Flood Insurance & RCV Recertification: What Agents Need to Know

As an insurance professional, you know that one of the most important numbers in any flood insurance policy is the Replacement Cost Value (RCV). This is the cost to rebuild the structure, of like kind and quality, at today’s prices.

Under NFIP’s Risk Rating 2.0, RCV has become a formal rating input for many flood policies. That means helping your clients keep their building valuations accurate is more important than ever. In fact, due to federal regulations, it’s become required standard practice to recertify RCVs for NFIP flood policies every three years.

How the Requirement Has Evolved

RCBAPs (Condo Association Policies)

Longstanding requirement: RCBAPs have always required a verified replacement cost valuation. Associations are familiar with the need to document and update values to avoid coinsurance issues.

Risk Rating 2.0 Expanded the Rule

April 1, 2022 onward: NFIP extended the requirement to Other Residential and Non-Residential policies with new business and renewals on or after this date.

Three-year recertification: NFIP guidance specifies that BRCV must be revalidated every 3 years. Updated documentation must be obtained and reviewed before the renewal billing period in the third year.

Why three years? According to FEMA, this requirement balances administrative burden with accuracy. Construction costs shift quickly, and a three-year cycle helps ensure your clients don’t drift into underinsurance.

NFIP vs. Private Carriers

While the three-year rule pertains to certain policies with the NFIP, private carriers have their own requirements. Some carriers mandate recertification on an annual basis while others allow a rolling adjustment unless a major renovation is reported. With this in mind, it is important for agents to track RCV recertification requirements based on both the policy type and the insurance carrier.

Which Policies Require Recertification under the NFIP?

Why RCV Matters for Your Clients

Claims settlement: If the replacement cost value (RCV) isn’t kept up to date, your clients risk smaller claim payouts and unexpected deductions. Accurate RCV helps ensure they get the coverage they expect and avoids costly surprises at claim time.

Premium accuracy: With Risk Rating 2.0, RCV is used as a variable in rating. Outdated values can misprice your client’s premium.

Compliance: Lenders require flood insurance that equals the lesser of the loan balance, NFIP maximum, or RCV. If the RCV isn’t current, your client’s coverage may not meet regulatory requirements.

Step-by-Step Checklist for Agents

1. Identify the trigger for ongoing tracking and recertifications (third renewal, renovations, or carrier request).
2. Gather updated building information (size, construction type, systems, upgrades).
3. Order or recommend a valuation through AFR (CA Value, VeroValue or ValueNet Appraisals).
4. Check adequacy vs. coverage limit.
5. Document everything (reports, assumptions, sources, dates).
6. Submit to carrier before renewal billing.
7. Monitor post-renewal and verify updated values are applied.

Why It Matters for Your Book of Business

• Protect your clients: Ensure they won’t face surprises after a claim.
• Keep lenders happy: Avoid compliance headaches.
• Differentiate yourself as an advisor: Agents who proactively guide clients through recertification stand out.

Here’s What to Remember:

• RCBAPs have always needed verified replacement cost documentation.
• Other Residential and Non-Residential properties must comply with the three-year revalidation cycle starting with renewals on or after April 1, 2022.
• Exempt properties like single-family homes aren’t required to recertify, but reviewing values regularly still helps protect your clients.
• AFR is here to help with automated valuation tools to streamline the process.

By building a process to track and revalidate RCV, you’re not just staying compliant, you’re strengthening client trust and ensuring their flood coverage truly protects them.

✅ Action Step for Agents: Review your renewal pipeline now. Identify which clients are coming up on their third renewal and start the revalidation conversation early.