Expert Advice Needed for Flood Insurance/Grandfather Clause!!

[moodyinstl]

My husband and I are refinancing and found out on Thursday that our property, which was originally in an X zone, was re-zoned to an AE flood area. That means our premium, if we take a new policy, will double or quadruple depending on the policy parameters we choose. Being an insurance agent myself (Life, not P&C), I began going through our options and found that we qualify for the grandfather clause because we haven't changed anything structurally to our home and have had continuous flood coverage. After getting the information together, I turned it over to our current agent and told him what to do. He called me back Friday and to tell me that the GF clause doesn't apply to us. According to Fidelity National, the FIRM was put into effect in Aug/2000 and our policy has an effective date of Oct/2000, therefore we don't qualify, although our building is pre-FIRM. I then contacted a P&C agent who actually does flood insurance (our agent stopped doing it years ago) and she said she'd never heard of that restriction and that none of her data from FEMA/NIFP has anything like that documented in it. I pulled up the most recent information I could find on the web for the GF clause and couldn't find anything about it, either. Has anyone heard of this restriction and if so, where can I view it online or can you send a copy of the document that states it to me? Also, how did we get the Zone X premium in the first place? In Life Insurance the only way to do that would be to back-date the policy and if that happened in our case, our policy would have an effective date of Aug/2000 or prior, which would make all of this moot. Any help would be greatly appreciated!

 

[djs]

http://www.floodsmart.gov/floodsmart/pdfs/grandfathering_fact_sheet_2009.pdf

Not sure if your home is pre-firm or post-firm. If it's post-firm and built based on the firm at the time, you can use the 'then-active' firm rating. If pre-firm, then you would need continous coverage since the firm date, which it doesn't look like you have.

Now, here is where I'm confused. Do you have an existing policy? If so, just keep it in force. Why is anyone asking about this? Or has your policy lapsed and you need a new policy? Lenders have gone off the deep-end in documentation lately (as I'm sure you have found out), but I've never had one question an existing flood policy, just that a flood policy had to be in place.

Dan

 

[moodyinstl]

Thanks for the info, DJS. Our house is pre-FIRM, but I'm still curious about how we originally got the X zone rating if the property was in an AE zone at the time of purchase. The reason we're going through this now is because we're refinancing and the bank is demanding that the flood policy reflect the zone that FEMA shows on their map, which is AE. Our old policy, which had never lapsed and is still in force now, was written in an X zone.

 

[Lyn]

Thanks for the info, DJS. Our house is pre-FIRM, but I'm still curious about how we originally got the X zone rating if the property was in an AE zone at the time of purchase. The reason we're going through this now is because we're refinancing and the bank is demanding that the flood policy reflect the zone that FEMA shows on their map, which is AE. Our old policy, which had never lapsed and is still in force now, was written in an X zone.

Then you should be grandfathered. I just wrote one this week and all we had to have was the latter from the Department of Emergency Management for the county and be sure that it includes the panel ID. In my county, I can go online and get the panel myself.

 

[moodyinstl]

Hi, Lyn. What is the letter from the Dept. of EM supposed to say?? I have my county panel ID. And did you read in my original post that the map was effective Aug/2000 and our policy went into effect Oct/2000?

 

[djs]

Only real recommendation is to have your agent (or you) call the NFIP helpdesk.

They should be able to give you a policy that reflects the current zoning. This may impact your renewal rates though, so I'd ask questions upfront.

In general, I've found calling NFIP a pretty easy thing. They usually stick to the book, but if you ask enough questions, you can at least make sure the answer is correct.

Also, since you didn't mention the premium, if you have a preferred rate, keep in mind the preferred rate will be changed to standard, even under grandfathering. This alone could cause a double to quadruple rate increase. Basically, preferred rates are NOT grandfathered, just the zone.

I'm still confused how you got the wrong rates upfront, but, the timing is close enough, I assume somebody used old data when they did the initial submission and then somebody accepted it, probably based on a slightly dated flood certificate.

Yes, lenders are hard to deal with nowadays.

Dan

P.S. NFIP helpdesk = 800-427-4661

 

[moodyinstl]

Thanks again, Dan. Our premium was $326 for $200K building coverage, $80K contents coverage, and $1K deductible. I see nothing on the cert that states preferred and the Program Status is "Normal", if that is what you're talking about. I did leave a message for NFIP Friday evening and am hoping to hear back from them tomorrow, but after reading the information you've provided I'm not anticipating getting any satisfaction from the conversation. The next hurdle we have is the 56-day rule (?). If we can't get grandfathered in and have it accepted by the bank, we will have to wait until 56 days prior to our current policy's end date, which is Oct 28th. That means we won't be able to close until early September and only with a new policy. A new policy in an AE zone will cost us just over $1200/yr with $159K building coverage, 0.81 RPH Basic, 0.83 RPH Additional, $5K deductible, Regular program type. Understand that I have no idea what "RPH" is, so I hope you do and that you don't mind sharing it with me. Is there any way to get around the 56-days prior rule and any way to lower our premium (other then upping the deductible to $5K and lowering the contents coverage)?

I tried to PM you, but I have to have 20 posts in order to PM anyone other than staff. If you can chat on YIM or any other instant messenger service, PM me with your ID if you don't mind.

 

[djs]

I'm not sure what state you are in, but, looking at California rates (the only rates I have experience with), the $326 DEFINITELY means you have preferred rates, which won't grandfather.

I have no idea what RPH is.

Unfortunately, unless you are in California, there isn't much I can do for you. It's going to take someone who is licensed in your state that knows how to run the gauntlet with NFIP to move you forward. Also, the problem really isn't NFIP (you already have a valid policy), it is the lender. I'd push back there first.

Dan

 

[moodyinstl]

I know we can't grandfather in w/preferred rates and that in itself isn't too upsetting. However, I am now curious about why the lender is forcing a new policy/rate on us. I guess I have to call him back again. I'm getting really tired of this.

Missouri, btw.
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Here is what the agent I'm speaking w/about flood insurance said on the issue of why we're having to deal with all of this now...

"I understood that the reason the mortgage company raised the issue on the flood is that when they asked for a copy of the current declarations page the zone was inaccurate. They would of just moved forward using the current declarations page and been satisfied with the current coverage if the zone would have matched what they show the zone should be (AE versus X)."

I would like to know why this was never an issue with our 2 previous refinances. This is getting complicated and convoluted and I'm just angry now.

 

[marindependent]

This is an old post, but if this happens to you nowadays - likely you may qualify for the newly mapped flood program.