June 14, 2024

Grandfathering Flood Zone

Understanding the Power of Grandfathering

Making Sense of It All
“…look at it this way: the original property owner built the structure according to all of the land use rules and requirements in force at the time of construction. Now, remapping comes along and changes the rules!  Without the benefit of grandfathering, the property owner suffers from a rule change applied after the fact, when he can do nothing about it. You don’t usually change the rules of the game after it has begun.  Map grandfathering is, ultimately, a fair way to play.”

What Agents Must Know About Map Grandfathering

“Map grandfathering provisions address two pivotal issues affecting the rating of a flood policy:
·         what is the applicable flood zone, and
·         what is the required Base Flood Elevation (BFE)?

NFIP rating rules allow a flood policy to be rated based on the current map or a prior map, depending on which produces a more favorable premium for the property owner.”

Grandfathering of Existing Business

“Renewal policies may continue to be rated using the FIRM zone and the BFE designated by the map in effect whenthe policy was originally written. Two conditions apply:
·         the NFIP coverage on the building must have been continuous, and
·         the building must not have been altered in a way that would make the lowest floor for rating   lower than the BFE on the original FIRM.
If the original map designated the location of the building to be in a low- or moderate-risk flood zone (Zone B, C, X, or D), then the zone is also grandfathered and there is no BFE requirement.”

New Business—Applications for Coverage….”another set of grandfathering rules applies to policies …originally designated as located in a flood Zone B, …..now located in a flood Zone AE, (designated as high hazard and subject to the mandatory purchase requirement).
·         …flood insurance policy rates can be based on the FIRM zone and the BFE (if applicable) on the map in effect on the date the building was originally constructed …(Provided the property has not been significantly improved or designated severely damaged.)…… but the rating of that policy can be based on the old map, thereby allowing him the benefit of Zone B rates, if they will produce a lower premium for his coverage. Documentation for FEMA must be provided to locate his property on the old map. ….
·         this property can qualify as a Zone B rated property, but it cannot qualify for the Preferred Risk Policy (PRP). The property must be located in a Zone B, C, or X according to the flood map current as of the inception date of each year’s policy if it is to qualify for the PRP.

For more information and complete NFIP rating rules, refer to the Rating Section of the NFIP Flood Insurance Manual, available on the FEMA website.

The information about “Map ‘Grandfathering’ Rules” is listed on pages RATE 21-23.
M. Rita Hollada, CPCU, CIC, CPIA, Chairman FIPNC

Excerpts from the Watermark, a publication of the NFIP