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#2140884 - 08/04/17 06:22 PM
Insurance rated differently from our determinatoin
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Diamond Poster
Joined: Jul 2010
Posts: 1,115
The Great White North
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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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#2140886 - 08/04/17 06:26 PM
Re: Insurance rated differently from our determinatoin
Bec
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Joined: Sep 2002
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TN
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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
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Galveston, TX
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Or your determination is wrong???
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2140926 - 08/04/17 09:04 PM
Re: Insurance rated differently from our determinatoin
Bec
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Joined: Jan 2017
Posts: 570
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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
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Diamond Poster
Joined: Jul 2010
Posts: 1,115
The Great White North
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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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#2141130 - 08/07/17 08:39 PM
Re: Insurance rated differently from our determinatoin
Bec
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Posts: 1,115
The Great White North
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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
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Posts: 83,227
Galveston, TX
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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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#2144474 - 08/31/17 03:25 PM
Re: Insurance rated differently from our determinatoin
Bec
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Posts: 83,227
Galveston, TX
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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
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Joined: Jul 2010
Posts: 1,115
The Great White North
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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
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Joined: Jul 2001
Posts: 83,227
Galveston, TX
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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
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Diamond Poster
Joined: Jul 2010
Posts: 1,115
The Great White North
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Thank you for your help rlcarey
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