Understanding what an elevation certificate is and how to read one will help you better navigate the issues a home may have in regards to flood insurance, a critical component of the home buying process. An elevation certificate (EC) is a document prepared by a land surveyor (or other licensed professional) that details the elevation of a home in reference to the Base Flood Elevation, commonly referred to as the “BFE.” The BFE is the elevation that floodwaters are estimated to have a 1 percent chance of reaching or exceeding in any given year. Remember, no type of flood damage, no matter the source of the water, is covered by standard homeowners policies.
FEMA Fact Sheet: Elevation Certificates
FEMA Elevation Certificates Instruction Guide
How an EC Is Used
If the property is in a high-risk area—a zone indicated with the letters A or V on a Flood Insurance Rate Map (FIRM)—the EC includes important information that is needed for determining a risk-based premium rate for a flood insurance policy. For example, the EC shows the location of the building, lowest floor elevation, building characteristics, and flood zone. The EC consists of six pages. Pages one through four are informational regarding the property, the Flood Insurance Rate Map (FIRM), and data pertaining to the structure. Pages five and six are photos of the property and structure. Your insurance agent will use the EC to compare your building’s elevation to the BFE shown on the map being used for rating, and determine the cost to cover your flood risk.
Section A (Page 1)
This section provides pertinent data including: the address of the property, the property description (otherwise known as the legal description), the latitude/longitude of the property, and information regarding the type of structure that is on the property such as: basement, crawl space, on slab, etc., and information regarding buildings with attached garages.
The National Flood Insurance Program (NFIP) just announced changes effective April 1, 2019 and January 1, 2020. The changes outlined below apply to new business and renewals that will become effective on or after April 1, 2019. The premium changes for Preferred Risk Policies (PRPs) and Newly Mapped procedure policies will become effective January 1, 2020.
Premium Increases and Surcharges
Average increase of 7.3%. These amounts do not include the HFIAA surcharge or the Federal Policy Fee (FPF).
For policies issued on or after April 1, 2019, there will be no changes to:
- Deductible Factors
- Federal Policy Fee
- Reserve Fund Assessment
- HFIAA Surcharge
- Probation Surcharge
Pre-FIRM Subsidized Policies (a group of policies in SFHA Zones A, AO, AH, A1-30, AE, A99, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, V1-30, and VE, that receive rates insufficient to pay the anticipated losses and expenses for that group)
- Other Pre-FIRM Subsidized Policies Not Subject to 25% Annual Increases: These are primarily condominium policies and multifamily policies. Premiums will increase 9%, with a total amount billed increase of 8%.
V Zones (coastal high-velocity zones)
- Rate increases are being implemented again this year as a result of the Heinz Center’s Erosion Zone Study, which clearly indicates that current rates significantly underestimate the increasing hazard from steadily eroding coastlines.
- Post-FIRM V Zones: Premiums will increase 6%, with a total amount billed increase of 6%.
A Zones (non-velocity zones, which are primarily riverine zones)
- Post-FIRM A1-A30 and AE Zones: Premiums will increase 4%, with a total amount billed increase of 3%.
- AO, AH, AOB, and AHB Zones (shallow flooding zones): Some policies within this rating category will have premium changes; however, for the entire category the average premiums and total amount billed will remain unchanged.
X Zones (zones outside the Special Flood Hazard Area)
- Standard-Rated Policies: Premiums will increase 1%, with a total amount billed increase of 1%.
Click here to download the summary
As we see time and time again, no home is completely safe from the risk of flooding. Flood insurance can be the difference between recovering or being financially devastated. Just one inch of water in a home can cost more than $25,000 in damage—why risk it?
Do You Need Flood Insurance?
- FACT: Homeowners and renters insurance does not typically cover flood damage.
- FACT: More than 20% of flood claims come from properties outside high-risk flood zones.
- FACT: Flood insurance can pay regardless of whether or not there is a Presidential Disaster Declaration.
- FACT: Most federal disaster assistance comes in the form of low-interest disaster loans from the U.S. Small Business Administration (SBA) and you have to pay them back. FEMA offers disaster grants that don’t need to be paid back, but this amount is often much less than what is needed to recover. A claim against your flood insurance policy could, and often does, provide more funds for recovery than those you could qualify for from FEMA or the SBA — and you don’t have to pay it back.
