NFIP Sanctions for Violations of Community Agreement
When your community agreed to participate in the NFIP, it adopted an ordinance with minimum criteria and agreed to enforce it to reduce future flood damage. In return, flood insurance and other forms of federal assistance are made available. If a community fails to uphold and enforce its ordinance, then FEMA can impose sanctions.
Examples of deficiencies and violations that FEMA considers serious enough to place a community on probation include:
- Failure to require permits for all construction, subdivisions and other development in flood hazard areas.
- Failure to obtain and reasonably utilize flood hazard data.
- Adoption of ordinance provisions that are inconsistent with the minimum requirements of the NFIP or that do not contain adequate enforcement provisions.
- Application of procedures that do not reasonably ensure compliance.
- Poor permit reviews that allow noncompliant activities.
- Failure to correct violations to the extent practicable.
- A pattern and practice of issuing variances that are inconsistent with the NFIP variance criteria.
- Allowing enclosures below elevated buildings to be converted in ways that are not in compliance with the ordinance.
Probation. FEMA looks for "substantive and multiple" deficiencies and/or violations before undertaking probationary action. Probation puts a $50 surcharge on all new and renewed flood insurance policies. Importantly, FEMA is required to notify all policyholders that poor compliance is the reason for the extra charge. FEMA and the state will closely monitor progress toward correcting the problems that led to probation, which lasts for a minimum of one full year. It may be continued beyond that if necessary. Probation is the precursor to suspension.
Suspension. Communities may be suspended from the NFIP for failure to correct any of the problems which led to probation. In order to be reinstated, a community must correct or mitigate identified violations to the fullest extent possible and institute acceptable administrative and enforcement procedures.
A community may be suspended without probation if its ordinance is not updated when required. FEMA and the state work with communities to revise ordinances. Ordinance revisions may be prompted by a map revision that requires a more stringent ordinance. If FEMA revises the standards in the NFIP regulations (Section 60.3), all communities must update their ordinances.
New flood insurance policies may not be written and existing policies may not be renewed in suspended communities. This will severely restrict the availability of mortgages and other loans, federal grants and disaster assistance. If an insurance agent mistakenly writes a policy in a suspended community, FEMA is not required to pay a subsequent claim and will reimburse premiums paid after suspension took effect. This has caused a great deal of distress after floods, when homeowners find out that the insurance they thought they had is not valid. Insurance agents who continue to write policies in suspended communities may be held liable for uninsured losses.
Corrective Measures. If FEMA or the state discover deficiencies or violations, community officials will need to take appropriate action to correct them. Corrective actions include:
- Demonstrating that a structure is not in violation by providing missing permit information.
- Rescinding permits for structures not yet built or in early stages of construction.
- Demolishing or modifying noncompliant structures or removing fills in the floodway.
- Seeking civil/criminal penalties.
- Submitting information to FEMA to deny flood insurance to specific buildings under Section 1316 of the NFIP.
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