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Table of Contents
Table of Contents
Purpose ......................................................................................................................................................... 8
Introduction ................................................................................................................................................ 10
1 Message to National Flood Insurance Program Claims Professionals ............................................. 10
2 National Flood Insurance Program .................................................................................................. 11
3 Standard Flood Insurance Policy ..................................................................................................... 11
3.1 Dwelling Form ......................................................................................................................... 12
3.2 General Property Form ........................................................................................................... 12
3.3 Residential Condominium Building Association Policy Form .................................................. 12
4 Emergency and Regular Programs .................................................................................................. 12
4.1 Emergency Program ................................................................................................................ 12
4.2 Regular Program ..................................................................................................................... 12
5 Amounts of Insurance Available ..................................................................................................... 13
6 Deductibles ..................................................................................................................................... 13
7 Group Flood Insurance Policy ......................................................................................................... 14
8 Disaster Response ........................................................................................................................... 15
8.1 FEMA Joint Field Office ........................................................................................................... 16
8.2 Disaster Response NFIP Field Offices ...................................................................................... 16
8.3 Adjuster Briefings .................................................................................................................... 17
9 Claims Professionals Expectations .................................................................................................. 17
9.1 NFIP Core Values ..................................................................................................................... 17
9.2 Customer Service .................................................................................................................... 18
10 NFIP Adjuster Participation ......................................................................................................... 19
10.1 Adjuster Authority................................................................................................................... 20
10.2 NFIP Knowledge ...................................................................................................................... 20
10.3 Required NFIP Adjuster Authorization .................................................................................... 20
10.4 Adjuster Qualifications ............................................................................................................ 21
10.5 Adjuster Authorization Process............................................................................................... 21
10.6 NFIP Fee Schedule ................................................................................................................... 22
11 Examiner Participation in the NFIP ............................................................................................. 23
11.1 Authority ................................................................................................................................. 23
11.2 Responsibilities ....................................................................................................................... 24
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11.3 Knowledge of the NFIP ............................................................................................................ 25
12 Training for Claims Professionals ................................................................................................ 25
12.1 NFIP Sponsored Training ......................................................................................................... 25
12.2 Annual NFIP Claims Presentations .......................................................................................... 26
12.3 Other Training ......................................................................................................................... 26
Section 1: SFIP Forms .................................................................................................................................. 28
1 Overview ......................................................................................................................................... 28
2 Dwelling Form ................................................................................................................................. 29
3 General Property Form ................................................................................................................... 98
4. Residential Condominium Building Association Policy ................................................................. 157
Section 2: Claims Processes and Guidance ............................................................................................... 221
1 Adjuster Preliminary Damage Assessment ................................................................................... 221
2 Advance Payments ........................................................................................................................ 222
2.1 Advance Payment Opportunity One: Pre-Inspection ........................................................... 222
2.2 Advance Payment Opportunity Two: Post-Inspection .......................................................... 223
2.3 Procedures for Issuing Advance Payment............................................................................. 224
2.4 Advance Payments Exceeding the Covered Loss .................................................................. 225
3 Appraisal ....................................................................................................................................... 226
4 Cisterns.......................................................................................................................................... 227
5 Claims Adjustment ........................................................................................................................ 228
5.1 Building Scope and Estimate ................................................................................................. 228
5.2 Contents (Personal Property)................................................................................................ 230
5.3 Special Limits ......................................................................................................................... 230
5.4 Depreciation .......................................................................................................................... 230
5.5 Progress Notes in File ............................................................................................................ 231
6 Claim Closed Without Payment Reasons ...................................................................................... 232
7 Communications from Attorneys, Public Adjusters, and Other Policyholder Representatives ... 233
8 Condominium Claims Handling ..................................................................................................... 234
9 Contents Manipulation ................................................................................................................. 235
10 Cooperative Buildings ............................................................................................................... 236
11 Countertops .............................................................................................................................. 237
11.1 Common Countertop Types and their Repair or Replacement ............................................ 237
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11.2 Countertop Adjustment Concerns ........................................................................................ 238
12 Electronic Signatures................................................................................................................. 239
13 Expense Payments .................................................................................................................... 240
13.1 Adjuster Fees ......................................................................................................................... 240
14 Flood-In-Progress ...................................................................................................................... 240
15 GFIP Claims Handling ................................................................................................................ 241
16 Guidance on the Use of Outside Professional Services ............................................................ 242
16.1 When to request a Building Structural Evaluation ................................................................ 242
16.2 Outside Financial Accounting Professionals ......................................................................... 243
16.3 Insurers must comply with the following requirements regarding the use of outside
professional services ......................................................................................................................... 244
17 General Adjuster (GA) Re-inspection Request .......................................................................... 246
18 HVAC Equipment ....................................................................................................................... 246
19 Identification of Building Equipment, Appliances, Electronics, and Mechanicals .................... 247
19 Improvements and Betterments .............................................................................................. 248
19.1 Tenants’ Contents Only Policies ............................................................................................ 248
19.2 Building Owner and Tenant Named on Same Policy with Coverage A ................................. 249
19.3 Duplicate Policies with Coverage A Not Allowed .................................................................. 249
20 Increased Cost of Compliance ................................................................................................... 250
21 Inspection .................................................................................................................................. 250
22 Letter of Map Amendment/Letter of Map Revision ................................................................. 251
22.1 Letter of Map Amendment Definition .................................................................................. 251
22.2 Letter of Map Revision Definition ......................................................................................... 251
22.3 Obtaining a LOMA or LOMR .................................................................................................. 252
22.4 How a LOMA or LOMR Applies to Claims .............................................................................. 252
23 Lowest Elevated Floor Determination ...................................................................................... 252
24 Manufactured (Mobile) Home/Travel Trailer Worksheet ........................................................ 254
25 Non-Waiver Agreement ............................................................................................................ 254
26 Notice of Loss ............................................................................................................................ 255
27 Overhead and Profit .................................................................................................................. 255
28 Payment and Paying Undisputed Loss ...................................................................................... 256
29 Perimeter Wall Sheathing ......................................................................................................... 257
29.1 General Guidance on Perimeter Wall Sheathing .................................................................. 257
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29.2 Determining Coverage of Damage to Perimeter Wall Sheathing ......................................... 257
29.3 Determining Methods of Repair or Replacement of Damaged Sheathing ........................... 258
29.4 Adjuster Considerations ........................................................................................................ 259
30 Photographs .............................................................................................................................. 259
31 Pollutants .................................................................................................................................. 260
32 Porches ...................................................................................................................................... 260
33 Prior Loss Request ..................................................................................................................... 261
34 Prompt Communications .......................................................................................................... 262
35. Proof of Loss/Increase Cost of Compliance Waiver Request Process....................................... 263
36 Property Address Waiver .......................................................................................................... 267
37 Property Related to Controlled Substances .............................................................................. 268
38 Record Request from Special Investigator for Fraud Investigation .......................................... 269
39 Release of Claim File Information to Policyholders .................................................................. 269
39.1 Integrity of Claim Files........................................................................................................... 269
39.2 Disclosure of Claim Files ........................................................................................................ 270
39.3 Letters of Representation ..................................................................................................... 270
40 Remediation, Drying, and Emergency Service Contractors ...................................................... 271
41 Reporting................................................................................................................................... 272
41.1 Timely Reporting ................................................................................................................... 272
41.2 Preliminary Report ................................................................................................................ 273
41.3 Interim Report ....................................................................................................................... 275
41.4 Narrative Report ................................................................................................................... 275
41.5 NFIP Final Report................................................................................................................... 276
41.6 Proof of Loss .......................................................................................................................... 276
42 Requests for Additional Payment ............................................................................................. 277
43 Reservation of Rights ................................................................................................................ 278
44 Salvage ...................................................................................................................................... 278
45 SFHAs and Non-SFHAs ............................................................................................................... 280
45.1 Special Flood Hazard Areas (SFHAs) ...................................................................................... 280
45.2 Non-Special Flood Hazard Areas (Non-SFHAs) ...................................................................... 280
46 Special Allocated Loss Adjustment Expense (SALAE) Processes ............................................... 280
47 Statute of Limitations ................................................................................................................ 289
48 Subrogation ............................................................................................................................... 290
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49 Underwriting Referral ............................................................................................................... 291
50 Waiver of Elevated Building Coverage Limitation..................................................................... 292
51 Wildfires .................................................................................................................................... 293
51.1 Application of Post Wildfire Exception to 30-Day Waiting Period for New Policies ............. 293
51.2 Assistance with the Proper Application of Post Wildfire Exception ..................................... 294
52 Wind/Flood Loss ....................................................................................................................... 294
52.1 Wind/Water Investigative Tips ............................................................................................. 295
53 Withdrawal Letters and Denial Letters ..................................................................................... 297
54 Oversight ................................................................................................................................... 297
54.1 Claims Oversight ................................................................................................................... 297
54.2 Claims Operation Reviews Description of Findings .............................................................. 299
55 Claim Overpayment Recovery................................................................................................... 301
55.1 Claim Overpayment Recovery Process ................................................................................. 301
55.2 Methods of Claim Overpayment Reimbursement to the NFIP ............................................. 301
Section 3: Increased Cost of Compliance .................................................................................................. 304
1 Increased Cost of Compliance (ICC) .............................................................................................. 304
1.1 Required ICC Requirements For Advance or Partial Payment: ............................................. 306
1.2 Required ICC Claim File Documents and Requirements ....................................................... 307
1.3 What to Know Concerning Elevation, Demolition, Relocation, and Floodproofing of a Flood
Damaged Building: ............................................................................................................................ 309
1.4 Assignment of Coverage D, ICC Benefits ............................................................................... 315
1.5 Grants .................................................................................................................................... 316
1.6 Cost Share ............................................................................................................................. 317
1.7 Some ICC Issues ..................................................................................................................... 318
1.8 ICC U-CORT Waiver Process .................................................................................................. 319
Section 4: NFIP Claims Appeals ................................................................................................................. 322
1 NFIP Claims Appeals ...................................................................................................................... 322
1.1 Eligibility ................................................................................................................................ 322
1.2 Filing an Appeal ..................................................................................................................... 322
1.3 What to Expect ...................................................................................................................... 323
1.4 Insurer Responsibility ............................................................................................................ 324
Appendix ............................................................................................................................................... 327
Acronyms and Abbreviations ................................................................................................................ 329
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Purpose
Purpose
The purpose of the NFIP Claims Manual is to improve clarity of claims guidance to WYOs,
vendors, adjusters, and examiners so that policyholders experience consistency and reliability of
service. The manual provides processes for handling claims from the notice of loss to final
payment.
All NFIP bulletins, other than those announcing Flood Insurance Claims Office numbers, Flood
Response Office locations, claims adjuster briefings, and current/future program changes, are
superseded by this manual and of no further effect.
Disclaimer: This document represents the current FEMA guidance on the covered topics and may
assist NFIP insurers, adjusters, vendors, and policyholders apply applicable statutory and
regulatory requirements, as well as the terms and conditions of the Standard Flood Insurance
Policy. This document is not a substitute for applicable legal requirements, nor is it itself a rule. It
is not intended to, nor does it impose, legally-binding requirements on any party, except where
parties have voluntarily entered into an agreement requiring compliance with FEMA guidance.
FEMA’s discussion of any brand, trademark, or registered mark is not an endorsement.
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Introduction
Introduction
1 Message to National Flood Insurance Program Claims Professionals
Over the past several years, the Federal Emergency Management Agency
(FEMA) has highlighted our commitment to our policyholders. We are
transforming the ways we manage the National Flood Insurance Program
(NFIP). This transformation will enable our partners and stakeholders, Write
Your Own (WYO) insurance companies, insurance company vendors,
agents, adjusting firms, adjusters, and examiners as claims professionals, to
improve our policyholders’ experience when they have a flood claim.
