INTRODUCTION AND GENERAL RULES - H2O Partners · The NFIP’s Basic Agent Tutorial: ... INTRODUCTION AND GENERAL RULES Section 1 2 . 2 Here’s our AGENDA ... Mudflow • A river

1

Welcome to

The NFIP’s Basic Agent Tutorial:

Key Fundamentals of Flood Insurance

Focused on flood insurance basics for insurance professionals

1

a

INTRODUCTION AND

GENERAL RULES

Section 1

2

2

Here’s our

AGENDA

• Section 1 – Introduction and

General Rules

• Section 2 - Policy Rating,

Elevations, Premiums and More

• Section 3- Coverage, limitations

and Exclusions in the SFIP

• Section 4- Loss Settlement

Provisions

• Section 5- Flood Insurance

Resources

3

Access the NFIP Flood Insurance

Manual:

• Online at the Flood Insurance

Library: http://www.fema.gov/flood-insurance-manual

4

NFIP Flood

Insurance Manual

http://www.fema.gov/flood-insurance-manual





3

NFIP definition of “flood”

6

What is a flood?

NFIP definition of “flood”

• A general and temporary condition

of partial or complete inundation of

two or more acres of normally dry

land area or of two or more

properties (one of which is your

property) from:

a. Overflow of inland or tidal waters,

b. Unusual and rapid accumulation or

runoff of surface waters from any

source,

c. Mudflow.

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What is a flood?

4

Mudflow

• A river of liquid and flowing mud

on the surface of normally dry

land areas as when earth is

carried by a current of water

• Not Mudflows:

• Landslide

• Slope failure

• Saturated soil mass

8

What is a flood?

Flood Related Erosion

• Collapse or subsidence of land

along the shore of a lake or

similar body of water

• Caused by waves or currents of

water exceeding cyclical levels

• Results in flooding

What is a flood?

9

5

• All Property Owners

• All Zones

Who has

flood risk?

10

SFHAs and Non-SFHAs

Special Flood Hazard Areas

(SFHAs)

• High Risk Zones

• AE (replaces A1-A30)

• A, AH, AO, A99, AR

• VE (replaces V1-V30), V, VO

Non-Special Flood Hazard Areas

(non-SFHAs)

• Low to Moderate Risk Zones

• B, C, X

• D (undetermined)

100-year floodplain = 1% annual chance flood

Over 30-year mortgage likelihood grows from 1% to at least 26% 11

6

12

Training Agenda

SFHAs appear as dark shading on a Flood Insurance Rate Map (FIRM).

Flood Insurance Rate Map (FIRM)

12

13

Digital Flood Insurance Rate Map (DFIRM)

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14

Locating flood maps: https://msc.fema.gov/

FEMA Map Service Center

How does the NFIP Work?

How is NFIP flood

insurance purchased?

15

https://msc.fema.gov/


8

• Community Participation

• All Zones

Who can buy NFIP

flood insurance?

16

Participating Communities

17

FEMA

agrees to make flood insurance

available

COMMUNITY

agrees to adopt and enforce floodplain management regulations

9

Community Status Book Report

18

https://www.fema.gov/national-flood-insurance-program-community-status-book

Buildings may be ineligible for coverage in participating communities,

If constructed on or after identification date.

CBRS System Ability to write NFIP policies may

be restricted in some:

• Coastal Barrier Resources Act (CBRA) areas

• Otherwise Protected Areas (OPA)

• Coastal Barrier Resources Act and Coastal Barrier Improvement Act enacted:

• October 18, 1982

• November 16, 1990

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10

• Write Your Own Company

• NFIP Direct Servicing Agent

• Licensed Property and

Casualty Agent

How is NFIP flood

insurance purchased?

20

A or V Zones

Who MUST buy flood

insurance?

21

11

Used as security for a loan

Who MUST buy flood

insurance?

22

Designated Loan

Who MUST buy flood

insurance?

23

12

Please note: Emphasis on a “building or

mobile home” as collateral

What is a

designated loan?

. A loan secured by a building or

mobile home that is located or to

be located in a “Special Flood

Hazard Area” in which flood

insurance is available under the

Act

24

Flood Insurance

vs.

Disaster Assistance

Who SHOULD buy

flood insurance?

25

13

Flood Insurance vs. Disaster Assistance

26

NFIP maximums vary by

building type and program limits

How much NFIP

flood insurance can

be purchased?

27

14

How much flood insurance coverage is available?

28

Emergency Program Regular Program

Residential (1-4 family)

Building

Contents

$35,000

$10,000

$250,000

$100,000

Other Residential

Building $100,000 $500,000

Non-Residential Business/Other Non-Residential

Building

Contents

$100,000 $100,000 $500,000

$500,000

Contents $ 10,000 $100,000

• 30-day waiting period

• Exceptions

When does an NFIP

policy become

effective?

29

15

30

For detailed information, please see the

General Rules section of the Flood Insurance Manual

When does an NFIP policy become effective?

• There is a 30 day

waiting period before

new or modified flood

insurance policies go

into effect.

• Exceptions are provided

for:

Insurance in connection with a loan transaction.

(MIRE)

Insurance purchased within 13

months of a map revision

(1-day wait).

