The Federal Emergency Management Agency’s (FEMA) “Clear Communication Initiative” is intended to inform federal flood insurance policyholders of their flood risk as reflected on the most current Flood Insurance Rate Map (FIRM). This is something congress mandated in the Homeowner Flood Insurance Affordability Act (HFIAA, and specifically Section 28 of that Act). The reasoning is sound, but there are parts that may be confusing, so I want to try and explain “Clear Communications”.
First, as a federal flood insurance policyholder, you may be paying subsidized insurance rates because your home may meet certain conditions that grant you less expensive insurance premiums. One example is called “grandfathering”, which means you pay the insurance rate for the flood zone your home was in when the home was built. So, your home may have been built in a less expensive flood zone decades ago, but now things have changed and your home is in a more expensive zone. For grandfathering, FEMA will allow you to pay the less expensive rate from when your home was built. Another example is called “pre-FIRM” which means your house was built before there was even a flood map, so you can pay a different rate too. There are many of these lower rate situations and Congress wants to make sure you know what your situation is through “Clear Communication” because it may not be clear on your flood policy documents.
Second, FEMA wants to make sure you know your current flood risk no matter which conditions you have met that may be lowering your insurance costs. That means, if you meet one of the special subsidized rate conditions, your flood insurance policy may say you are in a low-risk flood zone like Zone X since that is the matching insurance rate you are paying for. But the current flood map may show your home in a high-risk area such as Zone AE. While you may be paying a low-risk insurance rate, your home may be at high risk of flooding. So, Congress and FEMA, want you to know that just because you may be paying for a low-risk flood zone, you, and your family, may be at high-risk of flooding and closer to the flood danger than you may realize by just looking at your insurance policy documents.
Third, HFIAA is phasing out some of the conditions that allow you to qualify for lower rate insurance subsidies. So, part of “Clear Communication” is telling the federal flood insurance policy holders if they are receiving a subsidy, and that the flood zone for the subsidy may not reflect their real risk of flooding, AND those subsidies may be going away. If the subsidy goes away then you would pay the higher risk flood insurance rate FEMA has communicated to you through “Clear Communication”.
Fourth, “Clear Communications” also wants to tell policyholders what they can do to reduce their flood risk and reduce flood insurance costs. Things like getting an Elevation Certificate or elevating the home are a couple of those options.
So, the four points above all work together. First, FEMA tells you about the subsidy you may be benefiting from, then tells you what the actual risk to your property is today, then tells you the subsidy may go away and you’ll have to pay for the actual risk, and then gives you some information about what you can do to take the insurance costs back down.
To clearly communicate these four items, FEMA is sending letters to policyholders explaining all the things I mentioned above. If you get a letter, don’t throw it away because you need to read it since it could affect your risk and your wallet. FEMA will send you one of five different letters depending on your situation.
Letter A pertains to buildings that were newly mapped into high-risk flood areas. You’ll get this letter if you were in a low-risk flood zone and FEMA made a new flood map in the past year that changed your flood zone to high-risk.
Letter B is for buildings in which the standard flood insurance rates are paid but the building is located outside of the high-risk flood zone.
Letter C is for buildings that are granted the grandfathering subsidy, but they are in high-risk flood areas. This is a case where your flood insurance policy may say you are in a low-risk zone for purposes of calculating your lower insurance cost, but you are actually in a high-risk zone.
Letter D is for primary residential pre-firm buildings in high-risk flood areas paying a discounted rate. You’ll get this letter if the home you live in most of the time was built before there was even a flood map in existence and it is now in a high-risk flood zone.
Letter E is for non-primary pre-firm buildings in high-risk flood areas paying a discounted rate. You will get this letter if you have a home that you don’t live in most of the time, it was built before there was a flood map, and it is in a high-risk flood zone.
LETTER F is for buildings mapped outside of a high-risk flood area, and are insured with a lower premium flood insurance policy called a Prefered Risk Policy (PRP).
LETTER G is for buildings that were built after the Flood Insurance Rate Map was created, are in a high-risk flood area, and are already paying a flood insurance premium based on their current flood risk.
The letters will also state that one of the ways you can reduce flood insurance costs is to obtain an Elevation Certificate. An Elevation Certificate is simply a document, completed by a State-licensed Land Surveyor, which indicates the building’s elevation and the flood elevation. The difference between the two is an estimate of how much flood water would get into your home if there was a flood. If there’s more flood water in the home, the insurance rates would be higher because more water causes more damage. But if there’s less flood water, then the insurance rates would be lower because it can be expected to cause less damage. And some of the high-risk zones require an elevation certificate to set your insurance rate. If FEMA doesn't know how much water could get in the home, then you could be missing out on some big insurance discounts. So, it is not just the subsidy and the flood zone that affects your insurance rate, it is also the elevation of the home.
FEMA is simply trying to tell you what you are paying now and why; what you could be paying and why; and what you can do about it. And they are required to do so by the Homeowner Flood Insurance Affordability Act - Section 28.
Hopefully that explains FEMA’s “Clear Communications” initiative. If you need a free quote for an Elevation Certificate, or have questions about anything at all, please visit our website or give us a call. We have the best nationwide Elevation Certificate service in the US perfomed by licensed professional Land Surveyors and each certificate undergoes rigorous quality control to ensure you are getting the maximum insurance benefit possible.