We are getting policyholders on a road to recovery faster through a more
robust advance payment process. We are committed to making our
products and processes easier to understand from the policyholder’s point of view, that includes
rewriting of our claims and underwriting manuals in plain language so insurance professionals
understand the NFIP and can provide policyholders with consistency and reliability of service.
One of FEMA’s strategic goals is to build a culture of preparedness which promotes the idea that
everyone should be prepared when disaster strikes. One way an individual can be prepared is to
purchase proper insurance coverage. As representatives of FEMA and the NFIP, we will treat
each policyholder with empathy and respect, ensuring the NFIP adjusts each claim fairly and
without unnecessary delay, and handles each claim as if it were our home or business.
Policyholders’ positive word-of-mouth to family, friends, neighbors, and the wider community
regarding their claims experience can influence these individuals to purchase flood insurance.
All of you represent the NFIP and our improved customer experience. You will likely be the first
and may be the only NFIP representative the policyholder engages with after a flood event. FEMA
depends on your continued expertise and compassion to help our policyholders recover from
what may be a devastating experience for them.
As a claims professional, you are the one that will guide the policyholders through the entire
NFIP claims process – from the notice of loss to their final payment. With your knowledge of the
Standard Flood Insurance Policy, you can make the policyholder’s recovery smoother by
communicating what they should do to move their claim along the adjustment journey.
I would like to take a moment to recognize the hard work you do on our behalf.
During the past year, I have had the pleasure of observing quality adjusting by riding along on a
number of loss adjustments. I saw first-hand how much time, effort, and care claims adjusters
put into serving our policyholders. It is a tough job entering into dangerous spaces, dealing with
conditions such as mold and other hazards, and meeting the needs of NFIP policyholders still
processing the toll of a recent flood.
David Maurstad, Deputy
Associate Administrator for
Insurance and Mitigation
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I know first-hand how tough this is because my dad was an adjuster. In addition, during my 20+
years as an agent, I experienced the challenge of settling property losses many times. I
understand the dilemma claims professionals face trying to provide as much assistance to
someone in need within the constraints of the flood insurance contract.
We recognize your job is not easy. However, you have the opportunity to affect the claims
experience positively for NFIP policyholders. I appreciate that you go the extra mile to make sure
we are treating our policyholders with integrity and respect and getting every dollar allowed
them from the policy they purchased. Together we can help close the insurance gap and create
more resilient communities.
2 National Flood Insurance Program
The National Flood Insurance Act of 1968 (Title XII of the Housing and Urban Development Act of
1968, Public Law 90-448, codified as amended at 42 U.S.C § 4001 et seq.) created the National
Flood Insurance Program (NFIP). The NFIP is a cooperative venture involving the Federal
Government, state, and local governments, and the private insurance industry. The Federal
Government sets insurance rates, provides the necessary risk studies to communities, and
establishes floodplain management criteria guiding construction in the floodplain.
Communities must adopt and enforce minimum floodplain management standards for new,
substantially improved, and substantially damaged structures in order for the NFIP to provide
insurance within their boundaries. Private insurance companies, under an arrangement known
as the Write Your Own (WYO) program, sell and service federal flood insurance policies and
retain part of the premium for their efforts. FEMA also sells and services federal flood insurance
policies through the NFIP Direct Servicing Agent (NFIP Direct).
The Federal Insurance Directorate (FID) under the Federal Insurance and Mitigation
Administration (FIMA) is the component of FEMA charged with administering the NFIP.
3 Standard Flood Insurance Policy
The NFIP offers three Standard Flood Insurance Policy (SFIP) forms – Dwelling Form
1
, General
Property Form
2
, and the Residential Condominium Building Association Policy (RCBAP) Form
3
.
Each SFIP form has an insuring agreement between the policyholder and the insurer, which
details the terms and conditions explaining coverage and non-coverage provisions
4
.
1
44 C.F.R. pt. 61, App. A(1) (2018)
2
44 C.F.R. pt. 61, App. A(2) (2018)
3
44 C.F.R. pt. 61, App. A(3) (2018)
4
See 44 C.F.R. § 61.13 (2018); see also id. pt. 61, App. A(1), A(2), A(3)
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3.1 Dwelling Form
Insures a single-family dwelling, a two to four family dwelling, a residential renter, or a
residential condominium unit owner. See Section 1 for more information.
3.2 General Property Form
Insures a non-residential building or unit, a residential detached garage or outbuilding, a
non-residential leaseholder’s contents, a multi-family dwelling (other residential) such as
an apartment building, or a condominium association’s building, which has less than 75
percent of its square footage for residential use; and any other building that does not meet
the definition of a Dwelling or RCBAP. See Section 1 for more information.
3.3 Residential Condominium Building Association Policy Form
Insures a residential condominium building owned by a condominium association, which
has 75 percent or more of its square footage for residential use. See Section 1 for more
information.
4 Emergency and Regular Programs
NFIP only sells flood insurance in communities that participate in the NFIP. See the Community
Status Book for more information.
4.1 Emergency Program
A community may initially participate in the NFIP in the Emergency Program. The
Emergency Program is in place when FEMA has not made a Flood Insurance Rate Map
(FIRM). NFIP makes a limited amount of flood insurance coverage available for all residents
of the community. The community must adopt minimum floodplain management
standards to control future use of its floodplains.
5
4.2 Regular Program
The community joins the Regular Program of the NFIP after FEMA completes a detailed
engineering study for the community. The study allows FEMA to release the engineering
driven FIRM that provides flood data. The community must adopt or amend its floodplain
management regulations to incorporate the new flood data contained in the FIRM. FEMA
provides higher amounts of flood insurance coverage under the Regular Program than
under the Emergency Program and charges new construction actuarial rates to reflect the
risk of flooding.
6
5
See P.L. 90-448 § 1336, as added P.L. 91-152 § 91-152 § 408, 83 Stat. 396 (1969), 42 U.S.C. § 4056; 44 C.F.R. § 59.3 (2018)
6
See 44 C.F.R. § 59.2 (2018)
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5 Amounts of Insurance Available
Table 1 shows the maximum amounts of insurance currently available under the SFIP for
building coverage and contents coverage, in both Emergency Program and Regular Program
communities. The aggregate limits for building coverage are the maximum coverage amounts
allowed by statute for each building included in the relevant occupancy category. These limits
apply to all single condominium units and all other buildings, not in a condominium form of
ownership, including cooperatives and timeshares
7
.
Table 1. Amounts of Insurance Available: Dwelling, General Property, and RCBAP Forms
Coverage
Type
Property Type
Emergency
Program
Regular Program
Building
Single – Family Dwelling
$35,000
1
$250,000
2 – 4 Family Building
$35,000
$250,000
Other Residential Building
$100,000
$500,000
Non-Residential Building (including Business Buildings
and Other Non-Residential Buildings)
$100,000
$500,000
Residential Condominium Building Association
N/A
$250,000 x number
of units or
replacement cost of
the building,
whichever is less.
Contents
Residential Property (Dwelling)
$10,000
$100,000
Non-Residential Business, Other Non-Residential
Property
$100,000
2
$500,000
Residential Property (RCBAP)
N/A
$100,000
1
In Alaska, Guam, Hawaii, and U.S. Virgin Islands, the amount of building coverage available in the Emergency
Program for a single-family dwelling and 2-4 family dwelling available is $50,000.
2
In Alaska, Guam, Hawaii, and U.S. Virgin Islands, the amount of building coverage available in the Emergency
Program for Other Residential and Non-Residential buildings is $150,000.
6 Deductibles
Table 2 shows the minimum deductibles available under the SFIP for building coverage and
contents coverage, in both Emergency Program and Regular Program communities.
7
See P.L 90-448 § 1306, 82 Stat. 575 (1968) (42 U.S.C. § 4013); 44 C.F.R. § 61.6 (2018)
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Table 2. Minimum Deductibles
1
Program
Type
Rating
Minimum
Deductible for
Coverage of
$100,000 or
Less
2
Minimum
Deductible for
Coverage Over
$100,000
Emergency
All
$1,500
$2,000
Regular
All pre-FIRM subsidized zones
3
: A, AE, A1-A30, AH, AO,
V, VE, and V1-V30, AR/AR Dual Zones without
Elevation Data
$1,000
$1,250
All Full-Risk
4
zones: A, AE, A1-A30, AH, AO, V, VE, and
V1-V30, AR/AR Dual Zones without Elevation Data and
B, C, X, A99, and D
Tentative and Provisional
1
The deductible for the PRP, MPPP and Newly Mapped policies will be $1,000 for both building and contents
if the building coverage is less than or equal to $100,000 and $1,250 if building coverage is over $100,000.
A contents-only policy will have a $1,000 deductible.
2
Use this column if building coverage is $100,000 or less, regardless of the contents coverage amount.
This includes policies issued with contents coverage only.
3
Pre-FIRM subsidized policies are those policies covering a pre-FIRM building that are rated in zones
unnumbered A, AE, A1–A30, AH, AO, VE, and V1–V30 without elevation data from an Elevation Certificate.
Also included among pre- FIRM subsidized policies are policies covering certain pre-FIRM buildings rated in
zones D and unnumbered V, for which the pre-FIRM subsidized rate remains more favorable than full-risk
rating in zone D or unnumbered V.
4
Full-Risk rates apply to all policies rated with elevation data from an Elevation Certificate in zones
unnumbered A, AE, A1–A30, AH, AO, VE, and V1–V30, regardless of whether the building is pre-FIRM or
post-FIRM. Post-FIRM buildings rated in zones D or unnumbered V, and pre-FIRM buildings in zones D or
unnumbered V using post-FIRM rate tables are considered Full-Risk. Full-Risk rates are also applied to all
policies rated in zones B, C, or X, regardless of product type or the building classification as pre-FIRM or
post-FIRM. Grandfathered standard-X zone policies and grandfathered policies using elevation data from
an Elevation Certificate are considered Full-Risk.
Refer to the Flood Insurance Manual for more information on deductibles, including maximum
and optional deductibles.
7 Group Flood Insurance Policy
A Group Flood Insurance Policy (GFIP) is an insurance certificate covering all individuals named
by a state as recipients under section 408 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (P.L. 93-288 § 408, 42 U.S.C. § 5174) of an Individuals and Households
Program (IHP) award for flood damage because of a Presidential disaster declaration.
8
The NFIP
Direct handles all GFIPs. IHP funds the GFIP policy certificate, which is good for three years, from
the award to the recipient. Table 3 outlines the coverage details of the GFIP.
8
See 44 C.F.R. § 61.17(a) (2018); see also id. 206.119(d) (explaining purchase of GFIP)
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Table 3. GFIP Policy Details
Section
Details
Coverage
Amount
The amount of coverage is equivalent to the maximum grant amount established under
section 408 of the Stafford Act (42 U.S.C. § 5174) which FEMA determines annually.
9
See
the Federal Register
for the current grant amount.
Covered
Property
The GFIP covers the building and personal property of an owner. As of the publication
of this manual, the policyholder has the choice of whether to use the funds solely for
building damages, solely for contents damages, or for a combination of building and
contents. For renter policyholders, the GFIP is for damaged contents owned by the
policyholder. A renter cannot have building coverage under the GFIP.
There is no Increased Cost of Compliance (ICC) coverage under the GFIP.
Term
The term of the GFIP is for 36 months and begins 60 days after the date of the disaster
declaration. Coverage for individual grantees begins on the 30th day after NFIP Direct
receives the required data for the grantees and their premium payments. IHP will send
a Certificate of Flood Insurance to each individual under the GFIP.
10
Deductible
The GFIP is the SFIP Dwelling Form, except that Section VI. Deductibles does not apply.
FEMA applies separate deductibles of $200 each to any building loss and any contents
loss. This deductible applies to flood-damaged losses sustained to the insured property
during the term of the GFIP.
The deductible does not apply to the SFIP Section III.C.2. Loss Avoidance Measures, or
Section III. C.3. Condominium Loss Assessments Coverage.
The following sections of the SFIP do not apply to the GFIP:
• Section VII. General Conditions, E. Cancellation of Policy by You
• Section VII. General Conditions, H. Policy Renewal.
