance part of the property is AE, but the structure is in X?

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#2140927 - 08/04/17 09:13 PM Re: Insurance rated differently from our determinatoin Bec
Bec Offline
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Having the determination folks look at the position of the property again. It appears that it is in a flood zone considered moderate- to low-risk. (B, X500) Mind you, the determination people originally thought that the property was not in a flood zone. However, the appraisal indicated it was. So when I did my research with FEMA maps, it appeared to me to be in a B, X550. This has been such a mess.
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#2140928 - 08/04/17 09:24 PM Re: Insurance rated differently from our determinatoin Bec
David Dickinson Offline
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I would never rely upon an appraiser to make a flood determination. I see LOTS of errors there.
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#2141130 - 08/07/17 08:39 PM Re: Insurance rated differently from our determinatoin Bec
Bec Offline
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Right, I am not taking the appraiser's assessment, but my own research with FEMA maps and the location of the property in relationship to those maps indicated that it could be which prompted me to have the flood determination folks take another peek at it just to make sure. You think that process had LOTS of errors? With my process? Or you see LOTS of errors with appraisers and flood determinations?
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#2141133 - 08/07/17 08:41 PM Re: Insurance rated differently from our determinatoin Bec
rlcarey Offline
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Or you see LOTS of errors with appraisers and flood determinations?

Yes. Plus appraisers provide the bank with no indemnification regarding the flood information, so it is worthless information under the regulation.
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#2141156 - 08/08/17 02:25 AM Re: Insurance rated differently from our determinatoin Bec
David Dickinson Offline
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I see lots of errors with appraisers. Don't rely upon their flood determinations.
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#2141381 - 08/09/17 04:26 PM Re: Insurance rated differently from our determinatoin Bec
Bec Offline
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Right on. Thanks for the advice smile
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#2144470 - 08/31/17 03:17 PM Re: Insurance rated differently from our determinatoin Bec
Bec Offline
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So the saga continues. I provided a map to our flood determination company and they have now put the property in a flood zone AE. It is basically the corner of a deck that is in that zone, the primary is in a, from what I can tell, flood zone B or x500. However because it isn't clear if the deck is affixed to the house, the whole thing is brought into AE. The insurance company says they will not re-rate the insurance until renewal and even at renewal they will probably not re-rate but keep it at the zone X. Meanwhile, our customer is getting increasingly frustrated because they want their loan and we want to give it to them. If we force placed the flood insurance with AE rating, is that ok? We would then revisit the insurance renewal in November. Or could the borrower cancel their current insurance and go with a different company? There wouldn't be a waiting period right, lender compelled, no lapse in current coverage. Anyone have any other ideas. People are mad at me frown
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#2144474 - 08/31/17 03:25 PM Re: Insurance rated differently from our determinatoin Bec
rlcarey Offline
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Deck?? Ineligible risks on a flood policy include: Decks (except for steps and landing; maximum landing area of 16 sq. ft.)

You might think about finding a new FHD vendor. The insurance company is correct - if the structure is not touching the line and it is only a deck (attached or not), the structure is not in the SFHA.
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#2144488 - 08/31/17 03:42 PM Re: Insurance rated differently from our determinatoin Bec
Bec Offline
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Is that in the flood manual. my thought was that if the deck is in the higher risk flood plain and its attached to the dwelling, it brings the whole dwelling in. That was always my thought. Now I do see where the NFIP manual indicates that if the deck is overhanging the flood zone and the foundation is not in the flood zone, then it would not bring the dwelling in. Is that what you are referring to?
Last edited by Bec; 08/31/17 04:25 PM.
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#2144505 - 08/31/17 04:28 PM Re: Insurance rated differently from our determinatoin Bec
rlcarey Offline
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Yes

D. Buildings in More Than 1 Flood Zone/BFE
Buildings, not the land, located in more than 1 flood
zone/BFE must be rated using the more hazardous
zone/BFE.

This condition applies even though the portion of the
building located in the more hazardous flood risk zone/
BFE may not be covered under the SFIP, such as a deck
attached to a building. (Example: The building must be
rated using the more hazardous flood risk zone/BFE if
any portion of the attached deck foundation extends
into the more hazardous flood risk zone/BFE. If the
attached deck overhangs the more hazardous flood
risk zone/BFE, but its foundation system does not
extend into more hazardous flood risk zone/BFE, then
the building must be rated using the flood risk zone/
BFE where the building foundation is located.)

If that is the case, then you need to send that to the insurance agent along with the FEMA letter telling them to rerate the policy to both the agent and the insurance company.
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#2144600 - 08/31/17 09:23 PM Re: Insurance rated differently from our determinatoin Bec
Bec Offline
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Thank you for your help rlcarey
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