Thursday, June 27, 2013

Follow-Up to Info Central's Insurance Seminar

Like many of us, Island neighbor Larry Hinds found himself a little at sea after the Insurance Seminar hosted by Info Central on 5/29.  So he started doing some research, and was kind enough to share.

Terminology:
NFIP – National Flood Insurance Program: www.floodsmart.gov
RCBAP – Residential Condominium Building Association Policyhttp://www.fema.gov/library/viewRecord.do?id=4097
SRL – Severe Repetitive Loss
COBRA – Flood Zone: 
The Coastal Barrier Resources Act (COBRA) of 1982 and later amendments, removed the Federal government from financial involvement associated with building and development in undeveloped portions of designated coastal barriers (including the Great Lakes). These areas were mapped and designated as Coastal Barrier Resources System units or "otherwise" protected areas. They are colloquially called COBRA zones. COBRA banned the sale of NFIP flood insurance for structures built or substantially improved on or after a specified date. For the initial COBRA designation, this date is October 1, 1983. For all subsequent designations, this date is the date the COBRA zone was identified. 
COBRA zones and their identification dates are shown on Flood Insurance Rate Maps (FIRMs) http://www.fema.gov/national-flood-insurance-program-2/coastal-barrier-resources-system#0
Flood Zone – designated by rate tables 
Common flood zones in our area are AE and VE. Much of our area is determined to be in the Special Flood Hazard Area (SFHA), which is defined as an area of land that would be inundated by a flood having a 1% chance of occurring in any given year (commonly called the 100-year flood).
· AX Zone: A flood insurance rate zone that corresponds to areas outside of the 100-year floodplains, or that have a less than 1% chance of flooding in any given year, whereby there is no established base flood elevation (BFE) and flood insurance is typically not required by federally-back loans. (Lender discretion, but rarely required).
· AE Zone: A flood insurance rate zone that corresponds to areas in the 100-year floodplain. In most instances, Base Flood Elevations (BFE) are derived from detailed hydraulic analyses and are set accordingly throughout the zone. Example: If a property is in an AE zone with a BFE of 5ft, then construction regulations stipulate that the first habitable floor must be above 5ft. It essentially states that you are in a flood zone and could potentially flood up to the BFE based on simulated models and hydraulic analyses, therefore regulations restrict you from doing certain things below the BFE. Mandatory flood insurance purchase requirements apply.
· VE Zone: Everything for the AE Zone and apply here. In addition, this "velocity" zone includes the potential for wave action associated with the potential flood hazard. BFE's tend to be much higher (i.e. 12-14ft vs. 4 or 5ft) and building codes are much more restrictive.

Other Comments
· Wind and flood insurance policies are not required to be concurrent
· Single Adjuster Program allows adjuster to write flood AND wind insurance policies
· Golf Cart Addendum policies permitted by some insurer

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