Christopher J. Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS MyNewMarkets.com Insurance Journal Associate Editor
"I don't need flood insurance; I'm not in a 'flood zone.'" Or, "I don't need flood insurance because my mortgage company said I don't need it." These statements are made more often than any insurance professional would like to admit; but the frightening part is many agents might agree with the statement without question or understanding the full fallacy of either statement. Every structure located in one of the more than 20,400 NFIP-participating communities is in a "flood zone;" the insured house or building may simply not be in one of the more hazardous ones. The client is really trying to say, "I don't need flood insurance because I'm not in a special flood hazard area (SFHA)." They just don't know the correct terminology, but agents must know and be able to effectively and tactfully correct the insured when discussing flood coverage. And, as will be seen, being located outside a SFHA does not guarantee freedom from the possibility of flood loss. Other often used misnomers in news reports and newspapers are "100-year flood plain," or the "100 year flood event." Although the creation and use of both terms makes some sense based on the statistical calculations used to establish hazardous flood areas - both give the wrong impression of the true hazard. "Flood zone," "100-year flood plain" and "100-year flood event" are three phrases favored by the media and perpetuated by clients (and some agents). These over-simplified attempts to describe special flood hazard areas (SFHA) are incorrectly applied to the true exposure faced.
Defining Special Flood Hazard Areas (SFHA) A special flood hazard area is defined as an area having a 1 percent chance of being inundated by flood waters in any given year (thus the creation and misuse of the term "100-year flood plain"). Flood waters have an equal chance of submerging these areas every year for five straight years, or not for 200 years; there is simply a 1 percent statistical possibility EVERY year. Homes located in special flood hazard areas have a 26 percent chance of suffering flood damage during a normal 30-year loan according to FEMA. There are two broad classifications of special flood hazard areas: 1) "A" zones, and 2) "V" zones. Further information about these zones can often be found on Flood Insurance Rate Maps (FIRM) by use of sub-classifications such as "AR," "AO" or "VO." These and other SFHA sub-classifications provide more detailed information about the pattern and characteristics of flooding in the specified area. Detailed information about each of the Special Flood Hazard Area sub-classifications can be found on FEMA's Website at: http://www.fema.gov/pdf/nfip/manual200805/16map.pdf.
What Makes a "V" a "V"? Differentiating between "A" zones and "V" zones is simple; "V" zones are generally located near areas subject to hazardous tidal flows (waves) such as the ocean. "A" zones are those areas simply subject to inundation by overflow of rivers, low-lying areas subject to ponding, etc. "V" can be used to signify "velocity;" the water is flowing with the increased hazard and damage of wave action. "A" can mean "altitude;" the water goes up and goes back down, but it lacks the damaging wave action of a "V" zone. When reviewing a coastal Flood Insurance Rate Map (FIRM) it is common to find "V" zones morph into "A" zones. Both areas are still special flood hazard areas, there's just a difference in the supposed hazard and potential damage leading to different rating criteria. A common question in flood classes is, "How is that point decided?
Where does a "V" become an 'A'?" To establish this point, engineers must calculate two heights: 1) the "100-year" still-water height; and 2) wave heights above the still water height. Wave height decreases the further up the shore it moves; when the anticipated height of the tidal wave falls to less than three feet above the "100-year" still-water height the "V" zone ends and the "A" zone begins. "Base Flood Elevation" (BFE) and "100-year still-water height" are not synonymous. The BFE includes some wave action in its calculation. Agents who write flood coverage do not necessarily need this information for rating purposes, but it is essential to understand it when discussing coverage and rating with a client. Removing some of the mystery in flood insurance can put the client more at ease. "A" and "V" Zone Differences Reference points used for rating policies in special flood hazard areas differ depending on a structures zonal location. "A" zones use the bottom of the first elevated floor as the reference point for calculating the height above (or below) base flood elevation. Conversely, "V" zones use the bottom of the lowest horizontal support for the measuring point. "V" zone reference points could be as much as 18 inches to two feet lower than "A" zone reference points. Why is the bottom of the lowest horizontal support used in a "V" zone? Due to the damage potential presented by wave action. “A" and "V" zones also differ regarding the acceptable means for elevating the insured structure. Structures located in "A" zones may be elevated above Base Flood Elevation either by pilings, columns, shear walls or solid foundation perimeter wall with appropriate openings. Conversely, pilings, columns, shear walls or "breakaway" walls are the only acceptable elevation methods in "V" zones. Proper openings in a solid foundation perimeter wall (eligible only in "A" zones) allow for the free passage of water into and out of the building without requiring human intervention to open or close. Other