Wildfire exception

KEY NFIP TERMS, TOOLS,

AND RULES

To use and to live by…

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16

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Defining Pre-FIRM and Post-FIRM

Post-FIRM

On or After the initial FIRM or After 12/31/1974 . . . whichever is LATER

Pre-FIRM

Built before initial FIRM or

On or before 12/31/1974

Full-Risk Rates vs. Subsidized Rates

33

Represent the building’s true flood risk.

Premium reflects the risk assumed by the program and all administrative expenses.

Takes into account the full range of possible flood losses.

Do not represent the building’s true flood risk.

Determined with limited underwriting information

Discounted rates that have traditionally been available for Pre-FIRM buildings in A or V zones.

Full

Ris

k R

ates

Su

bsid

ized

17

Regular vs. Emergency Program

34

• Initial participation phase

• Limited amount of coverage

• Flood Hazard Boundary Map (FHBM)

Emergency Program

• Final phase of participation

• Full limits of coverage

• Flood Insurance Rate Map (FIRM)

Regular Program

Base Flood Elevations (BFEs)

35

BFE = 1% Chance Flood

18

Preferred Risk Policy

36

Preferred Risk

Policy

Lower Cost

B,C,X, A99, AR Zones

General Property

Form

Dwelling Form

Miscellaneous NFIP Rules

37

Rules

NFIP Policy Term

• 1 year annual term

• All policies

• NFIP Direct

• Write-Your-Own

Evidence of Insurance

• Flood insurance application & premium payment

• Copy of dec page

• No binders

Community Participation

• Probation

• Suspension

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POLICY RATING, ELEVATIONS,

PREMIUMS AND MORE…

Section 2

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39

Case Study Facts Your client has just purchased a home in unincorporated Palm

Beach County, Florida, and he approaches you to buy a flood

insurance policy that is required by his lending institution since

the house is in flood zone AE.

About the home It is a single family dwelling with a detached

garage that will be his primary residence. The

house was built in 1995. It is a two-story house

and, like most homes in Florida, it does not have a

basement.

How much flood insurance to buy Since the house and its garage have a replacement

cost value well above the NFIP’s $250,000 single

family maximum building limit, the new

homeowner wants to buy the maximum amount of

coverage on the building along with $100,000

worth of coverage for his personal property.

Information to gather What do you need to know in order

to provide your client a quote?

Let’s take a look at the information

you would need to gather; how you

use and interpret it; and we’ll go

step-by-step to develop your

client’s quote.

Palm Beach Rating Case Study

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40

Rating Elements

Single family dwelling with detached garage

Two-story home with no basement

Built in 1995 in Palm Beach County, FL

Flood Zone – AE

$250,000 – Building Coverage

$100,000 – Personal Property Coverage

Minimum deductibles


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Step 1

Determine Pre-FIRM or Post-FIRM status

Utilize Community Status Book https://www.fema.gov/national-flood-insurance-program-community-status-book
















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`

43

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Community Status List

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Step 1

Determine Pre-FIRM or Post-FIRM status

Utilize Community Status Book

Initial FIRM Date: 2/01/1979

Year Built: 1995

Post-FIRM Building
















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46

Step 2

Locate a FEMA Elevation Certificate

Blank Elevation Certificate Form


• Lowest Floor Elevation

• Elevation Difference

What is meant

by elevation?

47

http://www.fema.gov/media-library/assets/documents/160

24

• Elevation difference refers to the

height of a structure relative to

BFE

• A structure above BFE is less

likely to experience flood damage

• Less risk = lower premiums

48

Elevation

Difference

• Anticipated floodwater rise

• Regulatory requirement for

elevation or floodproofing

What is a Base Flood Elevation?

49

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50

Base Flood Elevation

What is a

Base Flood Elevation?

• Base flood is a flood that

has a 1% chance of being

equaled or exceeded.

• BFE is the expected

height of that 1% chance

of flood

Lowest Floor Elevation

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BASEMENT

26

53

Elevation

Certificates (EC)

• An EC includes important

information for determining a risk-

based premium

• EC shows:

• Location of the building

• Lowest floor elevation

• Building characteristics

• Flood zones

• Base flood elevation

• See building diagrams in the NFIP

Flood Insurance Manual or the EC

instructions

Why are Elevation

Certificates used?

54

• An Elevation Certificate:

• Certifies building elevation

• Documents community

compliance

• Determines policy rates

• Supports map revisions and

amendments

How are Elevation

Certificates used?

27

• A surveyor, engineer, or architect

must certify the building elevation

• Insurance agents use this

information for rating

55

Who Completes

an Elevation

Certificate?

• Where to locate an Elevation

Certificate for a building:

• Ask the local floodplain manager

• Ask the sellers

• Ask developer/builder

• Check the property deed

• Hire a licensed land surveyor,

professional engineer or certified

architect

56

Where to find an

Elevation

Certificate?

28

Use of Elevation Certificates

FEMA Elevation Certificates

57

Pre-FIRM Construction (SFHAs)

Not Required: Pre-FIRM subsidized rating Required: Full-risk rating approach

.

