Flood Insurance – Getting the True Picture

January 16, 2019

With the extreme hurricanes that have happened in the past year, most notably hurricanes Harvey, Irma, Maria and Florence - the topic of Flood Insurance is top of mind.

Many lenders have strict requirements stating that the borrower must purchase flood insurance on properties that exist in areas that are prone to coastal flooding and are classified in Zone V, V-1-V-30 VE, which are defined as areas within 100-year coastal flood with wave action.

Surveying for Flood Insurance

Concerning surveying, when requesting Optional Table A Item 3 - Flood Zone Classification on an ALTA Land Title Survey, a surveyor will review the Federal Flood Insurance Rate Maps (FIRMs), or any state or local equivalent, and report the flood zone classification of the surveyed property based on graphic plotting only. The ALTA surveyor is only responsible for reporting the zone based upon the CURRENT flood maps.

Depicting the True Flood Risk

Oftentimes, flood maps are out-of-date and do not properly represent the true risk. Beginning in the late 2000s, FEMA began the process of updating their maps for regions along highly - populated coastlines including the Pacific, Atlantic, Great Lakes and the Gulf of Mexico. Due to the substantial increase in development of communities along the coasts, there was a crucial need for updated maps to properly report adjustments. Between the devastation of the coastlines from disasters such as Hurricane Sandy in 2012, (which can impact the limits and the boundary of a flood zone), as well as major changes in recent years to the National Flood Insurance Rate Program (NFIP) policies and methodologies, it has become apparent that changes need to be made. Unfortunately, updating of the Flood Insurance Rate Maps (FIRMs) has not been swift.

Pay Attention to Dates Listed in Survey

Per Table A Option 3, the ALTA surveyor is only responsible to report the Flood Zone Code from the CURRENT mapping. In some cases, however, the “current” map may be 20 years old or more. For potential buyers considering a purchase or lenders offering mortgages for properties in coastal areas, it’s important to consider the date of the map reflected in the surveyor’s flood note. Should the date listed pre-date any of the previously listed circumstances, it may be worth discussing with FEMA, the municipality or insurance carriers to assess the true and current risk.

At Bock & Clark, we encourage you to visit FEMA’s website at www.fema.gov for more information. For definitions of flood zone codes, please refer to page 29 of the Bock & Clark Handbook, or visit https://www.fema.gov/flood-zones.

Are you interested in learning more about our ALTA Survey requirements? Request a quote today, or contact us for more information.