Commercial flood insurance can be expensive—very expensive. So, what should you do if your property is in a FEMA-designated Special Flood Hazard Area (SFHA) and your lender says, “you have two options, get flood insurance or a get a LOMA.”
Of course, you can explore your options for obtaining flood insurance through the National Flood Insurance Program (NFIP) or Private carriers. But if you’d like to remove the mandatory purchase requirement altogether, there’s a two-step approach I’ll discuss here. I’m Eric Ratcliffe, the former Director of FEMA’s Letter of Map Amendment (LOMA) Program and current COO at MassiveCert.
The first step in the process is to get an elevation certificate. The primary purpose of an elevation certificate is to provide better data to rate a flood insurance policy more accurately. An elevation certificate is created by a licensed surveyor or professional engineer after a site visit and detailed survey. One of the data elements determined is the lowest adjacent grade (LAG) at the structure. If the LAG elevation is equal to or above the FEMA Base Flood Elevation (BFE) the structure is a very good candidate for a successful LOMA submission (the second step).
Many commercial buildings are correctly shown in an SFHA (or high-risk flood zone) where a mandatory flood insurance requirement exists. FEMA uses engineering best practices and standards to delineate its flood zones, but the data is usually only good to +/- 2 feet. Therefore, there are many structures shown to be in an SFHA where the LAG is actually above the BFE. So FEMA created the LOMA process allowing property owners to challenge the zone classification of their building by submitting better elevation data. A LOMA can correct your flood zone based on structure-specific information. So for structures where the elevation certificate shows the LAG at or above the BFE, a properly completed and submitted LOMA application will be validated by FEMA and the zone changed, resulting in the elimination of the mandatory flood insurance requirement, potentially saving you tens of thousands of dollars per year.
As with any risk decision, you’ll want to consider the cost and benefit of whether to purchase flood insurance for your asset. But many find removal from the mandatory purchase beneficial even if they obtain the insurance, as additional, lower cost insurance options may be available, and the desirability and resell value of the property may be substantially increase.
Feel free to contact me directly to learn more about elevation certificates and LOMAs and how we can support you obtaining them.