Academy Journal: CoBRA Zones, OPAs and Flood Coverage

By | July 11, 2016

Rapid development in coastal areas, on barrier islands and near habitat-rich wetland areas prompted the federal government to pass the Coastal Barrier Resources Act of 1982 (CBRA). This was a legislative effort to minimize loss to human life, wasteful federal expenditures and damage to fish, wildlife and natural resources in protected areas by discouraging further development.

Coastal Barrier Resource System (CBRS) units were delineated by Congress with help from agencies within the Department of the Interior creating areas of land subject to “passive” federal protection. CBRS units are indicated on Flood Insurance Rate Maps (FIRMs) using backward slanting lines.

Congress expanded the CBRS units with the adoption of the Coastal Barrier Improvement Act of 1990 (CBIA). Beyond adding CBRS units not part of the original act, the CBIA created additional zones known as “Otherwise Protected Areas” (OPAs). OPAs are shown on FIRMs with backward slanting dotted lines or backward slanting dotted lines with bullets between lines (simply an indication of when the area was created).

OPA boundaries generally follow federal, state or local park boundaries and include land used for recreation or conservation. However, OPAs are not always restricted to these properties. Congress intentionally incorporated undeveloped land located contiguous to defined park land into OPAs even though individuals and private entities owned some of this undeveloped land.

Standard flood insurance policies require that if ANY part of a structure is in a Special Flood Hazard Area (SFHA), the entire building must be rated in the higher risk zone.

These two acts combined encompass 3.2 million acres of land (1.3 million CBRS and 1.9 million OPAs).

Federal Funds in Protected Areas

Federal spending is strictly limited in CBRS units. Federal money can be used only to fund emergency assistance (not the same as disaster assistance), military activities necessary for national security, exploration for and removal of energy resources, and the maintenance of existing federal navigation channels. Individuals and entities within a CBRS unit cannot receive federally-backed loans (i.e. VA, FHA, Fannie Mae or Freddie Mac loans), nor can they purchase federal flood insurance through the National Flood Insurance Program (NFIP).

Only one restriction on federal money applies in OPAs. Structures located in an OPA cannot purchase flood coverage through the NFIP.

The U.S. Fish and Wildlife Service estimated that during the first 27 years these zones existed the federal government would save $1.3 billion. Restrictions on federal spending for roads, wastewater systems, potable water supply, disaster relief and flood insurance in these areas would combine to create this savings.

Grandfather Laws in CBRS and OPAs

Structures existing prior to the adoption of these Acts garner “grandfather” status and remain eligible for federal flood coverage, provided they were built or substantially improved on or before specified dates and have not suffered substantial damage.

Grandfather status is granted as follows:

  • To any structure in a CBRS unit created by the CBRA of 1982 built or substantialy improved on or before Oct. 1, 1983;
  • To any structure in a CBRS unit added by the CBIA of 1990 built or substantially improved on or before Nov. 1, 1990; or
  • To any structure in an OPA built or substantially improved on or before Nov. 16, 1991.

Grandfathered buildings suffering substantial damage, from any hazard (fire, wind or flood), or substantially improved after the above dates lose eligibility under the grandfather laws and no longer qualify for flood coverage through the NFIP.

Substantial damage and substantial improvement are specific NFIP terms. Substantial damage means damage beyond 50 percent of the structures market values. Substantial improvement means improvement beyond 50 percent of the structures market value.

Passive Federal Protection

Restrictions on the availability of federal money for loans or federal flood coverage in these protected areas do not preclude the use of “free market” loans or open market flood insurance.

Further, these laws do not disallow building and development in these areas; they just don’t allow the use of federal dollars to finance, insure, build roads to or supply potable water to such development.

Owners are allowed to develop their property as they desire (subject to building codes and other applicable laws) but without any federal money.

The government did not take away property rights, just the availability of federal funds, thus the term “Passive Federal Protection.”

Determination of Coverage Eligibility

Only the U.S. Fish and Wildlife Service can officially determine if a property is located in a CBRS unit or an OPA. No local surveyor, building inspector or other town official has the authority to make an official determination.

Standard flood insurance policies require that if ANY part of a structure is in a Special Flood Hazard Area (SFHA), the entire building must be rated in the higher risk zone. This rule does not necessarily apply in CBRS units or OPAs. If a building is dissected by a CBRS or OPA boundary line, provisions in the law may allow the property to remain eligible for federal flood coverage. Decisions are made on a case-by-case basis depending on the specific details and history of the property in question.

Additions made to a structure after an eligibility ruling has been made can be problematic. Expansion on the seaward side of the dissecting boundary line could jeopardize the structure’s continued eligibility. However, additions on the leeward side should not result in any coverage issues (provided there is no change in the reference level).

States Affected

Twenty-one states have within their boundaries CBRS units and/or OPAs – Alabama, Connecticut, Delaware, Florida, Georgia, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, New Jersey, New York, North Carolina, Ohio, Rhode Island, South Carolina, Texas, Virginia and Wisconsin.

CBRS units and OPAs are also found in Puerto Rico and the Virgin Islands.

About Christopher J. Boggs

Chris Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS, is a veteran insurance educator. He is Executive Director, Big I Virtual University of the Independent Insurance Agents and Brokers of America. He can be reached at chris.boggs@iiaba.net. More from Christopher J. Boggs

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