Non-SFHA zones (B, C, D, and X)

Elevation certificates not required

Post-FIRM Construction (SFHAs)

Elevation certificates are required

FEMA Elevation Certificate

58

EC Sections – A thru F

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59

EC Sections

Section A Section B Section C Section D Sections E,F


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EC Sections

Section A

30


61

EC Sections

Section B


62

EC Sections

Section C

31


63

EC Sections

Section D


64

EC Sections

Sections E & F

32


Building Diagrams

65


Building Diagrams

66

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67

Building Diagram 1A

Elevation Certificates:

Who Needs Them and Why Click here for on-line version

How an EC is used

Who needs an EC

Where to get an EC

When you need an EC

When you do not need an EC

Useful terms

Resources

EC Fact Sheet

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https://www.fema.gov/media-library-data/1428941960043-a8f37b7e3af25f47396bbff04e7bf036/FEMA-HFIAA_ECFActSheet_040715.pdf



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69

Step 3

Utilize FEMA Elevation Certificate

Determine Elevation Difference



70

EC Sections

Palm Beach County* - 120192 Palm Beach County FL

AE 13.0

Single family dwelling | 2-story home - no basement | Built in 1995 in Palm Beach County, FL Post-FIRM construction | Flood Zone – AE | Diagram 1A – slab on grade

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35

13.0


71

EC Sections

Palm Beach County* - 120192 Palm Beach County FL

AE 13.0

Single family dwelling | 2-story home - no basement | Built in 1995 in Palm Beach County, FL Post-FIRM construction | Flood Zone – AE | Diagram 1A – slab on grade

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14.1

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Step 3

Utilize FEMA Elevation Certificate

Determine Elevation Difference Palm Beach County Case Study

Elevation Difference: +1

Lowest Flood Elevation: 14.1

Base Flood Elevation: 13.0

Elevation Difference: +1.1

Rounds down: +1.0


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Step 4

Determine Rating Approach

Subsidized rating vs. Full-risk rates


Reform Legislation Impact

74

25%

Annual Increases *Limits increases to

18%

• Individual premium increases

• Includes Reserve Fund Assessment

• Does not include:

• HFIAA surcharge

• Federal Policy Fee

Limits increases to 18%

• Subsidized rates for:

• Non-primary residences

• Business properties

• Severe repetitive loss

• Substantially Damaged Substantially Improved

25% Annual Increases

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Impact of Biggert-Waters Reform Act

75

How are premiums changing?

As of January 1, 2013

• Non-primary residences*

• Subsidized rates increase 25% per year upon

renewal

• Until they reach full risk-rate

Subsidized 25% 25% 25%? 25%?

Full Risk

Rates

*A non-primary residence is a single family dwelling, condominium unit, apartment unit,

or unit within a cooperative building that will not be lived in by the policyholder or the

policyholder’s spouse for more than 50% of the 365 days following the current policy

effective date. A policyholder and the policyholder’s spouse can have more than one

primary residence provided they submit the required supporting documentation for each

residence. (See Flood Manual for complete details)

Impact of Biggert-Waters Reform Act

76

How are premiums changing?

Effective April 1, 2016

• Subsidized rates increase for:

• Business properties (non-residential)*

• Subsidized rates increase 25% per year upon renewal until they reach full risk-rate

Subsidized 25% 25% 25%? 25%?

Full Risk

Rates

*A non-residential business is a building in which the named insured is a commercial enterprise

primarily carried out to generate income and the coverage is for:

• A building designed as a non-habitational building

• A mixed use building in which the total floor area devoted to residential uses is:

• 50% or less for single family or 75% or less for all other residential properties

• A building designed for use as office or retail space, wholesale space, hospitality space

or for similar uses

38

Subsidized Rates

$4,795/yr

$4,795/yr

$4,795/yr

$618/yr

$11,785/yr

$4,531/yr

Full-Risk Rates

Pre-FIRM Post-FIRM

77

4 ft below BFE

1 ft below BFE

4 ft above BFE

*AE Zone (04/01/18 rates) Bldg- $250,000 Contents- $100,000; Primary Residence, Single-story with no basement, crawlspace or enclosure rates; Zone AE; $2K deductible Bldg./Contents

77

“Let me get back to you with a quote!”

Palm Beach County

Rating Case Study

• Single family dwelling with

detached garage

• 2-story home - no basement

• Built in 1995 in Palm Beach

County, FLT

• Post-FIRM construction

• Flood Zone – AE

• +1 Elevation Difference

• $250,000 – Building

• $100,000 – Personal Property

• Minimum deductibles

78

39

79

Step 5

Review Key Rating Components

Basic & Additional Limits

Increased Cost of Compliance

Community Rating System

Reserve Fund Assessment

Premium Surcharge

Federal Policy Fee


How much flood insurance coverage is available?

80

Emergency Program Regular Program

Residential (1-4 family)

Building

Contents

$35,000

$10,000

$250,000

$100,000

Other Residential

Building $100,000 $500,000

Non-Residential Business/Other Non-Residential

Building

Contents

$100,000 $100,000 $500,000

$500,000

Contents $ 10,000 $100,000

40

Additional Limit Basic Limit

Building Coverage

Single family

2—4 family

$ 60,000

$ 60,000

Other residential

Non-res. Bus./Other Non-res.