11
Cancellation
The policyholder cannot cancel a GFIP. However, the policyholder may purchase a
regular SFIP through the NFIP. Upon the purchase of an SFIP, the group flood certificate
becomes void and the NFIP does not refund the GFIP premium.
Renewal
NFIP Direct will send a notice to the GFIP certificate holders approximately 60 days
before the end of the 36-month term of the GFIP. The notice encourages the certificate
holder to contact an insurance agent or private insurance company selling NFIP policies
under the WYO program to purchase the amount of flood insurance coverage they
must have to maintain their eligibility for future disaster assistance.
12
8 Disaster Response
Every year disasters put millions of Americans in danger and cause billions of dollars of property
damage. FEMA is always ready, helping communities reduce their risk, helping emergency
9
See 44 C.F.R. § 61.17(c) (2018); 42 U.S.C. § 5174(h) (setting the limit at $25,000 with an annual adjustment)
10
See 44 C.F.R. § 61.17 (d)-(f)
11
See 44 C.F.R. § 61.17(g)
12
See 44 C.F.R. § 61.17(h)
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officials prepare for all hazards, and assisting our insured survivors on their road to recovery.
Following are disaster response efforts and offices established in support of disasters.
8.1 FEMA Joint Field Office
The FEMA Joint Field Office (JFO) is a temporary federal facility established close to a
disaster or a multi-state event. FEMA may establish JFOs that function as central points for
federal, state, local, and tribal executives with responsibility for incident oversight,
direction, or assistance to coordinate protection, prevention, preparedness, response, and
recovery actions.
Federal Insurance assists the JFO in several capacities pre- and post-disaster. It oversees
and coordinates response efforts between other divisions of FEMA and the NFIP to ensure
the execution of flood response activities.
8.2 Disaster Response NFIP Field Offices
A. Adjuster Control Office
NFIP Direct establishes the Adjuster Control Office (ACO) to control the assignment and
coordination of NFIP Direct claims including the GFIP, Repetitive Loss (RL), and Severe
Repetitive Loss (SRL) policies.
B. Integrated Flood Insurance Claims Office
NFIP Direct establishes an on-site Integrated Flood Insurance Claims Office (IFICO)
following a major flooding event to process NFIP Direct flood claim payments. Examiner
staff and general adjuster staff assist flood adjusters, agents, and policyholders in the
handling of NFIP Direct flood claims.
C. Flood Response Office
The NFIP directs its Bureau and Statistical Agent (NFIP BSA) to establish a Flood Response
Office (FRO) to provide a local NFIP presence and base of operations during a flood event.
The NFIP BSA General Adjusters (GAs), NFIP BSA Regional Support staff, and others may be
deployed to a FRO to conduct a variety of activities to support the NFIP stakeholders,
including policyholders, adjusters, local officials, agents, WYO Companies, the NFIP Direct,
and FEMA. FRO activities are conducted in cooperation with other Government operations,
including FEMA Disaster Field Offices (DFOs), FEMA Joint Field Offices (JFOs) and others.
At the FRO, the NFIP BSA:
• Coordinates with the insurers to provide guidance on the scope of coverage.
• Facilitates the adjustment of losses sustained by NFIP policyholders.
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• Educates and informs the insured public, agents, adjusters, and federal and state
officials in matters related to the NFIP's total catastrophic response procedures
through distribution of posters, notices, and NFIP material, and attendance and
support of FEMA at community meetings.
• Conducts special adjuster briefings, surveys flood disaster areas, assesses the extent of
damage, and advises FEMA of findings.
• Implements the re-inspection program and performs claims troubleshooting activities.
8.3 Adjuster Briefings
The NFIP BSA General Adjusters and FEMA conduct adjuster briefings immediately after
major storms. These briefings address regional problems, construction issues, adjuster
authorization, and community, and state ordinances, etc. FEMA posts the date, time, and
location of the briefings at www.nfipservices.floodsmart.gov. Independent adjusters,
adjusting firms, and WYO Company claims examiners and representatives should attend
these briefings.
9 Claims Professionals Expectations
FEMA expects all claims professionals to be committed to the following NFIP core values of
compassion, fairness, integrity, respect, and diversity. See Appendix L, NFIP Customer Service
Standards.
9.1 NFIP Core Values
A. Compassion
Be empathetic to the stressful circumstances the policyholder may be experiencing and
your crucial role in helping their recovery. Every interaction with the policyholder is an
opportunity to cultivate rather than harm a relationship.
B. Fairness
Strive to achieve principled, well-reasoned, and just outcomes in the execution of all claims
and adjust each claim fairly and without unnecessary delay, bias, or preference.
C. Integrity
Integrity is the foundation of all our actions and is central to our conduct. Maintain the
highest standards of integrity by creating a culture of honesty, consistency, and
predictability. Trust is the earned result of conducting our actions with integrity. Failure to
adhere to the highest standards reflects poorly on the NFIP.
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D. Respect
Treat all policyholders with dignity and respect. This is not only important, it is also their
right.
E. Diversity
Diversity is one of the defining strengths of our Nation. Our policyholders reflect the full
spectrum of cultures, beliefs, backgrounds, and commitments. The NFIP is committed to
serving the needs of every policyholder recognizing that diversity is central in our work
every day.
9.2 Customer Service
A. Be Professional
FEMA expects:
•
Claims professionals to respond promptly to telephone inquiries; be available
to answer questions, update the policyholder about the status of their claim,
and present clear and correct information about their claim.
•
Claims professionals to include all allowances payable in the policy in the
estimate. NFIP coverage differs from other insurance policies and claims
professionals may need to spend some extra time addressing the differences
with the policyholder.
•
Claims professionals to explain coverage early in the claim process in a clear
manner. For example, post-FIRM elevated building and basement coverage
can confuse the policyholder and require additional explanation.
•
Claims professionals to inform the policyholder of the exclusions in the SFIP
and the steps necessary to pay their claim promptly.
•
Claims professionals to be considerate of the policyholder’s time, keep
appointments, and honor their commitments.
•
NFIP adjusters to provide a copy of the estimate and assist policyholders with
the contents claim and proof of loss.
•
NFIP examiners to confirm that all payment recommendations made by the
adjuster are in line with the policy.
B. Be Prepared
FEMA expects:
•
Claims professionals to have their resources on hand; and to understand the
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policy including all three SFIP forms, Dwelling, General Property, and RCBAP,
and the GFIP. All claims professionals must have a good command of the SFIP
and its application of coverages so they can successfully support the
policyholder.
•
Claims professionals to ensure adjusting software is properly calibrated for the
geographic area where the loss occurred, and accounts for post-disaster, and
property-specific issues.
•
Claims professionals to offer an advance payment to the policyholder with an
eligible claim, and always check for new guidance on advance payments.
•
Claims professionals to know when to engage outside professional services on
adjustments and, when necessary, seek the appropriate authorization in a
timely manner.
C. Be Compassionate
FEMA expects:
•
Claims professionals to treat its policyholders with respect. The adjuster
should realize a policyholder and their family may have lost most of their
personal possessions, or worse, may no longer have a home to return to.
•
Claims professionals to be flexible based on the circumstances affecting the
policyholder. This may mean to make reasonable changes to accommodate
the needs of the policyholder when it comes to inspecting the loss, discussing
the claim, and returning phone calls.
•
Claims professionals to remember the flood loss may create a traumatic
experience and response by the policyholder. Claims professionals often work
with people under stress and should recognize this and create a positive
policyholder claims experience.
10 NFIP Adjuster Participation
FEMA’s goal is to ensure that claims professionals adjust each claim fairly and without
unnecessary delay. Adjusters should treat each policyholder with respect, fairness, and equity
during this stressful time in their lives.
Adjusters represent the NFIP and demonstrate its commitment to improved customer
experience. Adjusters will likely be the first and perhaps the only NFIP representative a
policyholder meets after a flood. The NFIP depends on the adjusters’ expertise and compassion
to help our policyholders recover from what may be a devastating experience for them.
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The adjuster works in concert with the claims examiner to guide a policyholder through the NFIP
claims process.
10.1 Adjuster Authority
FEMA expects every adjuster handling NFIP flood losses:
•
To understand and to communicate to the policyholders that the adjuster
does not have the authority to deny a claim.
•
To understand that the adjuster does not have the authority to commit the
NFIP insurer to pay a claim.
•
To understand that all adjustments are only recommendations and subject to
review by the NFIP insurer.
Important: Adjusters should follow the insurer’s guidelines. They should refer coverage
questions requiring clarification through their internal chain of command.
10.2 NFIP Knowledge
FEMA expects every adjuster handling NFIP flood losses:
•
To be thoroughly familiar with the provisions of the applicable form of the
SFIP and the GFIP.
•
To know the coverage interpretations issued by FEMA and explained at the
NFIP Claims Presentations.
•
To communicate the coverage and limitations to policyholders during the
inspection.
•
To adjust all claims in compliance with these provisions.
•
To help the policyholder to document their loss as complete and accurate as
reasonably possible.
10.3 Required NFIP Adjuster Authorization
Independent adjusters must register with the NFIP BSA to adjust flood losses for NFIP
insurers and possess an active Flood Control Number (FCN). Adjusters must have the
qualifications noted below and attend an annual NFIP Claims Presentation to become an
authorized adjuster or to maintain active status. The NFIP BSA verifies credentials before
an adjuster receives an FCN.
FEMA holds annual NFIP claims presentations to keep the adjusting community current on
claims procedures and guidance required to adjust losses under the three forms of the SFIP.
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10.4 Adjuster Qualifications
The NFIP requires adjusters to have different levels of qualifications to adjust different
property types. Table 4 details what types of properties an adjuster can adjust for a given
level of training.
Table 4. Adjuster Qualifications
Property
Type
Authorization Requirements
Residential,
Manufactured
Home, Travel
Trailer, and
Commercial
Losses
• Have at least four consecutive years of full-time property loss adjusting
• experience.
• Be capable of preparing an accurate scope of damage and dollar estimate to
• $50,000 for manufactured homes and travel trailers, $250,000 for residential
• losses, and up to $500,000 for commercial losses.
• Have attended an NFIP Claims Presentation, once a year.
• Demonstrate knowledge of the SFIP and of NFIP adjustment criteria for all policy
forms.
• Be familiar with manufactured home and travel trailer and Increased Cost of
Compliance coverages and criteria.
• NFIP encourages adjusters to have Errors and Omissions (E & O) Insurance
coverage. Some WYO Companies require adjusters assigned to their claims to
have E & O coverage.
Large
Commercial
and RCBAP
Losses
• Have at least five consecutive years of full-time large-loss property adjusting
experience.
• For large commercial losses, be capable of preparing an accurate scope of
damage and dollar estimate of $500,000 or more.
• For RCBAP, be capable of preparing an accurate scope of damage and dollar
estimate of $1,000,000 or more.
• Have attended an NFIP Claims Presentation.
• Provide written recommendations from three insurance company supervisors or
claims management personnel. The recommendations must reflect his/her
adjusting experience only.
• NFIP encourages adjusters to have Errors and Omissions (E & O) Insurance
coverage. Some WYO Companies require adjusters assigned to their claims to
have E & O coverage.
10.5 Adjuster Authorization Process
NFIP recognizes that specialized knowledge is required for an adjuster to adjust NFIP
losses. Adjusters must know the differences between the SFIP forms and differences with
private industry property insurance forms. They must know interpretations of coverage
made by FEMA and the unique reporting requirements of the NFIP.
A. NFIP BSA
The NFIP, through its NFIP BSA, issues FCNs and maintains a database of active authorized
independent flood adjusters and inactive flood adjusters. The NFIP BSA also maintains
records of the date and location of adjusters’ attendance at an annual NFIP Claims
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Presentation, or attendance at a FEMA-approved claims presentation conducted by
independent adjusting firms or WYO Companies.