NFIP requirements for these openings are: 1) a minimum of two openings on different sides of each enclosed area; 2) there must be at least 1 square inch of opening for each square foot of enclosed space; 3) the bottom of the openings must be no more than one foot above the grade immediately below the vent; and 4) windows, doors and garage doors are not considered proper openings (they require human intervention). If the "A"-zone structure lacks sufficient openings as defined, the reference point becomes the ground under the structure. Pilings, columns, shear walls or "breakaway" walls are the only NFIP allowable method for elevating a structure in "V" zones. Following is a description of two of these options: Shear Wall: A shear wall is a structural support running parallel (as nearly as possible) to the flow of the water. These walls are not structurally joined at the ends allowing for water to flow through unimpeded. Breakaway Walls: Breakaway walls are non-structural walls perpendicular to the flow of water (taking the direct hit) designed to fail under certain wave force conditions. The failure of these walls should cause NO damage to the structural supports, the foundation or any part of the building above the walls. Supposed "Non-hazardous" Flood Zones Non-special flood hazard areas, historically delineated using "B," "C" or "X," are considered areas of moderate or minimal hazard generally only expected to flood in times of severe storms or when drainage problems exist. However, FEMA states that 25 percent to 30 percent of all flood insurance claims are paid in these "less hazardous" areas; so neither insured nor agents should ignore flood insurance just because they are not in areas considered "hazardous." Zones historically labeled "B" and "C" are being replaced with just "X." As Flood Insurance Rate Maps are updated, non-SFHA will be assigned a "Shaded X" or an un-shaded "X." Base flood elevations are not indicated in either "X" zone. "Shaded X" zones correspond to areas with a higher probability of flooding than areas tagged by an un-shaded "X." A "Shaded X" indicates the area has a 0.2 percent annual chance of flooding (the "500-year" flood line) or a 1 percent chance of experiencing flooding of less than one foot in any given year (not high enough to be classified as a special flood hazard area). Agents with clients depending on Difference in Condition (DIC) policies to provide flood coverage must pay close attention to the flood coverage exclusions in the DIC policy. Some DIC forms exclude flood outright or increase the flood deductible to match the maximum available coverage offered by NFIP policies for structures located in Special Flood Hazard Areas ("A" and "V" zones) and Shaded "X" zones. This "Shaded X" wording if often thrown in without the agent's or insured knowledge. If such limitation cannot be negotiated out, then the insured must be informed, and any structures located in "Shaded X" zones must be covered by an NFIP policy. Areas where the flood hazard is undetermined are shown on the FIRM as a zone "D." This zone may also be used when one community incorporates portions of another community where no map has been previously prepared.
Zone Lines: More Than One Zone Flood Zones do not follow property boundary lines; they are a function of the water source, protective measures, erosion, drainage and other hydrological factors. Zones may change in the middle of an individual's yard or in the middle of the living room. Questions often arise as to when the more hazardous zone must be used? The more hazardous zone is used when ANY part of the structure or its permanent, real-property attachments is dissected by the zone line; even if it is a part of the structure not covered by the flood policy. If the attached deck attached at the rear of the house is partially in an "A" zone and partially in an "X" zone, the entire house is rated in the "A" zone, even though the deck is not covered by the flood policy. If the line is in the back yard, rating is based on the zone in which the house is located. It is not the zone of the land that matters; it is the zone in which the structure itself is located.
Flood Policy Forms and Participating Communities
By Chris BoggsSeptember 16, 2009Compared to more common property insurance policies, National Flood Insurance Program (NFIP) policy forms are actually quite intriguing. First, the Federal government wrote them; and second, they use terms and conditions not found in other property policy forms. The three most commonly used NFIP coverage forms are highlighted below.Three Policy FormsEach Standard Flood Insurance Policy (SFIP) form issued by the Federal Emergency Management Agency (FEMA) specifies the terms, conditions and agreement between FEMA (as the insurer) and the named insured. Provisions are essentially the same among the three forms with the only differences being the qualifications for coverage, the limits available and the property valuation methods applied. Dwelling Form: Approximately 85 percent of current NFIP policies are written using the dwelling form. It is designed for one to four family structures primarily occupied as a residence. Homeowners, residential renters, owners of two to four unit residential structures, residential townhouse or row house and the owner of an individual unit in a condominium building are eligible for the dwelling form. Property insured on the dwelling form is valued at replacement cost provided two requirements are met:
Property is insured to at least 80 percent of its value (or the maximum coverage available); and
The insured lives in the residence at least 80 percent of the year.