$ 175,000

$ 175,000

$ 190,000

$ 190,000

$ 325,000

$ 325,000

Contents Coverage

Single family

2—4 fam; other res.

$ 25,000

$ 25,000

Non-res. Bus./Other Non-res. $ 150,000

$ 75,000

$ 75,000

$ 350,000

Rating: Basic and Additional Limits

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82

Training Agenda

Palm Beach County

Rating Case Study


• Single family dwelling


• Built in 1995 in Palm Beach County




• $250,000 – Building



82

.71/.08

41

83

Training Agenda

Palm Beach County

Rating Case Study


.38/.12

83







• $250,000 – Building



84

Training Agenda

Palm Beach County

Rating Case Study


• Building Coverage:*

• Basic: 60,000 X .71 = $426.00

• Add’l: 190,000 X .08 = $152.00

• Personal Property Coverage:*

• Basic: 25,000 X .38 = $95.00

• Add’l: 75,000 X .12 = $90.00

• Less 2% Deductible Discount

• Annual Subtotal: $748.00

* Rates per $100 of coverage limit (4/1/18 rates)

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• $250,000 – Building



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85

Training Agenda

Palm Beach County

Rating Case Study



• Increased Cost of Compliance: $5.00

• Subtotal: $753.00

85







• $250,000 – Building



Community Rating System (CRS)

• Encourages communities to exceed minimum NFIP requirements

• > 1,300 communities participate in CRS

• CRS classes 1 –10:

• Class 1 = 45% premium discount

• Class 9 = 5% discount

• 10: No discount

Community Rating System: https://www.fema.gov/community-rating-system Class 1

Roseville, CA

Class 2 Tulsa, OK

Sacramento County, CA Fort Collins, CO

King County, WA Pierce County, WA

Thurston County, WA 86

https://www.fema.gov/community-rating-system





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87

Training Agenda

Palm Beach County

Rating Case Study


87



• Built in 1995 in Palm Beach County, FL




• $250,000 – Building



88

Training Agenda

Palm Beach County

Rating Case Study





• $753.00 X .75 = $564.75 or $565.00

88







• $250,000 – Building



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Reserve Fund Assessment

• Builds reserves to fund future claims

activity

• 15% Assessment

• Preferred Risk Policy

• Newly Mapped

• All other policies

• Applied after ICC and CRS discount

• No agent commission paid on

reserve fund

Introduced October 1, 2013

15%

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90

Training Agenda

Palm Beach County

Rating Case Study




• CRS discount – 25%


• $565.00 X 1.15 = $649.75 or $650.00

90







• $250,000 – Building



45

HFIAA* Premium Surcharge

• Applies to all new and renewed

policies annually

• $25 for primary residences

• $250 for all other policies

• Applies to contents-only policies

• Surcharge is a fully earned** flat fee

based on building occupancy

• Not subject to earned commissions

**See Cancellation and Endorsement sections

of the NFIP Flood Insurance Manual for exceptions 91

* HFIAA – Homeowner Flood Insurance Affordability Act

92

Training Agenda

Palm Beach County

Rating Case Study





• Reserve Fund Assessment – 15%


• HFIAA Surcharge: $25.00


92







• $250,000 – Building



46

Federal Policy Fees

Federal Policy Fee Rate Type

Standard Rated Policies/ Newly Mapped Properties

$50

Preferred Risk Policies/ Tenants’ contents only policies (ex. RCBAP/GFIP)

$25

1 unit - 2-4 units - 5-10 units - 11-20 units - 21 or more -

$ 50.00 per policy $ 150.00 per policy $ 400.00 per policy $ 800.00 per policy

$2.000.00 per policy • Charged for all new and renewal policies • Fully earned on effective date of policy (except as indicated in Cancellation section of the NFIP

Flood Insurance Manual) • Not subject to earned commissions

93

RCBAP

94

Training Agenda

Palm Beach County

Rating Case Study





• Reserve Fund Assessment – 15%

• HFIAA Surcharge: $25.00


• Federal Policy Fee: $50.00

• Total Amount Due: $725.00

Total w/o CRS

discount = $941.00

94







• $250,000 – Building



47

95

Step 6

Other Rating Considerations

Newly Mapped procedure

Grandfather rules

Elevated buildings

Building enclosures

Proper flood openings

Breakaway walls


Newly Mapped Procedure

• Effective April 2015

• Newly Mapped procedure

• Properties in B, C, X, D, AR

and A99 zones on the old

map to an SFHA on new

map

• Must meet specific loss

eligibility requirements

96

48


Newly Mapped procedure applies to:

• Properties newly mapped into an

SFHA from B, C, X, D, AR and

A99 zones

• Policies previously issued under

the PRP Eligibility Extension

• Properties newly mapped into

SFHA may be eligible to receive

a “preferred risk premium” for the

first year after map revision*

Effective April 1, 2015

*Preferred Risk Policy premium before: • Reserve Fund Assessment • Federal Policy Fee • After first year, policies begin transition to full-risk

rates

97


Newly Mapped into SFHA on or after

April 1, 2015

• Eligible for Newly Mapped

procedure:

• If coverage effective within 12

months of map revision

• Not eligible for Newly Mapped

procedure:

• If coverage not effective within 12

months of map change

• Post-FIRM buildings may qualify

for built-in-compliance

grandfathering

• Pre-FIRM buildings may qualify

for Pre-FIRM subsidized rates

NOTE: All Properties must meet Preferred Risk Policy loss

requirements to be eligible for Newly Mapped Procedure

Within 12 months of map revision

98

Quick Key: Buildings in Palm Beach County affected by the map change effective 10/5/17 have until 10/4/18 to take advantage of the Newly Mapped procedure.