It’s easy to see that having flood insurance provides important recovery help. The most common flood insurance is offered through the federally regulated program known as the National Flood Insurance Program (NFIP) with options for your home only or home and contents.
- The maximum available coverage limit for the dwelling is $250,000.
- The maximum available coverage limit for contents in your home is $100,000
What if you need more than $250,000 worth of coverage for your home or more than $100,000 of coverage for your contents? Excess Flood insurance is available through private companies.
Federal Flood Insurance – What is Covered vs. What is Not
What Qualifies as a Flood?
Water has to cover at least 2 acres of land that’s normally dry, or has to have damaged two or more properties (one being your home). Also, the water has to come from:
- Overflowing inland or tidal waters
- Unusual, rapid accumulation or runoff of surface waters from any source
- Mudflow (that’s mud carried by a flow of water, creating a river of mud)
- You’re also covered when shorefront land collapses or sinks due to waters above “anticipated cyclical levels.”
*Water and seepage that comes from sewer or drain backups, or a sump pump that overflows is not considered a flood. Wind driven rain is not covered.
Please do not wait for an impending storm to purchase federal flood insurance. There’s usually a 30-day waiting period. Some private policies offer a 15-day waiting period.
Ron Lazarto, CPRIA is Client Advisor and Partner at Gulfshore Insurance specializing in Private Risk Services. Ron specializes in offering customized property and casualty insurance solutions for successful individuals and their families. Comments and questions are welcome at firstname.lastname@example.org
When advising buyers who are new to Florida or inexperienced with hurricanes, here are 10 important reminders:
- For homes with a replacement value over $1 million – their insurance agent should be reviewing package insurance policy options that give them an opportunity to purchase their insurance from one of the premier insurance carriers such as Chubb, AIG, or Pure. These carriers do the best job with paying claims and covering the loss assessment claims from their associations and golf clubs.
- Insure the home to its full replacement value; this is different than market value. Full replacement value is what it would cost today to rebuild the home as new.
- Be sure that the homeowner policy covers wind driven rain.
- Be sure that coverage for the screen enclosure is added by endorsement if it is excluded under dwelling for losses as a result of hurricane.
- Purchase full limits for mold coverage – the maximum is $50,000.
- Purchase flood insurance for the main house and the detached guest house, even when the home is in a non-flood hazard area.
- Review options for a second layer flood policy which will allow you to insure the home to value against the peril of flood.
- Have a reliable home check representative in place to be sure that the home is checked regularly and that necessary measures are taken at the time of a loss to prevent further damage that could have been avoided.
- Consider installing high impact windows/shutters if they are not already in place. Also, having a permanently installed generator is of upmost importance.
- Recommend they consult with a qualified insurance professional with a comprehensive understanding of the Florida insurance marketplace, and one who has access to the premier carriers, such as Chubb, AIG and Pure along with other reliable insurance carriers that hold A ratings by AM Best. Also, agent selection should include the agency’s roll in the claims process. In other words, does the agency have a claims advocate working on the homeowner’s behalf?
Andrea Pelletier, CPRIA, CPIA is Client Advisor and Partner at Gulfshore Insurance specializing in Private Risk Services. Andrea works with successful individuals and their families on creating and customizing package insurance solutions in the areas of luxury homes, car collections, jewelry, fine arts, watercraft, and personal excess liability. Comments and questions are welcome at email@example.com
In 2016, five flood-related events exceeded $1 billion in losses each with total flood losses reaching $17 billion or six times greater than overall flood damage in 2015. After borrowing another $1.6 billion from the U.S. Treasury Department to supplement the losses sustained last year, the NFIP now faces expiration in September. The program was last reauthorized in 2012 after a series of lapses and extensions that left policyholders on the fence.
Given the increase in flood losses seen, many feel the NFIP is not sustainable in its current state. There is a push to move more of the flood risk back into the private insurance market, and private sector insurance companies are now coming around to the idea that offering private flood insurance policies would be a strong sector for their balance sheets. Recently, several carriers have launched private flood insurance alternatives to the RCBAP tailored to meet the needs of condo associations located in high-risk flood areas. Read more