Even with the frequency of flooding events throughout the country, most lenders, servicers, and insurance personnel have heard various protests from homeowners when they are told that flood insurance is required for their home. Flooding is the most common and most costly form of natural disaster, yet people continue to feel as though it will not happen to them.

We've prepared responses to some of the most common protests. Hopefully these can help you educate your customers and overcome their concerns.

#1 Your customer says: "I've lived in this house for 20 years and it has never flooded."

Response: According to the Federal Emergency Management Agency's (FEMA's) Flood Insurance Rate Map for your community, your house is located in a Special Flood Hazard Area (SFHA). By law, we are required to use FEMA's maps to determine the flood insurance requirement for your house. These maps not only indicate flood risk areas based on historical data, but also engineering studies to determine the likelihood of flooding in a given area.

The important thing to remember is that the SFHA is based upon a one-percent-annual-chance flood event. This means that an area might not flood for several decades or it might flood a few times in one year, depending on rainfall and drainage. Luckily, your property has not experienced a flood for quite some time; however, that is not an indicator of your future flooding probability.

If you believe that your house is not within the SFHA, then you can submit an application to FEMA for a Letter of Map Amendment. Through this process, FEMA can determine if your house should be subject to the federal flood insurance requirement. Our flood zone determination vendor, CoreLogic Flood Data Services, can assist us with that process. I have a document called the CoreLogic Flood Compliance Kit that can help us get started.

#2 Your customer says: "No one else in my neighborhood has to pay for flood insurance."
Response: There are several situations that could result in this scenario. Let's explore them and see if we can determine the one that applies to you.

Because the flood zone determination for flood insurance purposes is site-specific to each building, it is possible that the Flood Insurance Rate Map shows your house in a different flood zone than your neighbors' houses.

Secondly, the flood insurance requirement only applies to buildings that are secured by loans with federally regulated lending institutions; therefore, this requirement may not apply to them.

Finally, perhaps your neighbors' mortgage companies are not aware that the properties are in the Special Flood Hazard Area (SFHA.) Your neighbors should consider contacting their mortgage companies to confirm the flood zone status of their home.

Of course, if you believe that your house is not within the SFHA, then you can submit an application to FEMA for a Letter of Map Amendment. Through this process, FEMA can determine if your house should be subject to the federal flood insurance requirement. Our flood zone determination vendor, First American Flood Services, can assist us with that process. I have a document called the CoreLogic Flood Compliance Kit that can help us get started.


#3 Your customer says: "My survey states that I am not in the Special Flood Hazard Area. Are you indicating that my surveyor is wrong?"
Response: We are not necessarily saying that the surveyor is wrong. FEMA requires that federally regulated lenders, like us, make a flood zone determination for flood insurance purposes based solely upon the current Flood Insurance Rate Map. It is possible that your surveyor is basing the flood zone determination on information other than the Flood Insurance Rate Map, such as field elevations, updated community data, or a subdivision plat. We can discuss the matter with your surveyor to try to resolve the discrepancy.

#4 Your customer says: "My house is on a hill. If it floods, the entire city is in trouble."
Response: We certainly understand your rationale; however, the flood zone determination for flood insurance purposes must be based upon the Flood Insurance Rate Map (FIRM.) Thus, if a portion of your house is located within the Special Flood Hazard Area (SFHA) on the flood map, then flood insurance is required.

While FEMA and your community work to make the FIRMs as useful and accurate as possible, the maps may not reflect every rise and fall in the terrain. It is possible that the map inadvertently shows your property to be within the SFHA; when, in fact, your property is sufficiently elevated to not be under a substantial risk of flooding.

If you believe that your house is not within the SFHA, then you can submit an application to FEMA for a Letter of Map Amendment. Through this process, FEMA can determine if your house should be subject to the federal flood insurance requirement. Our flood zone determination vendor, CoreLogic Flood Data Services, can assist us with that process. I have a document called the CoreLogic Flood Compliance Kit that can help us get started.

#5 Your customer says: "I have an Elevation Certificate that says my property is well above the flood level."
Response: We recognize the importance of the Elevation Certificate for your property; however, according to the official Instructions, the Elevation Certificate "does not provide a waiver of the flood insurance purchase requirement." The flood zone determination for flood insurance purposes must be based upon the Flood Insurance Rate Map. The Elevation Certificate has a threefold purpose: (1) Provide elevation information for community floodplain management, (2) Determine the proper insurance premium rate, and (3) Support a request for a Letter of Map Amendment.

If the Elevation Certificate states in Box B8. that you are in a Special Flood Hazard Area (a zone beginning with the letters "A" or "V"), but that the building is elevated above the Base Flood Elevation, then your building might be a candidate for a Letter of Map Amendment. Through this process, FEMA can determine if your house should be subject to the flood insurance requirement. On the other hand, if the Elevation Certificate states in Box B8. that your building is in Zone B, C, or X (not in an SFHA,) then we would be happy to contact the surveyor to try to resolve the question.

See First American's Flood Compliance Kit for more information on the LOMA process.


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