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Flood Zone Change & the Grandfathering Rule

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If a bank has a customer that was located and insured in flood zone AE, but due to a recent flood map change is now in flood zone VE, does the grandfathering rule apply? If so, is the requirement that the insurance premium stay at the AE zone rate, but the property still needs to be insured for zone VE or will FEMA pay for a VE loss even though it has been insured as an AE zone?

The grandfathering rules are explained in the Mandatory Purchase of Flood Insurance Guidelines beginning on page 12 here.

First published on 9/29/08

First published on 09/29/2008

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