B. WYO Staff Adjusters
WYO Companies can use staff adjusters to adjust their flood losses. Though not required,
FEMA encourages WYO staff adjusters handling flood claims on behalf of their employing
WYO Company to have an FCN.
C. Adjuster Registration
The Adjuster Registration Application contains five registration categories. Adjusters can
register for any or all categories if they meet adjuster qualification requirements. The
categories are:
•
Residential
•
Manufactured (Mobile) Home/Travel Trailer
•
Small Commercial (<$100,000)
•
Large Commercial ($100,001 - $500,000)
•
Condominium (RCBAP)
New applicants and adjusters seeking upgrades to their existing registration must submit a
completed Adjuster Registration Application to the NFIP BSA via any of the following
methods:
E-mail: NFIPCl[email protected]
Mail: NFIP BSA, PO Box 310, Lanham, MD 20703-0310
Adjusters seeking to maintain their active registered status do not need to submit an
application. The NFIP BSA will automatically renew previously registered adjusters when
they attend an annual NFIP Claims Presentation for the current calendar year.
The NFIP BSA will email new adjusters and adjusters who request an upgrade to their
classification of the approval or denial of their application. All approved adjusters who
attend the annual NFIP Claims Presentation receive an emailed FCN card confirming their
registration to handle NFIP flood claims.
Important: Adjusters who do not attend an annual NFIP Claims Presentation become
inactive and cannot adjust flood claims until they attend an approved NFIP Claims
Presentation and are reactivated.
10.6 NFIP Fee Schedule
Adjusters may bill based on the current NFIP Adjuster Fee Schedule:
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•
Current Adjuster Fee Schedule effective August 24, 2017 (See Appendix A)
•
For ICC claims, use the ICC fee schedule effective September 1, 2004 (See
Appendix B)
A. Gross Loss
The Adjuster Fee Schedule sets compensation amounts based on the claim’s gross loss.
Gross loss is the agreed cost to repair or replace before application of depreciation,
applicable deductible(s), and salvage buy-back. Gross loss shall not exceed any or all of the
following policy limitations: Building and personal property policy limits stated in the
Declarations Page; Program Limits building and/or personal property; damage values no
greater than 10% for a detached garage (Dwelling Form); Special Limits ($2,500); Loss
Avoidance Measures for Sandbags, Supplies, and Labor ($1,000); Property Removed to
Safety ($1,000); Pollution Damage - General Property form ($10,000); Policy Exclusions.
B. Increased Cost of Compliance (ICC) Claims
For Increased Cost of Compliance claims, use the ICC Fee Schedule whether the claim is
paid or closed without payment.
11 Examiner Participation in the NFIP
FEMA’s goal is to ensure that claims professionals handle each claim quickly and fairly and to see
that everyone involved in the flood claim process treats each policyholder with respect and
empathy.
NFIP insurers have the authority to act on behalf of the NFIP to examine claims, make coverage
decisions, and communicate the NFIP’s position to policyholders. How the examiner handles
their oversight of flood claims can positively influence the customer experience. The examiner
must be knowledgeable of the NFIP, stay up to date on program guidance, and be
compassionate about the situations that policyholders are facing. The examiner can help NFIP
policyholders recover from what may be a devastating experience for them by being responsive
to policyholder inquiries, proactively examining reports, timely issuing payments, and providing
appropriate and professional communications.
Examiners work in concert with the adjuster to guide policyholders through the entire NFIP
claims process – from the Notice of Loss to their final payment. Their knowledge of the SFIP can
make the policyholder’s recovery smoother by communicating what they should do to move
their claim along the claims journey.
11.1 Authority
Examiners are the claims administrators of the NFIP insurers and have the authority
through their management, to pay claims, make and confirm coverage determinations, and
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to deny coverage when appropriate. Examiners should provide adjusters guidance as
needed.
FEMA expects every examiner handling NFIP flood losses to:
•
Understand their first obligation to a policyholder is to identify coverage
under the SFIP.
•
Understand they should not take their authority lightly to determine
coverage under the SFIP and be aware that their decisions have a direct
impact on policyholders.
•
Understand their payment decisions must be in accordance with the SFIP.
Important: Examiners should follow their insurers’ internal settlement authority guidelines.
Examiners should also refer coverage questions that require clarification through their
internal chain of command.
11.2 Responsibilities
Claims examiner responsibilities include:
•
Assigning an adjuster within 24 hours of receipt of claim or document why
they did not make the assignment in the time frame required.
•
Managing the claim file including:
−
Issuing advances.
−
Resolving rating issues.
−
Overseeing adjusters for timely reporting settlement
recommendation.
−
Using experts.
−
Issuing proper payment.
•
Claims reporting and forms management including:
−
Transaction Record Reporting Process (TRRP) reporting.
−
Proper expense payments.
•
Communicating with policyholders, including information on reservation
of rights, non-waiver agreements, partial and full denial letters, and other
communications as necessary.
•
Handling of Increased Cost of Compliance (ICC) claims.
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11.3 Knowledge of the NFIP
FEMA expects every examiner handling NFIP flood losses:
•
To be thoroughly familiar with the provisions of the three forms of the
SFIP and the GFIP.
•
To know the coverage interpretations issues by FEMA and as explained at
the NFIP Claims Presentations.
•
To communicate the coverage and limitations to policyholders.
•
To oversee all flood claims in compliance with these provisions.
12 Training for Claims Professionals
12.1 NFIP Sponsored Training
A. Emergency Management Institute
FEMA’s Emergency Management Institute (EMI) offers independent study courses for
claims professionals that reinforce information offered at the NFIP Adjuster Claims
Presentations. EMI Independent Study courses are free and available to anyone. All
students must have a FEMA Student Identification (SID) number to take a course and can
register for a SID at https://cdp.dhs.gov/FEMASID.
Find out more about EMI Independent Study Courses and NFIP Perspectives informational
videos at https://nfipservices.floodsmart.gov/home/training/emi.
The Independent Study catalog is available at https://training.fema.gov/is/crslist.aspx.
Below is a list of relevant courses.
B. Adjuster Courses
−
Claims Review for Adjusters (IS-1104)
−
Adjuster Customer Service (IS-1107)
−
Introduction to Flood Claims (IS-1112)
−
Understanding Basement Coverage (IS-1109)
−
Introduction to Commercial Claims (IS-1111)
C. All Audiences
−
Increased Cost of Compliance (IS-1100)
−
EC Made Easy: Elevation Certificate Overview (IS-1105)
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12.2 Annual NFIP Claims Presentations
NFIP Claims Presentations keep the insurer examiners and the adjusting community
current on claims procedures and guidance required to adjust or oversee losses under the
three forms of the SFIP. FEMA does not charge a fee to attend the presentations, but you
must register. Click here to sign up for NFIP Adjuster Training emails.
12.3 Other Training
A. Associate in National Flood Insurance (ANFI)
Claims professionals may obtain the designation through the American Institute for
Chartered Property Casualty Underwriters, The Institutes, Risk & Insurance Knowledge
Group. There may be a cost associated with the ANFI designation that is not borne by the
NFIP. An ANFI designation is not required by FEMA to handle NFIP claims, and we do not
endorse or control the course content.
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Section 1: SFIP Forms
Section 1: SFIP Forms
1 Overview
The SFIP specifies the terms and conditions of the insuring agreement between either FEMA, as
insurer for policies issued by the NFIP Direct, or the WYO Company as insurer for policies issued
through the WYO Program.
There are three policy forms:
1. Dwelling Form
2. General Property (GP) Form
3. Residential Condominium Building Association Policy (RCBAP) Form
Each form insures a different type of property; however, many coverage terms and conditions
are the same. This manual will detail coverages for each of the three forms. The following tables
include the actual policy language in the left columns, with commentary in the right columns.
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Section 1: SFIP Forms – Dwelling Form
2 Dwelling Form
PLEASE READ THE POLICY CAREFULLY. THE FLOOD INSURANCE PROVIDED IS SUBJECT TO LIMITATIONS, RESTRICTIONS, AND
EXCLUSIONS. THIS POLICY COVERS ONLY:
1. A NON-CONDOMINIUM RESIDENTIAL BUILDING DESIGNED FOR PRINCIPAL USE AS A DWELLING PLACE OF ONE TO FOUR
FAMILIES, OR
2. 2. A SINGLE FAMILY DWELLING UNIT IN A CONDOMINIUM BUILDING.
I. Agreement
Policy Language Additional Explanation
The Federal Emergency Management Agency (FEMA) provides
flood insurance under the terms of the National Flood Insurance
Act of 1968 and its Amendments, and Title 44 of the Code of
Federal Regulations.
We will pay you for direct physical loss by or from flood to your
insured property if you:
1. Have paid the correct premium;
2. Comply with all terms and conditions of this policy;
and
3. Have furnished accurate information and statements.
We have the right to review the information you give us at any
time and to revise your policy based on our review.
This policy is under Federal law, unlike other property lines. Relevant definition at II.B.12 (direct
physical loss). Policyholder responsibilities appear at Section VII.J, K. post-loss underwriting at
Section VII.G.
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II. Definitions
Policy Language Additional Explanation
A.
In this policy, “you” and “your” refer to the insured(s) shown on the Declarations Page of this policy and your spouse, if a resident of the same household.
Insured(s) includes: Any mortgagee and loss payee named in the Application and Declarations Page, as well as any other mortgagee or loss payee determined
to exist at the time of loss in the order of precedence. “We,” “us,” and “our” refer to the insurer.
Some definitions are complex because they are provided as they appear in the law or regulations or result from court cases. The precise definitions are intended
to protect you.
Flood, as used in this flood insurance policy, means:
1. 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.
For a general condition of flood to exist, the inundation must cover two or more
acres of normally dry land or two or more parcels of land, one of which can be
public property (such as a roadway).
The reference to “partial or complete inundation of two or more acres of normally
dry land area or of two or more properties” requires that the two or more acres must
be continuous acres, and that the two or more inundated parcels of land must touch.
For mudflow definition, see SFIP Section II.B.19.
2. Collapse or subsidence of land along the shore of a lake or similar body
of water as a result of erosion or undermining caused by waves or
currents of water exceeding anticipated cyclical levels that result in a
flood as defined in A.1.a. above.
The SFIP also defines a flood as the collapse or subsidence of land along the shore of
a lake or similar body of water from erosion or undermining caused by waves or
currents of water (velocity flow) exceeding anticipated cyclical levels during a flood
from the overflow of inland or tidal waters.
The SFIP does not cover damage from any other cause, form, or type of
earth movement. It also does not cover gradual erosion.
See Exclusions at SFIP Section V.C.
B.
The following are the other key definitions we use in this policy:
1. Act
The National Flood Insurance Act of 1968 and any amendments to it.
Refer to policy language.
2. Actual Cash Value
The cost to replace an insured item of property at the time of loss, less the
value of its physical depreciation.
Actual cash value (ACV) is the cost to replace a building, a building item, or a
personal property item, that includes all charges related to material, labor, and
equipment. The unit price may include charges such as delivery, assembly, sales
tax, and any applicable overhead and profit, and the like, less applicable
depreciation on all components of such price.
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Section 1: SFIP Forms – Dwelling Form
II. Definitions
Policy Language Additional Explanation
3. Application
The statement made and signed by you or your agent in applying for this
policy. The application gives information we use to determine the eligibility of
the risk, the kind of policy to be issued, and the correct premium payment. The
application is part of this flood insurance policy. For us to issue you a policy,
the correct premium payment must accompany the application.
The statement made and signed by the prospective policyholder or the agent when
applying for a policy. The application contains information including the property
description, information to determine eligibility, the policy form selected, the
selected coverage and limits, deductible, and the premium amount.
4. Base Flood
A flood having a one percent chance of being equaled or exceeded in any
given year.
Refer to policy language.
5. Basement
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.
