Many insurance agents and brokers have limited expertise relative to the NFIP and may be at a disadvantage when writing a flood policy.

Caution #1, A client states "My lender tells me I need flood insurance." and the agent assumes the structure is in an "A, A1-A30, AE, AH, V, V1-V30, VE, AR, AR/A, AR/AE, AR/A1-A30, AR/AH, AR/AO zone where flood insurance is mandated. Note, the lender's requirement is often made based upon the decision of a Flood Hazard Determination Company who may have based their decision on the location of the property and not the insurable structure. Often these decisions are based on any portion of the property being located in or adjacent to a Special Flood Hazard Area (SFHA). Our experience has shown that up to 50% of the flood determinations completed by Determination Companies are incorrect or the property and/or structure will qualify for successful appeal for removal.

Accordingly, you should obtain a copy of the "Standard Flood Hazard Determination" form from the lender for your file and locate the structure on the FIRM yourself or recommend that the client retain a floodplain professional. Knapp Associates Determinations and/or Appraisals are always based upon the location of the structure and are 100% guaranteed and insured.

Caution #2, When you use the lender's requirement or your review as the basis to locate and rate a structure as being located within an (zones above), you should provide the client a "disclaimer" which states how the flood zone location for the structure was established and that FEMA has a number of appeals processes which can change the zone of location and/or mandatory purchase requirement.

The point of cautions #1&#2 is to protect the insurance professional. Mr. Smith pays "A" zone flood premiums based upon the insurance agent's use of the lender's mandate. Ten years later, Mr. Smith finds out that while a portion of his property is in the SFHA, the structure is not or the structure will qualify for a Letter of Map Amendment (LOMA) releasing him from the mandatory flood insurance purchase requirement. After paying $6000 to $8000 in unnecessary flood insurance premiums, Mr. Smith is now looking for a total refund and will most likely contact his attorney concerning litigation. A disclaimer by the insurance agent can provide protection since you explained how the zone of structure location was determined and you made them aware of FEMA's appeals processes. (See LOMA, LOMR under Services).

Never under any circumstances issue a Preferred Risk Policy in an "A" or "V" zone even if you believe it should not be in a flood zone. Recommend the client contact C.F.M. concerning FEMA's appeals processes. Only FEMA can decide if a structure qualifies for removal from the SFHA based upon the information submitted with an application.