If either of these requirements is not met, the most the insured is going to receive is the property's actual cash value.Although the policy states that replacement cost is paid if 80 percent of the value is carried, this is not a coinsurance form. Like the homeowners' form, the dwelling form will pay the greater of actual cash value or the amount developed in the coinsurance calculation; but only if the insured lives there 80 percent of the year. If both conditions are not met, losses are paid at actual cash value; this is the reason this is not the equivalent of a coinsurance form.In regular program communities, coverage for buildings and contents are limited to a specified maximum. Current (as of 2009) maximum limits are $250,000 on the structure and $100,000 on contents (which applies to "renters" as well). General Property Form: Owners or lessees of "other residential" and non-residential structures or units are eligible for protection under the general property form. Residential structures with five or more units, hotel or motels, apartment buildings, cooperative condominiums, assisted living facilities and dormitories are examples of "other residential" structures insurable on the general property form. Non-residential structures, as is evidenced by the name, are any structures where people do not live and includes stores, office buildings, manufacturing facilities, warehouses, churches, schools, detached garages commercial condominiums and any other eligible structure not normally considered a place of residence.Structures and contents insured on the general property form are valued at actual cash value with no other options available.Maximum limits differ depending on the classification of the structure. "Other residential" structures are limited to $250,000 on the structure and $100,000 on the contents. Non-residential structures are eligible for up to $500,000 on the building and another $500,000 for the contents.Residential Condominium Building Association Policy (RCBAP): Provides building coverage and if desired can be used to provide contents coverage for common use personal property for residential condominium buildings provided 75 percent or more of the building is residential use. Coverage is written in the name of the association for the benefit of the association and the unit owners. Only buildings with a condominium form of ownership are eligible for this coverage form. The unit owners must take title and deed to specific units. Cooperative condominiums are NOT eligible for the RCBAP as title to a specific unit is not passed to the occupier of the unit; an "owner" buys stock in the cooperative and is allowed to live in a particular unit (based on the amount of stock purchased). Timeshare buildings MAY be eligible for the RCBAP if condominium-style ownership is offered in jurisdictions which allow title to individual units be vested in the owners names (a fee simple-type arrangement allowing the title to be transferred to heirs).Property insured on the residential condominium building association policy is valued at replacement cost. In fact, this is the only form that offers a true coinsurance clause similar to the homeowners' or commercial property policy.Much higher limits are available for buildings insurable under the RCBAP. Up to $250,000 per unit, per building is available. A 10-unit building, for example, can purchase up to $2.5 million in protection. Coverage for commonly owned personal property is limited to $100,000 per building.Participating Communities in the Regular ProgramTwo requirements must be met before owners or lessees can avail themselves of the coverage and limits highlighted above:
The structure must be in a participating community (currently over 20,400); and
The community must have transitioned into the Regular Program.
A participating community is one that 1) has been notified by FEMA through the Federal Insurance and Mitigation Administration (FIMA) that there are flood-prone areas within the community (usually resulting from previous floods); 2) have been notified of the location of those areas by publication of a Flood Hazard Boundary Map; 3) within one year of notification agrees to join NFIP; and 4) agrees to participate in the development of local flood plain management guidelines. Being labeled a participating community is the first step toward becoming a regular community.Immediately following a community's decision to participate with NFIP, the emergency program is made available to residents and businesses in the community. During the emergency program phase, very limited amounts of coverage are available.Regular Program: Moving from the emergency program to the regular program requires completion of a more detailed flood insurance study (FIS) by FIMA and the Army Corps of Engineers, more clearly defining the community's flood hazards. Simultaneously, the community, in conjunction with FEMA, is developing and codifying the flood plain ordinances and laws to regulate construction and maintenance in flood zones and flood ways.After the flood insurance studies are completed and FEMA is satisfied with the locally adopted flood plain management ordinances, the community moves to the regular program. Once the community enters the regular program, the limits presented above become available.Flood Plain ManagementFlood plain management is the local community's responsibility. Reviewing and updating existing laws are solely the duty of the participating community; FEMA does not take part in this process. However, if the community fails to comply with its own flood plain management requirements, FEMA may place the community on probation for one year. During that year, every flood policy in that community has a $50 surcharge tacked on to the current premium: 1) to help finance the increased risk the community is presenting; and 2) as a political move to encourage policy holders to call the community to push for resolution. The community is no longer considered a "participating community" as they are not working with FEMA to mitigate losses. If deficiencies are not corrected within that year, the community is suspended and no NFIP-backed flood policies can be written or renewed
Six Unique Flood Insurance Definitions
By Christopher J. Boggs, CPCU, ARM, ALCM
September 21, 2009
NFIP flood policies narrowly and specifically define specific terms to make them apply uniquely to the flood insurance policy. As with any policy, since the federal government controls the definition of some extremely important policy terms, more than a cursory review of the terms is required.
