Amid the cries that Elevation Certificates have become irrelevant, let me make this clear: Surveyors need to be educators once again.
With the full implementation of Risk Rating 2.0 on April 1, 2022, some flood insurance agents seem to be confused about the use of the Elevation Certificate. FEMA has been presenting free training sessions, but some of the messages in those sessions don’t seem to be widely understood. Perhaps agents aren’t attending because the training courses are not approved for agent continuing education credits in any state. Perhaps agents don’t feel they need any additional training after the first round of courses FEMA began offering last summer to help transition from how flood insurance has been rated for the last 50-plus years.
I’ll be shouting a bit in this column, so expect to see some bold lettering.
While the Elevation Certificate is no longer a mandatory requirement for rating, it is still valuable in securing the best flood insurance rating. That line bears repeating, but you can read it again on your own.
There are two ways that flood insurance can be rated. One method is what FEMA refers to as “system generated,” in which the first-floor height (one factor in premium setting) is generated by FEMA’s software using policy information and various datasets. The other method is to use an Elevation Certificate provided to the insurer to determine the structure’s first floor height. The insurer is to use the method most beneficial to the purchaser of the policy (the agent must rate the policy both ways to make that determination). Elevation Certificate Sections C and E are both relevant for these purposes.
Here I’ll let FEMA explain “first floor height,” or FFH in the flood insurance world. FFH replaces the elevation difference between lowest floor and lowest adjacent grade as in what is now referred to as the “legacy” method of insurance rating. The explanation provided in the most current Flood Insurance Manual (issued October 2021, as Risk Rating 2.0 began phasing in) appears in Section 3, “How to Write” on page C-21: “the height of the building’s first lowest floor above the adjacent grade”. This means that very lowest floor may not be the “first floor” if that lowest floor is below grade. (Below grade spaces are not insured under the National Flood Insurance Program.) This information is something surveyors provide on Elevation Certificates.
The best way to underscore that Elevation Certificates are still important in flood policy ratings is to quote directly from the Flood Insurance Manual. Page 3-23 reiterates: “The First Floor Height is determined by FEMA, or the policyholder has the option to provide an EC. IF the policyholder provides an EC, FEMA’s system will compare both values and use the First Floor Height that is more favorable to the policyholder.”
That statement means a little more work for the agent due to extra data entry. However, note that the goal is to find the most favorably priced policy for a client. In the sidebar of this article, I point you to other places to direct agents, with a few pertinent quotes to which I’ve bold-lettered emphasis. Elevation Certificates are by no means dead.
There are other ways that the Elevation Certificate can be a valuable tool in rating insurance, such as confirming the foundation type (one of the factors in rating) and noting flood openings (providing eligibility for mitigation discounts). It benefits surveyors to become familiar with Risk Rating 2.0 to counter less-informed insurance agents and point them to appropriate procedures. The best weapon in this battle is the Flood Insurance Manual on FEMA’s website: https://www.fema.gov/flood-insurance/work-with-nfip/manuals#flood-insurance
Remember also that Elevation Certificates provide important information for those communities participating in the Community Rating System in determining eligibility for community-wide flood insurance discounts.
To sign up for notifications of free webinars on flood insurance (most of which are only one hour long), contact floodsmart@fema.dhs.gov
For additional educational ammunition, visit the following plain language websites.
floodsmart.gov/elevation-certificates
“Elevation Certificates: Who needs them and why” (for consumers)
agents.floodsmart.gov/write-policy/elevation-certificates
“All About Elevation Certificates”
This page for insurance agents includes sections on “What is an Elevation Certificate?,” “How might obtaining an Elevation Certificate benefit my client?,” and “How can my client obtain an Elevation Certificate?” I’ve extracted pertinent quotes:
“Under Risk Rating 2.0: Equity in Action, an EC will no longer be required to purchase coverage. Instead, FEMA will use its tools and resources to determine the first-floor height of a building as one of the factors used when calculating rates. However, a property owner may choose to provide an EC and submit it to their agent to determine if it will lower their insurance costs. ECs will continue to be used for floodplain management building requirements, which can affect eligibility for Community Rating System discounts.”
“Should your client choose to obtain an Elevation Certificate, each year at the time of renewal, review the rate they would get utilizing the certificate. Insurance agents are responsible for determining the best rate and coverage for their clients, so this is a vital step that must be done every year.”
agents.floodsmart.gov/retention/costs
“Help Clients Pay Less for Flood Insurance”
Includes sections on “Providing an Elevation Certificate” and “Mitigating their Risk”