49

Grandfather Rules

Allows a property owner to:

• “Lock” in a previous flood

zone

• “Lock” in a previous Base

Flood Elevation

• For rating purposes

Continuous Coverage vs. Built-in Compliance

99

If policy was obtained prior to the

effective date of the map change:

• Rates can be based on prior

zone/BFE

• Continuous coverage must be

maintained

100

Grandfather Rules

Continuous Coverage

50

If building was built in compliance

with FIRM in effect at time of

construction:

• Use old map’s zone or BFE, or

• Use current rating criteria

• Submit proof to carrier

• Continuous coverage not required

101

Grandfather Rules

Built in Compliance

102

Grandfather Rules

Historic flood maps

Find “historic” flood maps by clicking on:

“Search All Products”

51

103

Elevated Buildings Elevated building defined

Elevated buildings:

• Do not have basements

• Lowest elevated floor raised above

ground level by:

• Foundation walls

• Shear walls

• Posts

• Piers

• Pilings

• Columns

Note: In Zones V and VE, solid foundation perimeter walls are unacceptable for

elevated buildings.

104

Elevated Buildings

Building enclosures

An enclosure is:

• Portion of an elevated building below

the lowest elevated floor

• Partially or fully shut in by rigid walls

Finished Enclosure: • Drywall is mudded, taped and painted • Painted plywood

Unfinished Enclosure: • Drywall only painted • Drywall is mudded and taped but not painted • Block walls even if painted

52

105

Elevated Buildings

Proper Openings

Proper opening requirements:

• Must automatically equalize flood

forces by allowing entry and exit of

floodwaters

• A minimum of 2 openings on at least

2 exterior walls

• Total net area of not less than 1

square inch for every square foot of

enclosure

• Bottoms of openings no higher than 1

foot above the higher of the exterior

or interior grade

Can only be used for: • Building Access • Parking • Storage

106

Elevated Buildings

Breakaway Walls

Breakaway walls are:

• Not part of structural support

• Intended to collapse under certain

lateral loading forces

• Without causing damage the

elevated portion of the building or

the supporting foundation system

V Zones – Coastal Areas

• Should be less than 300 square feet • Unfinished • Used for access, parking or storage only • No machinery or equipment

53

COVERAGE, LIMITATIONS AND

EXCLUSIONS IN THE SFIP

Section 3

108

109

Case Study Facts Six months later – Flash floods strike Palm Beach County.

Torrential rains flood the house’s first floor with about 2 feet of

water.

Damage to the first floor consists of:

Severe warping of the home’s hardwood

flooring

Carpeting in the bedrooms soaked and

muddied by flood waters

Drywall and the insulation behind it damaged

Appliances and mechanicals damaged and

inoperative

Furniture, clothing and other personal articles,

including the homeowner’s valuable baseball

card collection severely impacted

Other Damage: House has a detached garage

inundated by flood waters,

destroying all the personal

property items in it as well as

flooding the family’s second car

parked in the garage

Palm Beach Case Study

54

Standard Flood Insurance Policy (SFIP) NFIP coverage forms

110

Provides building and/or personal

property coverage for:

• Non-condominium 1-to-4 family

dwellings

• Dwelling unit in a residential

condominium building

• Residential townhouse/rowhouse

• Mobile Homes/Travel Trailers as

dwellings

111

Dwelling Form

Quick Key: Palm Beach Case Study house uses Dwelling Form – watch for coverage specifics.

55

Provides building and/or personal

property coverage for:

• Non-condominium Residential

Buildings with 5 or more units

• Apartment building

• Co-operative building

• Dormitory

• Assisted living facility

• Non-residential Buildings

• Office building

• School, Church

• Factory, Warehouse

• Agricultural building

• Restaurant, etc.

112

General

Property Form

Provides building and, if purchased,

contents coverage (commonly owned):

• Condominium buildings with 75%

or more of total floor area for

residential use

• Issued to a residential

condominium association

• On behalf of association and unit

owners

113

Residential

Condominium Building

Association Policy

56

Preferred Risk Policy (PRP)

• Lower-cost Standard Flood

Insurance Policy (SFIP)

• Uses Dwelling or General

Property Forms

• RCBAP not eligible

• Buildings in B, C, X, A99

and AR zones

• In regular program

communities

• Must meet eligibility

requirements

• Not Eligible for PRP, if:

• Any of following exist:** • 2 flood claim payments for separate

losses, each > $1,000

• 3 or more flood claim payments for

separate losses, regardless of $

• 2 Federal flood disaster relief

payments for separate occurrences,

each > $1,000

• 3 Federal flood disaster relief

payments for separate occurrences,

regardless of amount

• 1 flood claim payment and 1 Federal

disaster relief payment, each for

separate losses and each > $1,000

**During any 10-year period, regardless of change of ownership of the building

Description & Eligibility Requirements

114

115

Types of

Coverage

Standard Flood Insurance

Policy (SFIP):

• Coverage A:

• Building Property

• Coverage B:

• Personal Property

• Coverage C:

• Other Coverages

• Coverage D:

• Increased Cost of Compliance

SFIP is a single peril property policy. Will pay for “direct physical loss by or from flood.”