Flood: A general and temporary condition of partial or complete inundation of two or more acres (general) or two or more properties (at least one of which is the policyholder's property) of normally dry land area (temporary) from the overflow of inland or tidal waters, unusual and rapid accumulation or runoff of surface waters from any source; or
Flood also includes the collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.
Four concepts on which to focus in this definition are:
The definition states "two or more properties…," it does not state "structures" or who the owner of the second property must be. If the contiguous flood crosses onto another's property, the inundation qualifies as a "flood;"
The "Southfork Ranch" provision (where the Ewings lived in TV's Dallas). Insureds that own a large amount of land may never qualify for coverage without this two-acre provision;
Mudflow in the flood policy is not synonymous with mudslide. It means a river of liquid and flowing mud on the surfaces of normally dry land areas; and
The collapse or subsidence of land does not mean erosion over long periods of time; this is sudden erosion caused by the inundation by flood waters.
Basement: Any area of the building, including any sunken room or sunken portion of a room, having its floor below ground level (sub-grade) on all sides. A very important definition because there is no coverage for any personal property located in a basement, regardless of the flood zone. Overall, there is very limited coverage for property in a basement. Some coverage is extended to property necessary for the operation of the structure and attached to a power source such as electrical equipment (outlets, switches, junction boxes and circuit breakers), HVAC and AC systems, water heaters, pumps, clothes washers and dryers and freezers (not walk-in).
Coverage for real property in basements is limited to: 1) Drywall for walls and ceilings in a basement to include the cost of labor to nail it, unfinished, un-floated and not taped, to the framing; 2) Elevators, dumbwaiters, and related equipment, except for related equipment installed below the base flood elevation after September 30, 1987; 3) Nonflammable insulation in a basement; 4) Stairways and staircases attached to the building, not separated from it by elevated walkways; and 5) Footings, foundations, posts, pilings, piers, or other foundation walls and anchorage systems required to support a building.
To be considered a basement, the area must be below ground level on ALL sides. Walkout basements not requiring a step up to grade are not considered a basement by definition; that is just the first floor and the reference point for flood rating purposes.
Conversely, the building may be above grade but have an area that is dug into the ground making that area below grade and a basement by definition. Coverage for property is such areas are limited as detailed above. Examples may include a sunken living room or a recessed production area.
Sunken living rooms were fashionable in the 1970's and are returning to vogue in some areas of the country. If these areas are below grade even though the rest of the house is above, they are considered basements and none of the property located in them is covered for damage resulting from flood.
Recessed production areas may be necessary due to the weight of the equipment or the process of manufacturing. Such large scale operations may require some excavation to assure the production floor is on solid footing. If the area is below grade on all sides due to this excavation, it is considered a basement; there will be no coverage for the machinery or equipment in such areas.
**Sometimes, computer rooms are moved to a basement due to the need for security, segregation or to avoid damage by sprinkler leakage. None of the computer equipment kept in these areas is covered by the NFIP policy if flood damage occurs.
ElevatedBuilding: A non-basement building with its lowest elevated floor raised above ground level by foundation walls, shear walls, posts, piers, pilings, or columns. Personal property and real property located below the reference point in an elevated structure are subject to the same conditions and limitations as property located in a basement. Additional problems are created if the reference level is altered in an elevated structure.
Pre-FIRM and/or Post FIRM:
These terms describe the date construction or substantial improvement was completed compared against the date the initial Flood Insurance Rate Map (FIRM) was effective.
Structures completed or substantially improved prior to the issuance of the community's first FIRM are considered Pre-FIRM; and
Structures completed or substantially improved after the issuance of the community's first FIRM are considered Post-FIRM.
Rates differ based on a structure's classification as Pre-FIRM or Post-FIRM. Grandfather laws are also affected by Pre or Post-FIRM designations.
Post-FIRM structures MUST comply with the floodplain management requirements and the FIRM in effect at the time of construction. Nothing should be done to the structure to alter it in violation of the subject FIRM.
