CHAPTER ELEVEN - ELEVATION CERTIFICATE

 

An Elevation Certificate (EC) is mandatory on Post-FIRM construction, but is optional on Pre-FIRM construction.  It is required by the NFIP so that it can be certified by the NFIP as to the lowest floor of a building so that the policy can be properly rated:

POST-FIRM STRUCTURES

The EC is to be completed by a land surveyor, engineer or architect who is authorized to certify elevation information when it is required for Zones A1-A30, AE, AH, A(with base flood elevations), V1-V30, VE and V (with BFEs).   Community officials who are authorized to complete this form may do so also.  For Zones AO and A (without BFEs) a building official, a property owner, or an owner's representative may also provide the information on this certification.  If the community is a CRS participating community, building elevation information may be available through the community official.

The lowest adjacent grade and diagram number are required for all new business applications effective on or after October 1, 1997 if the elevation certification date is on or after that date.

PRE-FIRM STRUCTURES RATED UNDER POST-FIRM RATES

Pre-FIRM construction can be elevation rated using the Post-FIRM EC rates, which are more favorable if the lowest floor of the building is at or above the BFE for the community.  Generally, the lowest floor level of a Pre-FIRM building is below the BFE, and it would not benefit the insured to pay the cost of the EC in an attempt to secure a later rate, but this is an insured's option.

AR AND AR DUAL ZONES

The EC is optional on all Post-FIRM and Pre-FIRM construction located in AR and AR dual Zones.  The decision to obtain an EC and to request Post-FIRM rating is at the discretion of the insured.  The EC includes the AR and AR dual Zone elevation requirements.

The producer is to attach the original of the completed EC to the Application.  A photocopy is to be forwarded to the policyholder and a copy is retained by the producer. 

PHOTO REQUIREMENTS

All new business application, including transfer of business, for elevation rated risks with a policy effective date of 1/1/07, or later, must be submitted with at least two recent photographs that show the front and back of the building and are taken and dated within 90 days of the submission date.  If the building is a split-level or has multi-level areas at ground level, at least two additional photographs showing views of both sides of the building must be submitted.

This requirement applies to all renewal and endorsement transactions adding elevation rating effective on or after 1/1/07.

The photographs must be submitted on the Building Photographs form that is part of the Elevation Certificate, and must include the date the photographs were taken.  All photographs must measure at least 3" x 3" and provide a good, clear image of the building's distinguishing features.  Analog or digital photographs are acceptable.  Color photographs are preferred. 

 

USING THE ELEVATION CERTIFICATE

 

PROPERTY OWNER INFORMATION

(A copy of the Elevation Certificate follows this discussion, for reference.)

1. Section A of the EC includes the building use, used for validating data collected by the agent and the Application information.
2. On the EC, latitude, longitude and related information is optional only if the document is being certified by other than a licensed surveyor, engineer or architect.
3. To reiterate, if the EC is being used to obtain flood insurance, it must be accompanied by at least two photographs (as mentioned above).
4. For any crawl space, enclosures or attached garage, the square footage, number of flood openings within 1.0 foot above adjacent grade, and total area of flood openings in square inches must be shown.  Note that a parking area located beneath an elevated floor is not considered as an attached garage.
5. Information contained in Section A is critical and if it is not completed, it will be returned to the party that executed the form.

SECTION B - FLOOD INSURANCE RATE MAP INFORMATION

This section includes:

1. FIRM panel effective date and revised date.
2. Source of the BFE of base flood depth.
3. Coastal Barrier Resources System Area or Otherwise Protected Area. (Refer to the Coastal Barrier Resources System section of the manual for insurance coverage eligibility.

BUILDING ELEVATION INFORMATION (SURVEY REQUIRED)

The responsibility of providing a number of elevations based on the building type selected is that of the surveyor, engineer, or architect.  From these elevations gathered, the agent is required to determine the lowest floor for rating flood insurance.

The surveyor, engineer or architect should complete Section C, but if it is left blank, the agent should contact the responsible person who completed the form and the insurance company underwriter with any questions.

Elevations of machinery and equipment servicing the building (water heater, furnace, air conditioner, etc) must be provided, regardless of its location, whether inside or outside of the building, elevated on platform or not elevated.

Where the surveyor, engineer or architect cannot access the crawl space, an estimate on item C2 may be left blank and the estimated measurements entered on the comments section (Section D).