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• Walled and roofed

• Affixed to a permanent site

• Principally above ground

level

What is a

Building?

116

Coverage A – Building Property

• Must have 2 or more outside rigid

walls

• A fully secured roof

• Affixed to a permanent site

• Must resist flotation, collapse or

lateral movement

• At least 51% of ACV above ground

level

What is a

Building?

117

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• Eligible buildings include:

• Manufactured (Mobile Homes)

• Travel Trailers

• Must be affixed to a permanent

foundation

• No weight supported by wheels or

axles

• Anchored in SFHAs to resist flotation,

collapse or lateral movement

What is a

Building?

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Coverage A: Building Property Manufactured/Mobile Homes & Travel Trailers

• Allows issuance of SFIP before

building is walled and roofed

• Offers coverage while work is in

progress except when:

• Construction halted for > 90 days

• Lowest floor for rating is below BFE

• Building deductible is doubled until

walled and roofed

What is a

Building?

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Covers materials and supplies while contained in an enclosed building on premises or adjacent to the premises

Coverage A: Building Property Buildings in the Course of Construction

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Additions and Extensions

NFIP insures additions and

extensions attached to and in

contact with the building, by

means of a:

• Rigid exterior wall

• Solid load-bearing interior wall

• Stairway

• Elevated walkway

• Roof

Coverage A: Building Property

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NOTE: At the insured’s option, additions and extensions connected by any of these methods may be separately insured.

• At policyholder’s option:

• 10% of building coverage can be

applied to a detached garage

• Applies to Dwelling Form only

• Not additional coverage

• Reduces building limit of liability

What is a

Building?

NOTE: Option does not apply to any detached garage used or held for use for residential, business, or farming purposes.

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Coverage A: Building Property Detached Garages

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Coverage A: Building Property

• Awnings, canopies

• Blinds

• Built-in dishwashers

• Built-in microwave ovens

• Carpet permanently installed over unfinished flooring

• Central air conditioners

• Elevator equipment

• Fire sprinkler systems

• Walk-in freezers

• Furnaces and radiators

• Garbage disposal units

• Light fixtures

• Hot water heaters, including solar water heaters

• Outdoor antennas & aerials fastened to buildings

• Permanently installed cupboards, bookcases, cabinets, paneling and wallpaper

• Plumbing fixtures

• Pumps and machinery for operating pumps

• Ranges, cooking stoves and ovens

• Refrigerators

• Wall mirrors (permanently installed.)

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Coverage B – Personal Property

Dwelling Form:

• If personal property coverage is

purchased, the SFIP insures:

• Personal property inside a building

• At the described location

General Property/RCBAP:

• If personal property coverage is

purchased, the SFIP insures:

• Personal property inside

• Fully enclosed insured building

Dwelling Form

vs. GPP/RCBAP

Quick Key: Palm Beach Case Study house has damage to personal property in detached garage. Detached garage is a building at the described location.

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Coverage B: Personal Property

Dwelling Form

• Air conditioning units, portable or window type

• Carpets, not permanently installed, over unfinished flooring

• Carpets over finished flooring

• Clothes washers and dryers

• “Cook-out” grills

• Freezers, other than walk-in, and food in any freezer

• Portable microwave ovens and portable dishwashers

General Property/RCBAP

• Air conditioning units

• Carpet, not permanently installed, over unfinished flooring

• Carpets over finished flooring


• “Cook-out” grills

• Freezers, other than walk-in, and food in any freezer

• Outdoor equipment and furniture stored inside the insured building

• Ovens and the like

• Portable microwave ovens and portable dishwashers

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Quick Key: Case Study house has carpet damage. Is it Coverage A or B? Luckily insured has purchased both coverages.

Coverage B: Personal Property General Property Form

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If Household Personal Property: If Other than Household:

Typical household personal property Furniture and fixtures

Belonging to the insured or to a member of the insured’s household

Machinery and equipment

Insured’s option: property belonging to a guest or domestic worker

Stock

Insured may be legally liable for Other personal property owned by insured and use in insured business

Under the General Property Form, coverage will be either for household personal property or other than household personal property, while within the insured building, but not both.

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126

Case Study Facts

Just to continue the discussion from a flood loss and

coverage standpoint – what if this house had a basement?

Let’s say that portions of the basement are finished with

an office and a rec room area included.

Items damaged in basement: Desk and chair

Computer and printer

Television and stereo

Pool table

Carpeting

Wall paneling

All major mechanicals

Appliances, including a refrigerator

Electrical outlets

Sump pump

Other personal items

What’s Covered/What’s Not?

Palm Beach

What if…? Case Study

Coverage A & B – Basements

Basement is defined as:

• Any area of the building, including any

sunken room or sunken portion of a

room, having its floor below ground

level (subgrade) on all sides.

What is a

Basement?

