Lending, Flood Insurance: Elevated Structures
Printer-friendly VersionQuestion:
We have a customer that wants to build down by the river. The lot is in the Special Flood Hazard Area (SFHA), but the borrower is going to build his home on walls or pilings above the Base Flood Elevation (BFE). Our question is, does the property still require flood insurance since the living space will be above the SFHA?
Answer:
Yes! Elevating a structure above the BFE may reduce the cost of flood insurance for the borrower, but it does not exempt the property from flood insurance requirements. The first link below has some helpful information entitled “How to Raise Your House Up-And Out of Harm's Way” on the FEMA website, and the second link is to the mandatory purchase guidelines that address the subject of elevated structures.
http://www.fema.gov/news/newsrelease.fema?id=10679
http://www.fema.gov/government/grant/mitmeasures/elevate.shtm
From Page 17 of the Mandatory Purchase Flood Insurance:
A unique situation arises when a building is initially constructed at a level below the BFE in an SFHA, and its lowest floor is subsequently elevated or raised above the BFE by supporting walls or pilings. Such a structure is then considered an elevated building by the NFIP.
In this situation, there is no basis for the issuance of either a LOMA or LOMR-F. The building is still in the designated SFHA, and its foundation, supporting walls, and pilings can come into direct contact with floodwaters. When an owner of property below the BFE elevates a building so that the lowest floor is above the BFE, the flood insurance purchase requirement continues to
apply. Insurance is required because the foundation on which the house is elevated is still below the BFE, where it remains
exposed to the action of floodwaters. However, because of its reduced exposure to damage, the newly elevated building will be subject to a lower insurance rate and premium.
January - 2012
http://www.fema.gov/news/newsrelease.fema?id=10679
http://www.fema.gov/government/grant/mitmeasures/elevate.shtm
From Page 17 of the Mandatory Purchase Flood Insurance:
A unique situation arises when a building is initially constructed at a level below the BFE in an SFHA, and its lowest floor is subsequently elevated or raised above the BFE by supporting walls or pilings. Such a structure is then considered an elevated building by the NFIP.
In this situation, there is no basis for the issuance of either a LOMA or LOMR-F. The building is still in the designated SFHA, and its foundation, supporting walls, and pilings can come into direct contact with floodwaters. When an owner of property below the BFE elevates a building so that the lowest floor is above the BFE, the flood insurance purchase requirement continues to
apply. Insurance is required because the foundation on which the house is elevated is still below the BFE, where it remains
exposed to the action of floodwaters. However, because of its reduced exposure to damage, the newly elevated building will be subject to a lower insurance rate and premium.
January - 2012