Elevations in Section E are based on feet, except in Puerto Rico, where it is metric and the agent must convert any readings to feet.

SURVEYOR, ENGINEER OR ARCHITECT CERTIFICATION

Section D is the certification of the surveyor, engineer or architect that the information provided by them is correct and their signature and identification number are required—in some states, a seal may be required.

 

BUILDING ELEVATION INFORMATION, ZONE AO AND ZONE A (WITHOUT BFE)

Section E - The difference between the highest and lowest elevation grade are required.  For the designated Zones, the property owner or his representative may completed Sections A, B & E.

PROPERTY OWNER OR REPRESENTATIVE CERTIFICATION

Address and other contact information about the property owner are requested in Section F.  The party completing Sections A, B, C and E must complete this section also.

COMMUNITY INFORMATION

The local official authorized to administer the community's floodplain management ordinance may transfer elevation information found on existing documentation—such as from an older elevation certification form or surveyor letterhead—to Section C, and then certify this information by completing Section G.  A statement advising FEMA of this transfer of information must be made in the comment section of the EC.  Section G may also be used to certify Item E4.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE INSTRUCTIONS FOLLOWING ARE PROVIDED IN DETAIL AND ARE PART OF THE FLOOD MANUAL - SECTION CERT 19 THRU CERT 26.

 

 

 

INSTRUCTIONS FOR COMPLETING THE ELEVATION CERTIFICATE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CANCELLATIONS / NULLIFICATIONS

 

The cancellation or nullification of Flood Insurance Policy procedures can be found in detail at http://www.fema.gov/business/nfp/manual.shtm  -  and it contains some10 pages of detail.  This discussion does not cover all of the intricacies and details contained in the manual, but should give the agent guidance on what canceling or nullifying a policy can entail, what is needed, and how it can be explained to the client.

REFUNDS

Refunds will be made by the insurance company for the current and one prior year.  If refund is requested for a period of more than 2 years, then the NFIP must process the request.  The request must consist of a policy cancellation request and the premium refund calculation for each year.  (A copy of the cancellation request form follows.)  The insurer must also include statistical records for each policy term and evidence of premium having been received—accounting details which should be expected. 

COMPLETING THE CANCELLATION FORM

Current Policy Number:  In the upper right-hand corner of the form, enter the NFIP policy number.

Policy Term:  Enter the policy term and the cancellation effective date.

Agent Information:  Enter the complete name, mailing address, phone number and fax number of the agent/producer.

Insured Mail Address:  Enter complete name, mailing address and phone number of the insured.  If insured has moved, enter the new mailing address.

First Mortgage:  Enter the complete name, mailing address, phone number and fax number of the first mortgagee.

Other Parties Notified:  Enter the complete name, mailing address of all other interested parties that should be notified, such as an additional insured, second mortgagee, loss payee, trustee, or disaster assistance agency.

Property Location:  Enter the location of the insured property.

Cancellation Reason Code:  Check the reason for cancellation of the policy and provide any additional information required.  (A list of cancellation codes follows.)

Refund:  Check the appropriate box to indicate to whom the refund is to be made payable.

When the cancellation/nullification notice has been received and if it directs the NFIP to make a premium refund to the PAYOR, and the policy has been endorsed showing the PAYOR as a WYO company or agency, then

Check the appropriate box to indicate to whom the refund should be mailed.

Signature:  The insured must sign and date the Cancellation/Nullification Request Form for all cancellation reason codes except for 5 and 6.  The producer must sign, date, and enter a Tax ID Number or Social Security number in every case.  After the form is completed, attach all supporting documents, and mail the original to the NFIP

The producer should retain the second copy; the third copy goes to the insured and the 4^th copy to the mortgagee.

After this form has been processed, the NFIP will send the producer, mortgagee and insured a notice of cancellation. 

 

CANCELLATION REASON CODES

The following reason codes for cancellation/nullification of NFIP policies is a summary of the reasons as most of them are self explanatory.  For more details, please refer to the Flood Insurance Manual.

1.  Building Sold or Removed.  Insured has no more insurable interest, or any other reason that the building is sold or removed.  If the building is sold, proof of sale is required.  Request must be received within 1 year of sale/removal, accompanied by Bill of Sale, settlement statement, or other such proof of removal or total loss.  Up to 2 years pro rata refund

2.  Contents Sold or Removed.  Insured no longer has an insurable interest or the property has been removed from the property.  Proof is needed, such as Bill of Sale, etc.  Pro rata refund.  Cancellation request must be received within 1 year of new policy effective date.

