Who doesn’t want to lower the cost of… everything? Flood insurance is one of those things where consumers might feel a little helpless because most flood insurance is issued through the Federal Emergency Management Agency (FEMA) so the rates are what they are. First, find a knowledgeable agent that really knows the National Flood Insurance Program. Second, check out our list of the top 5 ways to lower your premiums.
#1 Get an Elevation Certificate
The Base Flood Elevation (BFE) represents the Federal Emergency Management Agency’s (FEMA) 1% Annual Chance Floodplain (aka. 100-year flood). Generally speaking, the nearer the structure’s elevation is to the BFE the greater the risk, and for structure elevations below the BFE, the further the structure’s elevation is to the BFE, the more flood water would be expected to inundate the structure during a flood event causing greater damage, therefore higher insurance premiums.
When the Biggert Waters Act of 2012 (BW12) was passed, one of Congress’ goals was to allow for lender acceptance of private flood insurance policies to satisfy the mandatory purchase requirement. The Act contained vague language, and it took lending regulators seven years to finalize a rule for lenders to follow. Prior to the lending regulators creating the final rule, many lenders didn’t accept private flood policies as they were uncomfortable verifying compliance with the BW12 definition and worried about noncompliance fines and collateral protection.
Most lenders will contact a Flood Zone Determination company to obtain a Standard Flood Hazard Determination (SFHD) as part of their closing process and in most cases a property insurance agent will make the same request from the same or a different Flood Zone Determination company. With two or more SFHDs being produced for a single location, disagreements in results can arise. These discrepancies can delay closing or the placement of a flood insurance policy.
For FEMA to remove a structure from the Special Flood Hazard Area (SFHA) through the LOMA process, Federal regulations require the lowest ground touching the structure, also known as the Lowest Adjacent Grade (LAG) elevation, to be at or above the Base Flood Elevation (BFE). But how do I get a LOMA?