127

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128

• Central air conditioners

• Cisterns & the water in them

• Unfinished drywall (walls, ceilings)

in a basement

• Electrical junction and circuit

breaker boxes

• Electrical outlets and switches

• Elevators and related equipment

• Fuel tanks and fuel in them

• Furnaces and hot water heaters

• Heat pumps

• Non-flammable insulation in a

basement

• Pumps and tanks used in solar

energy systems

• Stairways and staircases (attached

to building)

• Sump pumps

• Water softeners and chemicals in

them, water filters and faucets

installed as integral part of

plumbing system

• Well water tanks and pumps

• Required utility connections for

items on this list

• Footings, foundations, posts, etc.,

required to support building

• Clean-up

*Applies to basements in ANY zone and Post-FIRM enclosures in SFHAs listed. Please see the policy for complete details.

Coverage A: Basement/Enclosures

Covered Building Property in Basements/Enclosures*

129

If policyholder has purchased

personal property coverage:

• Portable or window air conditioning units


• Food freezers (other than walk-in) and food in any freezer

Coverage B: Basement/Enclosures

Covered Personal Property in Basements/Enclosures

If installed in their functioning locations and, if necessary for operation, connected to a power source.

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What’s Covered in a Basement*?

• Furnace

• Refrigerator

• Desk

• Television

• Washer

• Stereo

• Sump pump

• Computer

• Desk Chair

• Printer

• Carpeting

• Dryer

• Wall paneling

• Pool table

• Electrical outlets

• Food in refrigerator

• Water softener

130 * Also in building enclosure below the lowest elevated floor of a Post-FIRM building in SFHAs listed in SFIP

Coverage C – Other Coverages

The SFIP pays the expense to remove:

• Non-owned debris on or in insured

property

• Debris of insured property anywhere

• Value of labor based on Federal

minimum wage

• NOTE: This coverage does not

increase the Coverage A or

Coverage B limit of liability.

Debris Removal

131

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The SFIP pays the expense for:

• Loss avoidance measures:

• Sandbags, supplies, labor (up to

$1,000)

• Property removed to safety (up to

$1,000)

• Value of labor based on Federal

minimum wage

• NOTE: This coverage does not increase

the Coverage A or Coverage B limit of

liability.

Loss Avoidance

Measures

No deductible applies to either Loss Avoidance measure

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• Condominium loss assessments

(Dwelling Form):

• Assessed to policyholder by condo

association

• Up to the Coverage A limit of liability



liability.

Condo Loss

Assessments

133

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• Pollution Damage

(General Property Form):

• $10,000 maximum limit

• Does not include testing or

monitoring unless required by law or

ordinance



liability.

Pollution

Damage

134

135

• Coverage A - $250,000

• Coverage B - $100,000

• Debris Removal Expense:

• $15,000

• Reduces Coverage A or B

limit

• For example:

• Coverage A - $235,000

Coverage C: Other Coverages Coverage C: Does not increase Coverage A or B

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136

SFIP pays for complying with state or local floodplain management law or ordinance

• Compliance activities include: • Elevation, Relocation,

Demolition, Floodproofing

• Eligibility requires: • Substantial damage

• 50% of market value, or • Lower local standard

• Repetitive loss • 2 flood losses in 10 years • 25% of market value

Coverage D: Increased Cost of Compliance

Coverage D: Compliance & Eligibility

ICC Limit of Liability

$30,000

See Part III. Property Covered - Section D of SFIP for complete details

on eligibility and coverage

137

• Personal property not inside a

building

• Building, and contents in it, located

entirely in, on, or over water

• Open structures, including a

boathouse in, on, or over water

• Recreational vehicles

• Self-propelled vehicles or machines

licensed for public road use

• Land, land values, lawns, trees,

shrubs, plants, growing crops or

animals

• Accounts, bills, coins, currency,

other valuable papers

• Walks, decks, driveways, etc.

• Underground structures and

equipment, including wells, septic

tanks, septic systems

• Containers & related equipment, such

as tanks containing gases and liquid

• Buildings and their contents if > 49%

of ACV is below ground

• Fences, retaining walls, seawalls,

piers, docks, etc.

• Aircraft, watercraft or their

furnishings and equipment

• Hot tubs and spas that are not

bathroom fixtures

• Swimming pools and their equipment

Property Not Covered

Examples of Property Not Covered

See Standard Flood Insurance Policy coverage forms for more information

Quick Key: Case Study house had the family’s second car damaged by flood. Vehicles licensed for public road use are not

covered.

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138

Exclusions Exclusions Partial list of SFIP Exclusions

The SFIP does not provide coverage for:

• Loss of revenue or profits

• Loss of access

• Loss of use

• Loss from interruption of business or

production

• Additional living expenses

139

Exclusions Exclusions Partial list of SFIP Exclusions

SFIP does not pay for losses for:

• Water or water borne material that:

• Backs up thru sewers or drains

• Discharges or overflows from a sump

pump

• Seeps or leaks on or thru covered

property

• Damage from the pressure or weight

of water

Exception:

Unless there is a flood in the area and the flood is the proximate cause of

one of the excluded items.