The SFIP definition for a basement means the floor level of a room, or any area of a
floor level in a building is below the ground level on all sides. This definition may
differ from what policyholders consider as their “basement.” The SFIP considers a
sunken room or sunken portion of a room to be a basement if the floor level is below
the ground level on all sides. The entire below-ground-floor-level area, including
walls and the ceiling that may extend above grade, is subject to basement coverage
limitations.
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II. Definitions
Policy Language Additional Explanation
Figure 2. Sunken Room
Photograph credit Amber Flooring
Ground level is the surface of the ground immediately along the perimeter of the
building. If an exterior area of egress into the building is below the ground level on all
sides, installed over a subgrade, the area of egress is below ground level.
Figure 3. Ground Level vs. Below Ground Level
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II. Definitions
Policy Language Additional Explanation
Figure 4. Egress
A subgrade is a surface of earth leveled off to receive a foundation such as a concrete
slab of a building.
The insurer may need to engage a qualified, licensed professional (e.g., surveyor) to
measure the floor level in question. See Section 2
of this manual.
Sump wells and elevator pits are not basements because they are not a floor level.
6. Building
a. A structure with two or more outside rigid walls and a fully secured
roof, that is affixed to a permanent site;
b. A manufactured home (a “manufactured home,” also known as a
mobile home, is a structure: built on a permanent chassis,
transported to its site in one or more sections, and affixed to a
permanent foundation); or
c. A travel trailer without wheels, built on a chassis and affixed to a
permanent foundation, that is regulated under the community’s
floodplain management and building ordinances or laws.
Building does not mean a gas or liquid storage tank or a recreational
• The SFIP covers a building, manufactured home (mobile home), or travel
trailer, if located at the described location as shown on the Declaration
Page. The policy insures only one building.
• The SFIP requires a building to be affixed to a permanent site, whereas it
requires a manufactured home and a travel trailer to be affixed to a
permanent foundation.
• A travel trailer (recreational vehicle) with attached wheels is not a
building.
• Apply the same rules to determine building and contents coverage with a
storage or shipping container, if it is used as a shed, storage building or
residence, as you would a manufactured home or travel trailer.
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II. Definitions
Policy Language Additional Explanation
vehicle, park trailer or other similar vehicle, except as described in
B.6.c. above.
7. Cancellation
The ending of the insurance coverage provided by this policy before the
expiration date.
• The NFIP Flood Insurance Manual
provides a list for all valid policy
cancellation reasons.
• The expiration date is the ending of the policy term, the period of
coverage provided by the insurance policy.
• The policy term for the SFIP is one year, after any applicable waiting period.
8. Condominium
That form of ownership of real property in which each unit owner has an
undivided interest in common elements.
Refer to policy language.
9. Condominium Association
The entity made up of the unit owners responsible for the maintenance and
operation of:
a. Common elements owned in undivided shares by unit owners; and
b. Other real property in which the unit owners have use rights; where
membership in the entity is a required condition of unit ownership.
A unit must be part of a condominium governed by a condominium association
for a unit owner to have coverage eligibility under the Dwelling Form.
Homeowners’ associations, townhome associations, and cooperatives, and the like
are not condominium associations.
10. Declarations Page
A computer-generated summary of information you provided in the
application for insurance. The Declarations Page also describes the term of the
policy, limits of coverage, and displays the premium and our name. The
Declarations Page is a part of this flood insurance policy.
Refer to policy language.
11. Described Location
The location where the insured building(s) or personal property are found. The
described location is shown on the Declarations Page.
Each SFIP insures only one building. Under the Dwelling Form, an eligible detached
garage can be covered along with the dwelling at the option of the policyholder. Part
of this eligibility requires the detached garage to be located at the described location
stated on the Declarations Page. Personal property is covered within any building, but
only at the described location.
12. Direct Physical Loss By or From Flood
Loss or damage to insured property, directly caused by a flood. There must be
evidence of physical changes to the property.
The SFIP only pays for damage caused by direct physical loss by or from flood, as
defined by the SFIP. Direct physical loss means flood must physically contact the
insured property and there must be evidence of physical change by or from flooding
to
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Section 1: SFIP Forms – Dwelling Form
II. Definitions
Policy Language Additional Explanation
the insured building or to insured personal property.
Several SFIP provisions, each with its own criteria, address specific situations where
the condition of direct physical loss by or from flood occurs despite an exclusion that
would suggest otherwise. In these specific situations, listed below, the insurer must
thoroughly document the presence of the relevant criteria in the claim file for
coverage and payment:
• Losses from mudflow and collapse or subsidence of land as a result of erosion
specifically covered under the SFIP definition of flood (see SFIP Section V.C.,
as well as II.A.1.c and II.A.2)
• Back up of water and water-borne material through sewers or drains, where
a flood is the proximate cause of the sewer or drain backup (see SFIP Section
V.D.5.a.)
• Discharge or overflow from a sump, sump pump, or related equipment,
where a flood is the proximate cause of the sump pump discharge or
overflow (see SFIP Section V.D.5.b.)
• Seepage or leakage on or through the insured building, where a flood is
the proximate cause of the seepage of water (see SFIP Section V.D.5.c.)
• Pressure or weight of water, where a flood is the proximate cause of the
damage from the pressure or weight of water (see SFIP Section V.D.6.)
13. Dwelling
A building designed for use as a residence for no more than four families or a
single-family unit in a building under a condominium form of ownership.
Refer to policy language.
14. Elevated Building
A building that has no basement and that has its lowest elevated floor raised
above ground level by foundation walls, shear walls, posts, piers, pilings, or
columns.
For more information about elevated buildings, see Section 2 of this manual, Lowest
Floor Elevation.
15. Emergency Program
The initial phase of a community’s participation in the National Flood Insurance
Program. During this phase, only limited amounts of insurance are available
under the Act.
Refer to policy language.
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Section 1: SFIP Forms – Dwelling Form
II. Definitions
Policy Language Additional Explanation
16. Expense Constant
A flat charge you must pay on each new or renewal policy to defray the
expenses of the Federal Government related to flood insurance.
There is no longer an Expense Constant charge.
17. Federal Policy Fee
A flat charge you must pay on each new or renewal policy to defray certain
administrative expenses incurred in carrying out the National Flood Insurance
Program. This fee covers expenses not covered by the Expense Constant.
Refer to policy language.
18. Improvements
Fixtures, alterations, installations, or additions comprising a part of the insured
dwelling or the apartment in which you reside.
Refer to policy language.
19. 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. Other earth movements, such as
landslide, slope failure, or a saturated soil mass moving by liquidity down a
slope, are not mudflows.
A mudflow is liquefied soil flowing in a manner akin to water flowing, which causes
damage in a manner similar to moving water.
20. National Flood Insurance Program (NFIP)
The program of flood insurance coverage and floodplain management
administered under the Act and applicable Federal regulations in Title 44 of
the Code of Federal Regulations, Subchapter B.
Refer to policy language.
21. Policy
The entire written contract between you and us. It includes:
a. This printed form;
b. The application and Declarations Page;
c. Any endorsement(s) that may be issued; and
d. Any renewal certificate indicating that coverage has been instituted
for a new policy and new policy term.
b. Only one dwelling, which you specifically described in the application,
may be insured under this policy.
Refer to policy language.
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22. Pollutants
Substances that include, but are not limited to, any solid, liquid, gaseous, or
thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids,
alkalis, chemicals, and waste. “Waste” includes, but is not limited to, materials
to be recycled, reconditioned, or reclaimed.
Testing for or monitoring of pollutants is not covered unless required by law. See
Section V.F. of the SFIP.
23. Post-FIRM Building
A building for which construction or substantial improvement occurred after
December 31, 1974, or on or after the effective date of an initial Flood
Insurance Rate Map (FIRM), whichever is later.
Start of construction or substantial improvement after December 31, 1974, or on or
after the issuance of the community’s initial Flood Insurance Rate Map (FIRM),
whichever is later. Note: A pre-FIRM building is a building constructed or substantially
improved on or before December 31, 1974, or prior to the effective date of the
community’s initial FIRM, whichever is later.
24. Probation Premium
A flat charge you must pay on each new or renewal policy issued covering
property in a community the NFIP has placed on probation under the
provisions of 44 CFR 59.24.
Refer to policy language.
25. Regular Program
The final phase of a community’s participation in the National Flood Insurance
Program. In this phase, a Flood Insurance Rate Map is in effect and full limits of
coverage are available under the Act.
Refer to policy language.
26. Special Flood Hazard Area
An area having special flood or mudflow, and/or flood-related erosion hazards,
and shown on a Flood Hazard Boundary Map or Flood Insurance Rate Map as
Zone A, AO, A1–A30, AE, A99, AH, AR, AR/A, AR/AE, AR/AH, AR/AO, AR/A1–
A30,
V1–V30, VE, or V.
All zones listed are SFHAs. However, the post-FIRM elevated building coverage
limitations apply only to Zones A1–A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1–A30,
V1–V30, and VE, at SFIP Section III.A.8.
27. Unit
A single-family unit you own in a condominium building.
Refer to policy language.
28. Valued Policy
A policy in which the insured and the insurer agree on the value of the
property insured, that value being payable in the event of a total loss. The
Standard Flood Insurance Policy is not a valued policy.
The SFIP is not a valued policy. A valued policy is a policy where the policyholder and
insurer agree on the dollar value of the property at the time a policy is placed. In the
event of a total loss, a valued policy pays the agreed dollar value of coverage, without
the policyholder proving the value of the loss.
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A.
Coverage A—Building Property
We insure against direct physical loss by or from flood to:
1. The dwelling at the described location, or for a period of 45 days at
another location as set forth in III.C.2.b., Property Removed to Safety.
Refer to policy language.
2. Additions and extensions attached to and in contact with the dwelling by
means of a rigid exterior wall, a solid load-bearing interior wall, a
stairway, an elevated walkway, or a roof. At your option, additions and
extensions connected by any of these methods may be separately
insured. Additions and extensions attached to and in contact with the
building by means of a common interior wall that is not a solid load-
bearing wall are always considered part of the dwelling and cannot be
separately insured.
A property owner has the option to separately insure an addition under its own SFIP if
the addition, considered by itself, meets the definition of a building at SFIP II.B.6.
Otherwise, the Dwelling Form covers an addition or extension as part of the building.
Figure 5. Examples of additions and extensions and the five means of connection
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3. A detached garage at the described location. Coverage is limited to no
more than 10% of the limit of liability on the dwelling. Use of this
insurance is at your option but reduces the building limit of liability. We
do not cover any detached garage used or held for use for residential (i.e.,
dwelling), business, or farming purposes.
The SFIP covers a single detached garage up to 10 percent of the dwelling liability.
Any payment for damage to a detached garage reduces the insured dwelling’s
available coverage.
The garage must meet the definition of a building (SFIP Section II.B.6) and have a
garage door or opening large enough to accommodate an entire automobile within
the building.
The Dwelling Form does not cover a detached garage if the policyholder uses or holds
it for residential, business, or farming purposes. A policyholder may purchase a
separate policy to cover a garage used for these purposes.
The term “residential” means used as a residence, dwelling place, domicile, or
providing living accommodations. There must be evidence of the capability for an
individual to live in the building overnight or longer. The presence of household
property, installed kitchen appliances, HVAC equipment, sink, bathroom, exercise
room, hobby room, or workshop does not necessarily disqualify a detached garage
from coverage under this provision. This provision disqualifies a detached garage used
entirely or partly as or held for sleeping space.
If the claim recommendation denies coverage to a detached garage used for
residential, business, or farming purposes, the claim file must include documentation
or detailed explanation that supports the decision.
4. Materials and supplies to be used for construction, alteration, or repair
of the dwelling or a detached garage while the materials and supplies are
stored in a fully enclosed building at the described location or on an
adjacent property.
Refer to policy language.
5. A building under construction, alteration, or repair at the
described location.
a. If the structure is not yet walled or roofed as described in the
definition for building (see II.B. 6.a.) then coverage applies:
(1) Only while such work is in progress; or
(2) If such work is halted, only for a period of up to 90 continuous
days thereafter.
