If a building is constructed below the BFE but receives a certificate of occupancy, will the owner's flood insurance costs be affected?

When a building is constructed below the Base Flood Elevation (BFE), its flood insurance costs are fundamentally influenced by its elevation relative to the BFE, regardless of any certificate of occupancy granted. The flood insurance rates are primarily determined by the risk level associated with the building's elevation. Specifically, a building that is below the BFE is classified as being at higher risk for flooding compared to those built at or above this elevation. Therefore, the owner's flood insurance costs will generally be higher because the premiums correlate with the increased risk of flood damage.

While a certificate of occupancy indicates that the building meets local building codes and standards for safety, it does not affect how flood insurance premiums are calculated based on flood risk. Insurers assess the risk based on the lowest elevation of the building in relation to the BFE. Consequently, if a building is below the BFE, it will lead to higher insurance premiums, reflecting its potential vulnerability to flooding. This principle underscores the importance of constructing buildings in accordance with floodplain management requirements to minimize the flood insurance costs for property owners.