3. Policy Canceled and Rewritten to Establish a Common Expiration Date with Other insurance Coverage.  A "housekeeping" reason and new policy must be rewritten with the same company for the same or higher" amounts of coverage.  This should be accompanied by a Cancellation form for the previous policy.  One year refund maximum.

4.  Duplicate NFIP Policies.  Refund is pro rata.  Insured can choose which policy to keep, but only one policy will be effective.  Document by submitting copy of declaration page(s) and copy of force-placement letter from the mortgagee if applicable. Force-placement usually has been done by the lender, but if both policies are applicable, the WYO company will cancel the force-placed policy.

5.  Non-Payment.  If there has been an "insufficient funds" check used to pay the premiums, policy is then nullified, with bank's notice attached to the form.  A full premium refund will be provided to the producer if the producer has sent his funds to the insurer.  If the WYO covers the premium for a prospective insured and then does not receive payment, the policy can be nullified.  Full refund.

 

6.  Risk Not Eligible for Coverage.  This is actually nullification where an application was submitted and a policy was issued on a property that was not eligible for coverage.  When submitting this type of reason for nullification, there must be a clear and precise explanation, such as where the property is not located in a community participating in the NFIP (wrong community number on the application), contents located in an open building, etc.  Full refund and void from date of issue. 

7.  Property Closing Did Not Occur.  Policy would be nullified.  Document from Title Company, lender or attorney representing purchaser stating the closing did not occur.  Full refund.

8.  Policy Not Required by Mortgagee.  This is the way to cancel a policy when coverage was required by the mortgagee and it was later determined that the property was not located in a SFHA.  Statement by mortgagee must be included.  This can only be used during the original policy term.  Other forms may be required if there is a discrepancy between the lender's and insured's determinations.  Note:  This reason may also be used even if the policy was written as being in a non-SFHA.  Full pro rata refund, eligible only for current year.  Documentation requires a copy of original mandatory purchase document and current mortgagee statement that the policy is not required; a revised determination from the lender showing that the building is not in an SFHA.

9.  Insurance No Longer Required by Mortgagee Because Property is No Longer Located in a Special Flood Hazard Area Because of a Physical Map Revision.  Rather self-explanatory.  Note:  RCBAP policies require a release from the mortgagee of every unit owner in the association or a statement of the unit owner if there is no mortgage, along with a letter from the condominium association listing the number of units and specifying the owner of each unit.  Full refund available must request must be received during the policy year or 6 months of policy expiration date.

10.  Condominium Policy (Unit or Association) Converting to RCBAP.  This is used to cancel a condominium policy because coverage is being provided under an RCBAP.  Duplicate coverage occurs when the unit owner policy and the RCBAP limits are more than the cost of the unit, up to the maximum limits of the Program.

12.  (Note:  "11" is no longer used.)  Mortgage Paid Off.  Self-explanatory.  Statement from mortgagee that the mortgage has been paid off and the flood insurance was required as part of the mortgage.

13.  Voidance Prior to Effective Date.  Used when coverage is not mandatory and the plaintiff decides during the30-day waiting period, or prior to the effective date of a renewal, not to take the policy—after submitting a premium payment.

14.  Voidance Due to Credit Card Error.  Used when error or billing dispute occurs on a credit card payment.  Credit Card Notice of non-payment is documentation needed.

15.  Insurance No Longer Required Based on FEMA Review of Lender's Special Flood Hazard Area Determination.  Used when flood insurance was originally required by mortgagee or other lender because the property was found to be in a SFHA.  After a review by appropriate agency, FEMA issued a Letter of Determination because the building or manufactured home is not in an SFHA and insurance is not required.  Policy may be cancelled back to inception.

16  Duplicate Policies from Sources Other than the NFIP.  If flood insurance has been obtained from a source other than the NFIP, a statement to that effect along with copy of declarations page of the new policy from the mortgagee, if any, accepting the non-NFIP policy as the replacement.