The SFIP only covers buildings under construction affixed to a permanent site. For
example, NFIP does not cover a building elevated on temporary cribbing and not
affixed to a permanent site.
The SFIP covers building materials and supplies for the insured building under
construction stored in an eligible detached garage under Coverage A, up to building
policy limits per Section III.A.4.
When a building under construction, alteration, or repair does not have at least
two rigid exterior walls and a fully secured roof at the time of loss, your deductible
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b.
However, coverage does not apply until the building is walled and
roofed if the lowest floor, including the basement floor, of a non-
elevated building or the lowest elevated floor of an elevated building
is:
(1) Below the base flood elevation in Zones AH, AE, A1–A30, AR,
AR/AE, AR/AH, AR/A1–A30, AR/A, AR/ AO; or
(2) Below the base flood elevation adjusted to include the effect of
wave action in Zones VE or V1–V30.
The lowest floor levels are based on the bottom of the lowest horizontal
structural member of the floor in Zones VE or V1–V30 and the top of the floor
in Zones AH, AE, A1–A30, AR, AR/AE, AR/AH, AR/A1–A30, AR/A, AR/AO.
amount will be two times the deductible that would otherwise apply to a
completed building. See Dwelling Form – Section VI. Deductibles
The SFIP does not cover a building under construction if work stops for more than 90
continuous days. Coverage resumes when work resumes.
The SFIP does not cover tools for construction, such as forms, cribbing, power tools,
etc.
Figure 6 and Figure 7
show a dwelling elevated but temporarily supported on
cribbing. The structure becomes eligible for SFIP coverage once it is affixed to a
permanent site as shown in
Figure 8.
Figure 6. Building in Process of Elevating
Photograph credit Leesa Tomsett, FEMA
Figure 7. Temporary Cribbing
Photograph credit Leesa Tomsett, FEMA
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Figure 8. Building Affixed to a Permanent Site
Photograph credit Leesa Tomsett, FEMA
6. A manufactured home or a travel trailer as described in the
Definitions section (see II.B.6.b. and II.B.6.c.).
If the manufactured home or travel trailer is in a special flood hazard
area, it must be anchored in the following manner at the time of the
loss:
a. By over-the-top or frame ties to ground anchors; or
b. In accordance with the manufacturer’s specifications; or
c. In compliance with the community’s floodplain management
requirements unless it has been continuously insured by the NFIP at
the same described location since September 30, 1982.
A manufactured (mobile) home is a structure built on a permanent chassis,
transported to its site in one or more sections, and affixed to a permanent
foundation. It can be a travel trailer without wheels, built on a chassis, affixed to a
permanent foundation that a community regulates under its floodplain management
and building ordinances. The term “manufactured home” does not include a
recreational vehicle.
For the SFIP to insure a manufactured home, the owner must affix it to a permanent
foundation. A permanent foundation for a manufactured home may be a poured
masonry slab, foundation walls, piers, or block supports. The foundation, not the
wheels and or the axles, must support all the weight of the manufactured (mobile)
home.
If the mobile home is in an SFHA, the owner must anchor it to a permanent
foundation to resist flotation, collapse, or lateral movement by:
• Providing over-the-top or frame ties to ground anchors.
Following the manufacturer’s specification for anchoring.
• Complying with the community’s floodplain management requirements.
7. The following items of property, which are covered under Coverage
A only:
a. Awnings and canopies;
b. Blinds;
• Blinds include vertical and horizontal types.
• Central air conditioners include related built-in equipment for dehumidification,
air filtering, and ventilation.
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c.
Built-in dishwashers;
d. Built-in microwave ovens;
e. Carpet permanently installed over unfinished flooring;
f. Central air conditioners;
g. Elevator equipment;
h. Fire sprinkler systems;
i. Walk-in freezers;
j. Furnaces and radiators;
k. Garbage disposal units;
l. Hot water heaters, including solar water heaters;
m. Light fixtures;
n. Outdoor antennas and aerials fastened to buildings;
o. Permanently installed cupboards, bookcases, cabinets, paneling, and
wallpaper;
p. Plumbing fixtures;
q. Pumps and machinery for operating pumps;
r. Ranges, cooking stoves, and ovens;
s. Refrigerators; and,
t. Walls and mirrors, permanently installed.
•
Walk-in freezers and coolers must be permanently installed or built-in. Furnaces
and radiators include heat pumps, boilers, and related installed equipment for
humidification, air filtering, and ventilation.
• Ranges, cooking stoves, ovens include cooktops, range hoods, and built-in
cooking exhaust apparatuses.
• Refrigerators include beverage coolers, and other major appliances that
refrigerate.
8. Items of property in a building enclosure below the lowest elevated
floor of an elevated post-FIRM building located in Zones A1-A30, AE,
AH, AR, AR/A, AR/AE, AR/AH, AR/A1-A30, V1-V30, or VE, or in a
basement, regardless of the zone. Coverage is limited to the
following:
a. Any of the following items, if installed in their functioning locations
and, if necessary for operation, connected to a power source:
When the Declarations Page reflects two zones, a current zone and a rating zone (or
FIRM zone), the rating zone represents the zone in force at the time of the policy’s
inception, which is applicable to the claim during the policy term period. This zone
may be a grandfathered zone that remains in effect for coverage unless or until the
home is substantially damaged, substantially improved, or there is a lapse in coverage.
The current zone may be a different zone that reflects the zone designation in the
current flood map. This zone is intended only for non-claim related purposes such as
underwriting premiums and ICC applicability.
This post-FIRM elevated building limitation does not apply to SFHA Zones A, AO, A99,
AR/AO, V, and VO. Basement limitations apply in all zones.
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The SFIP does not cover items of property that are not listed under this provision
when installed or located in a basement, even if the item of property is installed or
located above an equal point with the ground level. The policy limitation applies t
o the
complete area defined as a basement--floors, walls, and ceilings.
For a post-FIRM elevated building enclosure subject to this policy limitation, the SFIP
does not cover items of property that are not listed under this provision when
installed or located at a level below the level of the lowest elevated floor, whether or
not the item is on an exterior part of the building or part of the enclosure, in, on, or
within. Subject to all other terms and conditions of the SFIP, all items of property
installed or located at or above the level of the lowest elevated floor are covered,
exterior or interior.
For items of property that originate or straddle the line level with the lowest elevated
floor, the item(s) is subject to the coverage limitation. For example, a cabinet, door,
window, or refrigerator that originates below, or straddles the line level equal with the
lowest elevated floor is not covered, even that portion or value at or above the lowest
elevated floor.
However, coverage can be provided for building materials and finishes installed above
the line level with the lowest elevated floor, even if the items originate or straddle the
line level with the lowest elevated floor, when the function of the building material or
finish is not reduced by cutting or removing the damaged and otherwise excluded
building material physically located at or below the line level equal with the lowest
elevated floor. Examples include exterior siding, wood trim, drywall, paint, or
insulation, even if the same item extends below the level of the lowest elevated floor.
The building materials and finishes below the line level with the lowest elevated floor
are still excluded. This coverage interpretation is in sync with new FEMA-approved
building codes for new construction and substantially improved buildings.
(1) Central air conditioners; Central air conditioners include related built-in equipment for dehumidification, air
filtering, and ventilation.
(2) Cisterns and the water in them; See Section 2 Claims Processes and Guidance in this manual.
(3) Drywall for walls and ceilings in a basement and the cost of labor
to nail it, unfinished and unfloated and not taped, to the
framing;
The SFIP covers unfinished, unfloated, and not taped drywall installed anywhere in
a basement. The SFIP will also pay for unfinished, unfloated, and not taped drywall
in lieu of paneling or any finished wall or ceiling treatment.
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The SFIP does not cover non-structural building elements, including non-load
bearing floor, wall, or ceiling framing components, such as when installed for the
purpose to improve a basement or enclosure area with finish floors, walls, and
ceilings.
For an elevated building located in an SFHA, full coverage begins at the lowest
elevated floor. This is the lowest floor raised above ground, even if the pilings extend
beyond it (see Lowest Elevated Floor Determination,
in Section 2 this manual). Items
of property that include but not limited to, garage doors, exterior doors, windows,
and drywall that originate below the lowest elevated floor are subject to the post-
FIRM limitations and excluded.
The SFIP does not cover items, interior or exterior, located below the lowest elevated
floor of a post-FIRM elevated building.
(4) Electrical junction and circuit breaker boxes;
(5) Electrical outlets and switches;
Electrical junction and circuit breaker boxes include a junction box, which serves as an
unfinished basic light fixture. See Figure 9 below. The SFIP does not cover finished
lighting, which is an improvement as defined in Section II.B.18, of the SFIP.
Figure 9. Unfinished Basic Light Fixture
(6) Elevators, dumbwaiters, and related equipment, except for
related equipment installed below the base flood elevation after
September 30, 1987;
An elevator or dumbwaiter is covered if within the covered building enclosure or
attached to and in contact with the insured building; or directly attached to the 16
square foot landing area used for egress if unattached.
For elevators and dumbwaiters installed below the BFE after September 30, 1987,
coverage is limited to the cab and the included controls installed on or in the cab.
Related equipment is everything except the cab and the included controls and is not
covered unless the damaged part of the equipment is installed above the level at or
above the BFE.
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A chair lift is covered if within the covered building enclosure or attached to an in
contact with the insured building; or attached directly to the 16 square foot landing
area used for egress (See Figures 10 and 11
).
Figure 10. Example of a Covered Chair Lift Attached to a Building
Photograph credit BFA, LLC
Figure 11. Example of a Non-covered Chair Lift.
(7) Fuel tanks and the fuel in them; Fuel tanks and the fuel in them include a connected fuel gauge or fuel filter.
(8) Furnaces and hot water heaters; Furnaces and hot water heaters include boilers and permanently installed equipment
for humidification, air filtering, and ventilation. This includes those portions of the
central HVAC in a building enclosure below the Lowest Floor Elevation (LFE) or
basement, including boilers and connected radiators and hot water baseboards. This
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does not include electric baseboard heaters whether hardwired to the electrical
system or not.
(9) Heat pumps Heat pumps and other central HVAC units permanently installed equipment related
to humidification, dehumidification, air filtering, and ventilation.
(10) Nonflammable insulation in a basement; Nonflammable insulation in walls and ceilings of a basement includes:
• Nonflammable insulation in walls and ceilings.
• Nonflammable insulation installed between joists within the lowest elevated
floor and unfinished protective weather barriers affixed to floor joists.
The SFIP covers unattached protective barriers located in a crawlspace as personal
property provided the area is not subject to basement or post-FIRM coverage
limitations and the policyholder purchased contents coverage.
When installed underneath a building in a crawlspace the barrier must be physically
attached to the building’s foundation or floor framing.
(11) Pumps and tanks used in solar energy systems; Refer to policy language
(12) Stairways and staircases attached to the building, not separated
from it by elevated walkways;
The SFIP covers unfinished base support material for staircases and stairways
(underneath the finished treads and risers) attached to the building, not separated
from it by elevated walkways, includes an exterior staircase into a basement that is
part of the building and enclosed by an addition defined under SFIP Section III.A.2.
This also includes interior basement or post-FIRM elevated building staircases.
The SFIP does not pay to treat, paint, or stain the base support material in a
basement, or below the lowest elevated floor of a post-FIRM elevated building in
an SFHA.
The SFIP does not cover damage to finish materials used for a tread, riser, or
stringer, if such material is installed onto unfinished base support material for
stairways and staircases. If finish material is the base support material, such as with
a floating staircase or step, the finish material is covered but not the cost to apply a
finish coating, or paint.
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Figure 12. Unfinished base stairs (left) are covered in a basement or below a post-FIRM
elevated building; however, improvements added to finish treads, risers, and stringers
(right) are not:
Figure 13. Covered Stairs Where the Finish Material is the Base Material; However, no
Coverage to Paint, Stain, or Coat
The SFIP does not cover the basement exterior egress staircase located outside of
the perimeter building walls, even if covered by a roof or door. See SFIP Section
IV.9.