Grandfather Laws: These rules were established for the benefit of policyholders who have either built in compliance with the FIRM in effect at the time of construction, and/or have maintained continuous coverage. Insureds qualifying under Grandfather Laws have the option of using the most favorable rating data, either: 1) the most recent Flood Insurance Rate Map; or 2) the rating criteria in effect when the structure was built or coverage was first obtained. The ability to procure coverage based on prior rating criteria is extremely important in at least three situations.
The structure is remapped into a special flood hazard area where it was previously part of a non-special flood hazard area (flood insurance may be required by the mortgagee where it wasn't before);
The Base Flood Elevation (used for rating) changes. The difference between the BFE and the reference point may be less; or the reference level may even move to below the BFE as a result of the remapping, exponentially increasing the cost of flood coverage; or
The expansion of Coastal Barrier Resource System areas.
Qualifications under Grandfather Laws differ based on the insured's history of flood coverage. Insureds already covered by an NFIP policy need only meet a short list of requirements to qualify for Grandfather status:
The structure must have been built in compliance with the FIRM in effect at the time of construction;
Flood coverage must have been continuous; and
No alterations can have been made changing the reference level.
If there has not been previous flood insurance or a prior policy was not renewed, the structure owner can still qualify; but the requirements are a bit more stringent. Rates can be based on the FIRM and Base Flood Elevation in effect when the building was constructed provided:
Proper documentation is submitted indicating the date of the FIRM (when constructed) and the Zone applied at the time of construction;
It must be proven through documentation from a community official that the building was constructed in compliance with the map and flood plain management requirements in effect at the time it was built; and
Proof must be supplied that the building has not been altered in any way that would have changed the original reference point level.
Two actions of the building owner will negate the ability to qualify for the preferred rates offered by Grandfather Laws:
If an elevated building is altered changing the reference level to below the Base Flood Elevation; or
The building undergoes substantial improvement or suffers substantial damage (both terms defined below).
A campaign of remapping and updating FIRMs is underway due to outdated information on current Flood Insurance Rate Maps. Development, updated flood protection and even inadequate flood protection are driving the need for this remapping. More insureds may be pulled into special flood hazard areas. As remapping continues, understanding Grandfather laws is going to become more important for agents.
Substantial: FEMA defines substantial to mean an amount that exceeds 50 percent of the structure's MARKET VALUE (defined below). This applies to "Substantial Improvement" and "Substantial Damage" as follows:
Substantial Improvement: Any reconstruction, rehabilitation, addition, or other improvement to a building, the cost of which equals or exceeds 50 percent of the market value of the building BEFORE the start of construction of the improvement. Substantial improvement includes buildings that have incurred "substantial damage," regardless of the actual repair work performed. The term does not, however, include either any project for improvement of a building to correct existing state or local code violations or any alteration to a "historic building," provided that the alteration will not preclude the building's continued designation as a "historic building."
Substantial Damage: Damage of any origin whereby the cost of restoring the building to its before-damaged condition would equal or exceed 50 percent of the market value of the building BEFORE the damage occurred.
Market value is negotiated between and agreed to by a willing buyer and a willing seller. It can fluctuate up and down based on the economy, condition, use or need and has little relation to the true cost to rebuild a particular structure. Beyond the fact that market value has no fixed basis, two problems are created when market value is used to calculate substantial improvement: 1) improvements do not have to be a structural in nature to increase the market value by 50 percent. The owner may completely remodel and update the kitchen and bathrooms; this could easily increase market value by at least 50 percent; and 2) who knows what the market value was BEFORE the improvements were completed? Unless an analysis was completed by a licensed appraiser before improvements began, this is just a FEMA-induced guess.
How CoBRA Zones and OPA's Affect Flood Coverage
By Christopher J. Boggs, CPCU, ARM, ALCM
September 23, 2009
Rapid development in coastal areas, on barrier islands and near habitat-rich wetland areas prompted the Federal government to pass the Coastal Barrier Resources Act of 1982 (CBRA). This was a legislative effort to minimize loss to human life, wasteful Federal expenditures and damage to fish, wildlife and natural resources in protected areas by discouraging further development. Coastal Barrier Resource System (CBRS) units were delineated by Congress with help from agencies within the Department of the Interior creating areas of land subject to "passive" Federal protection.
Congress expanded the CBRS units with the adoption of the Coastal Barrier Improvement Act of 1990 (CBIA). This act added CBRS units not part of the original act plus it created additional zones known as "Otherwise Protected Areas" (OPA's).
