Can you tell me what is required to accept a Flood insurance policy with lower risk Zone determination using a Grandfather clause? What information would the customer have to submit, and who would they submit it to? We have reviewed loan files and compared polices to SFHD’s for consistency. We have a couple of customers who have claims that the original zoning was an “X” rating, and thus they would qualify to continue at this rate. Do they submit the required information to the insurance agent? I think this is what is required : the date of construction; the date of the FIRM; the zone on that FIRM in which the property is located; a copy of the map panel showing the location of the building; and the rating element that is to be grandfathered (e.g., zone, BFE, elevation difference). But to be honest, the insurance companies are the ones who do not want to change to a higher rated zone in the first place.
Also, does it make any difference what the zone rating was when they purchased the house? Meaning, if the rating was originally an “X”, but was later upgraded to an “A” rating and then sold , wouldn’t all future owners be required to obtain “A” rated policies?
Thanks for your help, this is one matter that reading the Manual has not given me all the answers. 😕
The flood zone on the insurance policy must match the flood zone on the flood determination. The only completely acceptable difference is when the preperty has been grandfathered. Grandfathering is granted by the insurance agency. It is not something you apply for.
You need to work with the flood insurance agent and your determination company to resolve the differences. If you are unable to resolve the matter, it must be submitted to FEMA for resolution, and that will cost your customer a fee. You cannot fund the loan until a flood insurance policy in an adequate amount is in place.