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(13) Sump pumps;
(14) Water softeners and the chemicals in them, water filters, and
faucets installed as an integral part of the plumbing system;
Refer to policy language.
The SFIP allows for a faucet that is affixed directly to the plumbing line, as opposed to
a faucet that is connected to plumbing lines but mounted onto a sink as a finished
fixture.
(15) Well water tanks and pumps; Well water tanks and pumps include the pressure switch, pressure valve, and gauge.
(16) Required utility connections for any item in this list; and Refer to policy language.
(17) Footings, foundations, posts, pilings, piers, or other foundation
walls and anchorage systems required to support a building.
Footings, foundations, posts, pilings, piers, or other foundation walls and anchorage
systems required to support a building:
• Includes windows and doors installed in the perimeter foundation walls of an
SFIP-defined basement area such as a perimeter wall basement garage door
or sliding glass door.
• Includes vents installed in and considered part of the covered foundation
walls of a post-FIRM elevated building. However, there is no coverage for
breakaway walls, or for vents in breakaway walls.
• Does not include screen or storm doors, or a door covering or enclosing an
exterior egress in a basement, such as a Bilco™ door.
• Does not include doors and windows of any type in an enclosure subject to
post-FIRM limitations when located below the lowest elevated floor.
b.
Clean-up. Clean-up includes:
• Pumping out trapped floodwater
• Labor to remove or extract spent cleaning solutions
• Treatment for mold and mildew
• Structural drying of salvageable interior foundation elements
The SFIP does not cover clean-up of an item or property located in areas subject to
basement and post-FIRM coverage limitations – that is, the property must itself be
covered under SFIP Section III(A)(8) –or for items or loss otherwise excluded under
this policy.
Clean-up is not debris removal. See SFIP Section III.C.1 for Debris Removal.
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B Coverage B—Personal Property
1. If you have purchased personal property coverage, we insure against
direct physical loss by or from flood to personal property inside a
building at the described location, if:
a. The property is owned by you or your household family members;
and
b. At your option, the property is owned by guests or servants.
Personal property is also covered for a period of 45 days at another location as
set forth in III.C.2.b., Property Removed to Safety.
Personal property in a building that is not fully enclosed must be secured to
prevent flotation out of the building. If the personal property does float out
during a flood, it will be conclusively presumed that it was not reasonably
secured. In that case there is no coverage for such property.
• The personal property may be inside any SFIP-defined building, at the
described location.
• The SFIP does not cover personal property that floats out of a partially
enclosed building.
• See SFIP Section III.C.2.b. for Property Removed to Safety.
• Property leased under a “capital lease”, a contract that entitles a renter the
temporary use of an item
and to account for the financial effect of ownership
on their balance sheet, qualifies as an insurable interest and can be claimed
even if the property is not solely owned by the policyholder.
In contrast, an “operating lease” is a contract that entitles a renter the
temporary use of an item but does not convey ownership rights.
According to
Generally Accepted Accounting Principles (GAAP), property in the possession
of a policyholder obtained through an operating lease, cannot be represented
in balancing sheet financials. Therefore, it is not covered under the SFIP
Coverage B-Personal Property.
2. Coverage for personal property includes the following property,
subject to B.1. above, which is covered under Coverage B only:
a. Air conditioning units, portable or window type;
b. Carpets, not permanently installed, over unfinished flooring;
c. Carpets over finished flooring;
d. Clothes washers and dryers;
e. “Cook-out” grills;
f. Food freezers, other than walk-in, and food in any freezer; and
g. Portable microwave ovens and portable dishwashers.
• Coverage A – Building Property covers through-the-wall air conditioning units
that are permanently installed.
• Clothes washers and dryers including the dryer exhaust vent kit. The
connectors and plumbing line for a gas dryer are covered under building
coverage only.
• Coverage B applies to food freezers only. NFIP considers an appliance that
both refrigerates and freezes as a refrigerator and covers it under Coverage A
– Building Property.
3. Coverage for items of property in a building enclosure below the
lowest elevated floor of an elevated post-FIRM building located in
Zones A1–A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1–A30, V1–
V30, or VE, or in a basement, regardless of the zone, is limited to the
• Coverage A – Building Property covers through-the-wall air conditioning units
that are permanently installed.
• Clothes washers and dryers include a dryer exhaust vent kit.
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following items, if installed in their functioning locations and, if
necessary for operation, connected to a power source:
a. Air conditioning units, portable or window type;
b. Clothes washers and dryers; and
c. Food freezers, other than walk-in, and food in any freezer.
•
Coverage B applies to food freezers only. NFIP considers an appliance that
both refrigerates and freezes as a refrigerator and covers
it under Coverage A
– Building Property.
This provision does not apply to Zones A, AO, A99, AR/AO, V, and VO.
4. If you are a tenant and have insured personal property under
Coverage B in this policy, we will cover such property, including your
cooking stove or range and refrigerator. The policy will also cover
improvements made or acquired solely at your expense in the
dwelling or apartment in which you reside, but for not more than
10% of the limit of liability shown for personal property on the
Declarations Page. Use of this insurance is at your option but reduces
the personal property limit of liability.
The SFIP considers tenant-owned appliances such as refrigerators, stoves, and ovens
as personal property, not as building improvements, therefore they are not subject to
the 10 percent building improvements limitation.
5. If you are the owner of a unit and have insured personal property
under Coverage B in this policy, we will also cover your interior walls,
floor, and ceiling (not otherwise covered under a flood insurance
policy purchased by your condominium association) for not more
than 10% of the limit of liability shown for personal property on the
Declarations Page. Use of this insurance is at your option but reduces
the personal property limit of liability.
This provision applies only to a condominium unit owner, who purchased Coverage B
– Personal Property under the Dwelling Form. This provision does not provide
coverage for loss assessments charged to the unit owner by a condominium
association and does not require an assessment to trigger coverage (see SFIP Section
III.C.3. Condominium Loss Assessments). This provision is comparable to the
provision that provides coverage to a tenant’s betterments and improvements to the
building.
The RCBAP is the primary insurance coverage. The RCBAP pays for flood damage to
interior walls, floors, and ceilings within the unit when the unit owner is responsible
for those items of property.
The Condominium Association’s bylaws or articles of incorporation detail the unit
owner’s responsibility if there is no RCBAP or if there is no remaining RCBAP building
coverage because of coinsurance provisions. For example, when an association
purchases RCBAP coverage to 80 percent of the full replacement cost of the
condominium building, no coinsurance applies. If the damages exceed the
coverage purchased, this provision provides coverage to the unit owner of up to
10 percent of the amount of coverage purchased under Coverage B – Personal
Property. This provision allows coverage for damages to building property (interior
walls, floors, and ceilings) within the unit not to exceed 10 percent of the Coverage
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B limits of liability even when the unit owner has not purchased coverage under
Coverage A – Building Property.
A payment made under this provision is not an additional amount of insurance and
reduces the Coverage B limit available to pay for personal property (contents)
damages.
Claims professionals must coordinate the RCBAP claim and the unit-owner claim
under the Dwelling Form to prevent payment that exceeds:
• The maximum insurance available that can be paid for the condominium
building, which is $250,000 times the number of units.
• The maximum insurance available for a single-family residence, including
a unit in a condominium, which is $250,000.
See Section 2
for detailed information on condominium claims handling.
6.
Special Limits.
We will pay no more than $2,500 for any one loss to
one or more of the following kinds of personal property:
a. Artwork, photographs, collectibles, or memorabilia, including but not
limited to, porcelain or other figures, and sports cards;
b. Rare books or autographed items;
c. Jewelry, watches, precious and semi-precious stones, or articles of
gold, silver, or platinum;
d. Furs or any article containing fur which represents its principal value;
or
e. Personal property used in any business.
Payments for these items may not exceed $2,500.00 in aggregate.
7. We will pay only for the functional value of antiques. The SFIP does not value an antique based on the rarity of the item, nor does it apply
depreciation based solely on age or its physical condition. The SFIP bases the value of
an antique item on its functional value considering its quality. The adjuster should
apply depreciation based on its restored condition at the time of the loss.
SFIP-covered Functional value for an antique = Agreed appraised value – Intangible
value – Depreciation
As an example, a 400-year-old fully restored chair formerly owned by a historical
figure is appraised by a certified industry professional at $25,000. The chair has seen
general usage for 3-years after its restoration date. Applying judgment, a new chair
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with the same or similar functional design, material quality, and craftsmanship is
comparably worth $3,500. Less 3 percent depreciation, the SFIP would pay the
functional value of $3,395, as the functional value must also consider depreciation.
C. Coverage C—Other Coverages
1.
Debris Removal
a. We will pay the expense to remove non-owned debris that is on or in
insured property and debris of insured property anywhere.
b. If you or a member of your household perform the removal work, the
value of your work will be based on the Federal minimum wage.
c. This coverage does not increase the Coverage A or Coverage B limit of
liability.
Insured property means the insured dwelling, the SFIP-eligible detached garage and
covered personal property.
The SFIP does not pay for removal of:
• Non-covered debris anywhere, such as a non-covered damaged property or
debris located in the yard, driveway, or on another parcel of land.
• Non-covered items of property even if the removal of the item facilitates
cleanup or covered building repairs, such as the removal of carpet installed
inside a basement, or the removal of plants, shrubs or trees along the
perimeter of the building to access foundation or siding repairs.
2.
Loss Avoidance Measures
a. Sandbags, Supplies, and Labor
(1) We will pay up to $1,000 for costs you incur to protect the
insured building from a flood or imminent danger of flood, for
the following:
(a) Your reasonable expenses to buy:
(i)
Sandbags, including sand to fill them;
(ii)
Fill for temporary levees;
(iii)
Pumps; and
(iv)
Plastic sheeting and lumber used in connection with
these items.
(b) The value of work, at the Federal minimum wage, that you
or a member of your household perform.
(2) This coverage for Sandbags, Supplies and Labor only applies if
damage to insured property by or from flood is imminent and
the threat of flood damage is apparent enough to lead a person
The SFIP only covers those items specifically noted. The policyholder must provide
receipts for covered materials they purchased. Additionally, the NFIP reimburses the
policyholder and members of the policyholder’s household labor at the Federal
minimum wage at the time of the loss.
Water-filled bladders, as shown in Figure 14,
are considered a temporary levee for the
purposes of loss avoidance coverage. However, because these are reusable, the SFIP
will pay the cost to purchase the bladder once, but only when the initial purchase is in
connection to the claimed flood event. After that event, any future claim for loss
avoidance here is limited to the labor and fill material.
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of common prudence to anticipate flood damage. One of the
following must also occur:
(a) A general and temporary condition of flooding in the area
near the described location must occur, even if the flood
does not reach the insured building; or
(b) A legally authorized official must issue an evacuation order
or other civil order for the community in which the insured
building is located calling for measures to preserve life and
property from the peril of flood.
This coverage does not increase the Coverage A or Coverage B limit of liability.
Figure 14. Water-filled Bladder
Photograph credit Randy Wagner
b.
Property Removed to Safety
(1) We will pay up to $1,000 for the reasonable expenses you incur
to move insured property to a place other than the described
location that contains the property in order to protect it from
flood or the imminent danger of flood.
Reasonable expenses include the value of work, at the Federal
minimum wage, you or a member of your household perform.
If you move insured property to a location other than the
described location that contains the property, in order to
protect it from flood or the imminent danger of flood, we will
cover such property while at that location for a period of 45
consecutive days from the date you begin to move it there. The
personal property that is moved must be placed in a fully
enclosed building or otherwise reasonably protected from the
elements.
Any property removed, including a moveable home described in
II.B.6.b. and c., must be placed above ground level or outside of
the special flood hazard area.
(2) This coverage does not increase the Coverage A or
Coverage B limit of liability.