18.  (Note:  "17" is no longer used) Mortgage Paid Off on a Mortgage Portfolio Protection Program (MPPP) Policy.  This reason is used to cancel a MPPP policy after the mortgage has been paid off.  Statement from mortgagee that mortgage has been paid off and that flood insurance was required as part of the mortgage.

19  Insurance No Longer Required by the Mortgage Because the Structure Has Been Removed from the Special Flood Hazard Area (SFHA) by Means of Letter of Map Amendment (LOMA) or Letter of Map Revision (LOMR).  When flood insurance was required by mortgagee or other lender because the property was determined to be in an SFHA, subsequently it was determined (by LOMA or LOMR) that the property is no longer located in an SFHA, the policy can be canceled by the owner.  A copy of the LOMA or LOMR must accompany request.  Note:  RCBAP policies require a release from the mortgage of every unit owner or statement of the unit owner if no mortgagee. Letter from Condo. Assoc. listing units and owners must also accompany cancellation form.

20.  Policy Was Written to the Wrong Facility (Repetitive Loss Target Group).  When coverage was inadvertently written to the wrong facility on those structures that were identified as part of the Repetitive Loss Target Group, this reason is used.  Full refund, and the Repetitive Target Group Report furnished by the NFIP Bureau and Statistical Agent must accompany request.

21. Other:  Continuous Lake Flooding or Closed Basin Lakes.  This is used for continuous lake flooding or closed basin lakes, and must be only for one term of the policy with cancellation effective date after date of loss.  No refund.  FEMA notification required as documentation.

22.  Cancel/Rewrite Due to Misrating.  When ineligible PRP's or MPPP policies are canceled and rewritten and when changes are made due to system constraints.  Also used for canceling a Standard policy that is eligible for a PRP.  Refunds resulting from cancellation must be applied to the rewritten policy prior to any refund being generated.  Documentation is LOMA, LOMR, Zone determination, copy of map, etc.

23.  Fraud.  When FEMA determines fraud in the transaction, no premium refund is allowed, the agent will retain the full commission and the company's expense allowance will not be reduced.  Documentation is FEMA notification.

24.  Cancel/Rewrite Due to Map Revision, LOMA or LOMR.  This reason is used to rewrite a standard flood insurance policy to a PRP as the result of a map revision, LOMA or LOMR.  The standard policy will be canceled and rewritten as a PRP as of inception, premium from canceled policy will be applied to PRP (no refunding).  Agent will retain full commission.  This rule applies to present year and one prior year if the revision occurred during the prior year.

 

 

 

 

 

 

 

 

 

 

STUDY QUESTIONS–CHAPTER ELEVEN

 

1.  An Elevation Certificate (EC) is mandatory on Post-FIRM construction,

      A.  but is optional on Pre-FIRM construction.

      B.  and is also mandatory on Pre-FIRM construction.

      C.  but it is submitted on an "information only" basis, which means there will be no under      writing or rating information used from the EC.

      D.  but they are illegal on Pre-FIRM construction.

 

2.  The Elevation Certificate

      A.  is mandatory on all Pre–FIRM construction.

      B.  is completed by the producer for Zones A1-A30.

      C.  submitted without the required photographs is not considered valid for rating.

      D.  should be available to the insurer after a loss.

 

3.  Section B-Flood Insurance Rate Map Information includes all of the following EXCEPT:

      A.  Insurer’s underwriting evaluation of the insured property.

      B.  FIRM panel effective date and revised dates.

      C.  Source of the BFE of  base flood depth.

      D.  Coastal Barrier Resources System Area or otherwise Protection Area.

 

4.  Section C of the Elevation Certificate

      A.  must be completed by the property owner.

      B.  should be completed by the surveyor, engineer or architect.

      C.  is optional.

      D.  does not require a survey.

 

5.  Refunds are

      A.  in the form of a credit.

      B.  payable to the insured and mailed to the producer.

      C.  available only for the current year.

      D.  only granted if the building is sold.

 

6.  All of the following are reasons to cancel EXCEPT:

      A.  building sold

      B.  contents sold

      C.  non – payment

      D.  no flood is in the weather forecast.

 

7.  If there is a duplicate NFIP Policy,

      A.  both policies stay in effect

      B.  producer losses commission on both policies

      C.  the premium paid on 2^nd policy will be applied to next year.

D.  the refund is pro rata

 

 

 

Chapter Eleven Quiz Answer:  1A , 2C , 3A , 4B , 5B , 6D , 7D