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140

Summary of

Coverage

Flood Insurance Reform Act of 2004

Summary of Coverage

Information sent to policyholder by

WYO Company or NFIP Servicing

Agent:

• Summary of Coverage form

• Cover letter for enclosures

• Copy of flood insurance policy

141

Claims

Handbook

Flood Insurance Reform Act of 2004

Claims Handbook

FEMA sends to policyholder:

• Property’s loss history information

• Claims handbook

• Acknowledgment form to sign

• Cover letter referencing

enclosures

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LOSS SETTLEMENT

PROVISIONS

Section 4

142

Loss Settlement -Deductibles

• Minimum deductibles vary based

on:

• Policy rating

• Amount of coverage

NOTE: Deductible doubles for building under

construction prior to being walled and roofed 143

71

Loss Settlement Deductibles

144



on:

• Policy rating


• Optional deductibles are available


construction prior to being walled and roofed 145

Non-residential - $50,000 RCBAP - $25,000 Residential - $10,000

72



on:

• Policy rating


• Optional deductibles are available

• Separate for building and for

contents

• No deductible for:

• Loss avoidance measures

• Loss assessments

• ICC


construction prior to being walled and roofed

Non-residential - $50,000 RCBAP - $25,000 Residential - $10,000

146

147

Loss Settlement

Approaches

Loss Settlement Provisions Loss Settlement and the SFIP

• Replacement Cost Value

• Actual Cash Value

• Special Loss Settlement

73

148

Loss Settlement

Approaches

Loss Settlement Provisions Replacement Cost under Dwelling Form

Replacement Cost Loss Settlement applies

to:

• Single Family Dwelling

• Building only

• Contents (ACV)

• Must be principal residence

• Insured-to-Value:

• 80% of replacement cost at time of loss, or

• Maximum under NFIP

Quick Key: Principal Residence: the

insured or insured’s spouse

must have lived there for at

least 80% of 365 days

immediately before the loss.

149

Loss Settlement

Approaches

Loss Settlement Provisions Replacement Cost under RCBAP

• Insures a residential condominium

building owned by a condominium

association.

• Replacement cost loss settlement

applies to condos other than

manufactured homes/travel trailers

• If insured to at least 80% of its

replacement cost value at the time of

loss or max limit there is no

coinsurance penalty

74

RCBAP Maximum Amount of Insurance

• The maximum RCBAP building coverage

• Equals the replacement cost value of the

building, or

• $250,000 per unit times the number of

units, whichever is less

RCBAP

Maximum

$250,000 x 10 Units = $2,500,000

$250,000 x 100 Units = $25,000,000

150

151

Loss Settlement

Approaches

Loss Settlement Provisions Replacement Cost under RCBAP

• Insures a residential condominium

building owned by a condominium

association.

• Replacement cost loss settlement

applies to condos other than

manufactured homes/travel trailers

• If insured to at least 80% of its

replacement cost value at the time of

loss or max limit there is no

coinsurance penalty

75

RCBAP Co-Insurance Penalty Applies to Building Coverage Limit

Amount of insurance at time of loss

Amount of insurance required

X

Amount of loss (before deductible)

= Limit of Recovery

152

153

Loss Settlement

Approaches

Loss Settlement Provisions Actual Cash Value

Actual Cash Value loss settlement

applies to:

• 2-to 4 family dwellings

• Single family that are not eligible for

RCV

• Other Residential buildings

• Non-residential buildings

• Detached garages

• Personal property

• Mobile homes under 16 ft. wide and

under 600 sq. ft 52-unit Apartment Building

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154

Loss Settlement

Approaches

Loss Settlement Provisions Manufactured/Mobile Homes and

Travel Trailers

Special Loss Settlement applies to:

• Mobile homes/travel trailers

• At least 16’ wide; at least 600 square feet

• Must be principal residence

• Partial losses settled according to

replacement cost loss settlement

conditions

• If it is total loss, coverage is the least of:

• The building’s limit of liability

• Replacement cost of dwelling

• 1.5 times ACV

FLOOD INSURANCE

RESOURCES

Section 5

155

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Access the NFIP Flood Insurance

Manual:

• Online at the Flood Insurance

Library: http://www.fema.gov/flood-insurance-manual

NFIP Flood

Insurance Manual

156

www.fema.gov/national-flood-insurance-program

National Flood Insurance Program Home Page

157






http://www.fema.gov/national-flood-insurance-program







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www.floodsmart.gov

FloodSmart.gov

158

Key Fundamentals Course Page

159

Handouts at: www.h2opartnersusa.com/agent/floodtraining.html

http://www.floodsmart.gov/

http://www.h2opartnersusa.com/agent/floodtraining.html

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Locating flood maps: https://msc.fema.gov

FEMA Map Service Center

160

https://www.fema.gov/national-flood-insurance-program-flood-insurance-advocate

Office of the Flood Insurance Advocate

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• All attendees will be receiving an

email with a link to a survey and

feedback form.

• Please take time to complete and

help us improve our training effort!

Evaluations

162

• Melanie Graham [email protected]

• Mike Moye

[email protected]

• Rich Slevin

[email protected]

• Rich Waalkes [email protected]

• Aaron Montanez/Will Lucas [email protected]

Contact Info

163

mailto:[email protected]





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Thank you for attending!

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