Otherwise Protected Area boundaries generally follow Federal, state or local park boundaries and include land used for recreation or conservation. However, OPA's are not always restricted to these properties. Congress intentionally incorporated undeveloped land located contiguous to defined park land into OPA's. Individuals and private entities own some of this undeveloped land.
These two acts combine to remove 3.1 million acres of land (1.3 million CBRS and 1.8 million OPA's) from eligibility for Federal flood protection through the NFIP.
Federal Funds in Protected Areas
Federal spending is strictly limited in CBRS units. Federal monies are available only to fund emergency assistance (not the same as disaster assistance), military activities necessary for national security, exploration for and removal of energy resources and the maintenance of existing Federal navigation channels. Individuals and entities within a CBRS unit cannot receive Federally-backed loans (i.e. VA, FHA, and Fannie Mae or Freddie Mac loans) nor is Federal flood insurance available.
Only one restriction on Federal money applies in Otherwise Protected Areas. The only limitation on Federal funding in an OPA is Federal flood insurance. Structures located in an OPA cannot purchase flood coverage through the National Flood Insurance Program.
A 2002 US Fish and Wildlife Service study estimates that from 1983 through 2010 Federal fund restrictions mandated by these Acts will have resulted in $1.3 billion in savings to taxpayers. Restrictions on Federal spending for roads, wastewater systems, potable water supply, disaster relief and flood insurance in these restricted areas combine to create this savings.
Grandfather Laws in CBRS and OPA's
Structures existing prior to the adoption of these Acts garner grandfather status and remain eligible for Federal flood coverage provided they were built or substantially improved on or before specified dates and have not suffered substantial damage. Grandfather status is granted as follows:
To any structure in a CBRS unit created by the CBRA of 1982 built or substantially improved on or before October 1, 1983;
To any structure in a CBRS unit added by the CBIA of 1990 built or substantially improved on or before November 1, 1990; or
To any structure in an OPA built or substantially improved on or before November 16, 1991.
Grandfathered buildings suffering substantial damage, from any hazard (fire, wind or flood), or substantially improved after the above dates lose eligibility under the grandfather laws and no longer qualify for flood coverage through the NFIP. Substantial damage and substantial improvement were defined above.
Passive Federal Protection
Restrictions on the availability of Federal money for loans or Federal flood coverage in these protected areas do not preclude the use of "free market" loans or open market flood insurance. Further, these laws do not disallow building and development in these areas; they just don't allow the use of Federal dollars to finance, insure, build roads to or supply potable water to such development.
Owners are allowed to develop their property as they desire (subject to building codes and laws) but without any federal money. The government did not take away property rights, just the availability of Federal funds, thus the term "Passive Federal Protection."
Determination of Coverage Eligibility
Only the US Fish and Wildlife Service can officially determine if a property is located in a CBRS unit or an OPA. Although these zones are indicated on applicable Flood Insurance Rate Maps (FIRMs), boundary lines on older FIRMs are only approximations and can be off by as much as 100 yards (affecting as many as three houses). No local surveyor, building inspector or other town official has the authority to make an official determination.
Standard flood insurance policies require that if ANY part of a structure is in a Special Flood Hazard Area (SFHA), the entire building must be rated in the higher risk zone as per the prior discussion. This rule does not necessarily apply in CBRS units or OPA's. If a building is dissected by a CBRS or OPA boundary line, provisions in the law may allow the property to remain eligible for Federal flood coverage. Decisions are made on a case-by-case basis depending on the specific details and history of the property in question.
Additions made to a structure after an eligibility ruling has been made can be problematic. Expansion on the seaward side of the dissecting boundary line could jeopardize the structure's continued eligibility. However, additions on the leeward side should not result in any coverage issues (provided there is no change in the reference level).
States Infected with CoBRA Zones and OPA's
Twenty-one states, Puerto Rico and the Virgin Islands are home to CBRS units or OPA's. States containing these units are: Alabama, Connecticut, Delaware, Florida, Georgia, Louisiana, Massachusetts, Maryland, Maine, Michigan, Minnesota, Mississippi, North Carolina, New Jersey, Ney York, Ohio, Rhode Island, South Carolina, Texas, Virginia and Wisconsin.
The Coastal Barrier Resources Reauthorization Act of 2000 re-codified these areas through 2010. Changes to these boundary lines and locations can only be made by an act of Congress.
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