When High-Risk Becomes Higher, Offer Cost-Savings

What’s changing

A client’s flood risk is changing from a high-risk area (Zone A) to higher-risk area (Zone V) or the Base Flood Elevation (BFE) is increasing.

An image depicting a transition from high risk to higher risk

What this means for existing clients

Continuous grandfathering: For clients in high-risk areas whose flood risk is increasing, the NFIP offers the cost-saving option known as grandfathering. Grandfathering allows clients to “lock in” their current flood risk rating or BFE.

For clients to qualify for grandfathered rates, they must purchase or renew their policy before the new flood maps become effective. Clients also must maintain coverage continuously to keep their grandfathered rate. If the building is sold, the policy can be assigned to the new owners, allowing them to keep the continuous grandfather rating option.

Built-in-compliance grandfathering: Grandfathering is also available after the new flood map’s effective date, but only for properties that were built in compliance with the floodplain regulations at the time of construction. This is known as “built in compliance” grandfathering and requires additional documentation.

Agent talking points

  • Your building is now at an even higher risk of flooding – renew or purchase flood insurance before the maps change to stay protected and save money.
  • Flood insurance costs are higher for higher-risk areas. But, there is a way to save money.
  • If you purchase or renew coverage before the map change takes place, you’ll secure a “grandfathered” rating, locking in rates based on your current lower-risk zone or BFE.
  • You should also remember to renew your policy annually to stay protected and keep your lower rates.
  • Flood insurance is required if you have a mortgage from a federally regulated or insured lender.
  • Even if you don’t have a loan, you are strongly encouraged to purchase a policy. There is at least a 1 in 4 chance of flooding over the life of a 30-year loan in high-risk areas.