• The SFIP coverage of “reasonable expenses” under this provision is limited to
the policyholder’s removal, storage, and return of covered building and
personal property to the location described on the declarations page. The
insurer may reimburse the policyholder for related expenses for labor of the
policyholder and family members at Federal minimum wage, and incurred
transportation and storage costs. The policyholder must itemize and support
these expenses with valid proof of payment. Coverage here is limited only to
the length of time that a flood or the imminent danger of flood exists.
Payment under this provision does not increase Coverage A – Building
Property or Coverage B – Personal Property limits of liability.
• The SFIP will cover from the peril of flood, the property relocated to another
location for a period of 45 consecutive days from the date the policyholder
began to move the property. If the policyholder does not place the property
in a fully enclosed building, the property must be secured to prevent flotation
out of the building. If the property floats out or away from the structure used
to reasonably protect the property from the elements, it will be conclusively
presumed that the policyholder did not reasonably secure the property. In
that case there is no coverage for the property.
• Regarding the provision “must be placed above ground level or outside of the
SFHA”, the relocated site of the property must be a reasonable location to
prevent loss compared to the described location. For example, where
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surrounding terrain is sloped, the site of the relocated property must be on a
higher elevation than the floor level of the building at described location
where the property was originally located; the policyholder may not relocate
the property to a basement. Where the surrounding terrain is level and the
site of the relocated property is considered within the same flood hazard
area, the property must be placed on a floor level in the relocated building
that is a higher elevation compared to the floor level in the building at the
described location where the property was originally located. The property
may not be relocated into a lower enclosure below an elevated floor within a
post-FIRM building located in a SFHA.
3
.
Condominium Loss Assessments
a
. If this policy insures a unit, we will pay, up to the Coverage A
limit of liability, your share of loss assessments charged against
you by the condominium association in accordance with the
condominium association’s articles of association, declarations
and your deed.
The assessment must be made as a result of direct physical loss
by or from flood during the policy term, to the building’s
common elements.
The Dwelling Form covers a condominium association’s loss assessments to a
covered property for direct physical damage by flood. This does not include an
assessment from the Condominium Association for property not covered by the SFIP,
such as the cleanup of debris, sand, landscape lighting, repairs to parking lots, decks,
sidewalks, pools, etc.
b.
We will not pay any loss assessment charged against you:
(1) And the condominium association by any governmental body;
(2) That results from a deductible under the insurance purchased
by the condominium association insuring common elements;
(3) That results from a loss to personal property, including contents
of a condominium building;
(4) That results from a loss sustained by the condominium
association that was not reimbursed under a flood insurance
policy written in the name of the association under the Act
because the building was not, at the time of loss, insured for an
amount equal to the lesser of:
(a) 80% or more of its full replacement cost; or
The Dwelling Form covers assessments if the Association does not have insurance for
80 percent of the RCV or the maximum insurance available for the condominium
building. The Dwelling Form does not cover assessments for non-covered items.
This provision does not increase building limits. The SFIP will not pay more than once
for any building item regardless of the number of policies. The total payments for an
individual unit from all NFIP policies may not exceed $250,000, the maximum
insurance available for a single-family residence.
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(b)
The maximum amount of insurance permitted under the
Act;
(5) To the extent that payment under this policy for a condominium
building loss, in combination with payments under any other
NFIP policies for the same building loss, exceeds the maximum
amount of insurance permitted under the Act for that kind of
building; or
(6) To the extent that payment under this policy for a condominium
building loss, in combination with any recovery available to you
as a tenant in common under any NFIP condominium
association policies for the same building loss, exceeds the
amount of insurance permitted under the Act for a single-family
dwelling.
Loss assessment coverage does not increase the Coverage A limit
of liability.
D.
Coverage D—Increased Cost of Compliance
1.
General
This policy pays you to comply with a State or local floodplain management
law or ordinance affecting repair or reconstruction of a structure suffering
flood damage. Compliance activities eligible for payment are: elevation,
floodproofing, relocation, or demolition (or any combination of these
activities) of your structure. Eligible floodproofing activities are limited to:
a.
Non-residential structures.
b.
Residential structures with basements that satisfy FEMA’s standards
published in the Code of Federal Regulations [44 CFR 60.6 (b) or (c)].
Refer to policy language.
2.
Limit of Liability
We will pay you up to $30,000 under this Coverage D—Increased Cost of
Compliance, which only applies to policies with building coverage (Coverage
A). Our payment of claims under Coverage D is in addition to the amount of
coverage which you selected on the application and which appears on the
Declarations Page. But the maximum you can collect under this policy for both
All three SFIP forms provide Increased Cost of Compliance (ICC) benefits as Coverage
D. ICC provides up to $30,000 toward the cost of bringing a flood-damaged structure
into compliance with state or community floodplain management laws or ordinances
governing repair or reconstruction following a flood.
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Coverage A— Building Property and Coverage D—Increased Cost of
Compliance cannot exceed the maximum permitted under the Act. We do not
charge a separate deductible for a claim under Coverage D.
3.
Eligibility
a.
A structure covered under Coverage A—Building Property sustaining
a loss caused by a flood as defined by this policy must:
(1) Be a “repetitive loss structure.” A repetitive loss structure is one
that meets the following conditions:
(a) The structure is covered by a contract of flood insurance
issued under the NFIP.
(b) The structure has suffered flood damage on two occasions
during a 10-year period which ends on the date of the
second loss.
(c) The cost to repair the flood damage, on average, equaled or
exceeded 25% of the market value of the structure at the
time of each flood loss.
(d) In addition to the current claim, the NFIP must have paid
the previous qualifying claim, and the State or community
must have a cumulative, substantial damage provision or
repetitive loss provision in its floodplain management law
or ordinance being enforced against the structure; or
(2) Be a structure that has had flood damage in which the cost to
repair equals or exceeds 50% of the market value of the
structure at the time of the flood. The State or community must
have a substantial damage provision in its floodplain
management law or ordinance being enforced against the
structure.
b.
This Coverage D pays you to comply with State or local floodplain
management laws or ordinances that meet the minimum standards
of the National Flood Insurance Program found in the Code of Federal
Regulations at 44 CFR 60.3. We pay for compliance activities that
exceed those standards under these conditions:
To be eligible for ICC, the community must declare the building substantially
damaged. The amount paid for Coverage D – ICC and Coverage A – Building Property
combined cannot exceed the maximum program limits of $250,000 for the Dwelling
Form.
ICC is not available in Emergency Program communities.
ICC is not available for:
• Contents-only policies.
• Group Flood Insurance policies.
• Dwelling Form policies on individual condominium units in a multi-
unit building.
In a multi-unit condominium building, ICC coverage is available through the
condominium association’s flood policy. No separate deductible applies.
ICC Claims
The date of loss of the ICC claim is the date of loss of the underlying flood claim that
triggers the requirement to comply with a community law or ordinance.
Policyholders have up to six years from the date of the underlying flood loss to
complete the eligible mitigation activity. Policyholders should know that initiating a
mitigation project before receiving a substantial damage declaration from the
community may jeopardize their eligibility to receive an ICC payment.
For buildings in Zones B, C, X, D, unnumbered A and V, and A99, the adjuster must
document why a building must undergo mitigation and obtain a written statement
from the community to substantiate the ICC claim.
ICC does not pay for testing, monitoring, clean up, removal, containment, treatment,
detoxification, or neutralization of pollutants even if required by community
ordinance.
Repetitive Loss Properties
ICC is also available for repetitive loss properties for communities with a cumulative
damage language in their ordinance. The NFIP defines a Repetitive Loss Structure as
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(1)
3.a.(1) above.
(2) Elevation or floodproofing in any risk zone to preliminary or
advisory base flood elevations provided by FEMA which the
State or local government has adopted and is enforcing for
flood-damaged structures in such areas. (This includes
compliance activities in B, C, X, or D zones which are being
changed to zones with base flood elevations. This also includes
compliance activities in zones where base flood elevations are
being increased, and a flood-damaged structure must comply
with the higher advisory base flood elevation.) Increased Cost of
Compliance coverage does not apply to situations in B, C, X, or D
zones where the community has derived its own elevations and
is enforcing elevation or floodproofing requirements for flood-
damaged structures to elevations derived solely by the
community.
(3) Elevation or floodproofing above the base flood elevation to
meet State or local “freeboard” requirements, i.e., that a
structure must be elevated above the base flood elevation.
c.
Under the minimum NFIP criteria at 44 CFR 60.3 (b)(4), States and
communities must require the elevation or floodproofing of
structures in unnumbered A zones to the base flood elevation where
elevation data is obtained from a Federal, State, or other source.
Such compliance activities are also eligible for Coverage D.
d.
This coverage will also pay for the incremental cost, after demolition
or relocation, of elevating or floodproofing a structure during its
rebuilding at the same or another site to meet State or local
floodplain management laws or ordinances, subject to Exclusion
D.5.g. below.
e.
This coverage will also pay to bring a flood-damaged structure into
compliance with state or local floodplain management laws or
ordinances even if the structure had received a variance before the
present loss from the applicable floodplain management
requirements.
a building covered by an NFIP policy that has incurred flood-related damages on two
occasions during a 10-year period ending on the date of the event for which the
insured makes a second claim. The cost of repairing the flood damage, on the
average, must equal or exceed 25 percent of the market value of the building at the
time of each flood. The adjuster must verify that the community ordinance has such
cumulative damage language and that the NFIP paid a claim for both qualifying
losses.
Substantial Damage
Insurers may only open an ICC claim when the community declares a building
substantially damaged in writing. Neither FEMA nor the insurer can determine
substantial damage or issue a substantial damage declaration. The community has
the sole authority to determine substantial damage.
Note that in some cases a community may declare a building substantially damaged,
based in whole or in part on non-flood-related damage. While having more than 50
percent damage may trigger a requirement to comply with the local floodplain
management ordinances, the SFIP requires the percentage of damage to be by or from
flood, whether covered by the SFIP or not.
See Section 3 Increased Cost of Compliance in this manual for more detail.
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4.
Conditions
a.
When a structure covered under Coverage A—Building Property
sustains a loss caused by a flood, our payment for the loss under this
Coverage D will be for the increased cost to elevate, floodproof,
relocate, or demolish (or any combination of these activities) caused
by the enforcement of current State or local floodplain management
ordinances or laws. Our payment for eligible demolition activities will
be for the cost to demolish and clear the site of the building debris or
a portion thereof caused by the enforcement of current State or local
floodplain management ordinances or laws. Eligible activities for the
cost of clearing the site will include those necessary to discontinue
utility service to the site and ensure proper abandonment of on-site
utilities.
b.
When the building is repaired or rebuilt, it must be intended for the
same occupancy as the present building unless otherwise required by
current floodplain management ordinances or laws.
ICC pays for the following mitigation activities or combination thereof:
• Floodproofing to reduce the potential for flood damage by keeping
floodwater out of a building, for nonresidential structures and for
certain residential structures that satisfy FEMA’s standards under 44
C.F.R. 60.6(b) or (c).
• Elevation to raise a building to or above the BFE plus freeboard
adopted by a community, adopted Advisory Base Flood Elevations
(ABFE), or the best available data provided by FEMA.
• Demolition when a building is in such poor condition that elevation
and relocation are not technically feasible or cost effective.
• Relocation to move a building outside of the floodplain.
See Section 3
Increased Cost of Compliance in this manual for more detail.
5.
Exclusions
Under this Coverage D - Increased Cost of Compliance, we will not pay for:
a.
The cost to comply with any floodplain management law or ordinance
in communities participating in the Emergency Program.
b.
The cost associated with enforcement of any ordinance or law that
requires any insured or others to test for, monitor, clean up, remove,
contain, treat, detoxify or neutralize, or in any way respond to, or
assess the effects of pollutants.
c.
The loss in value to any insured building or other structure due to the
requirements of any ordinance or law.
d.
The loss in residual value of the undamaged portion of a building
demolished as a consequence of enforcement of any State or local
floodplain management law or ordinance.
e.
Any Increased Cost of Compliance under this Coverage D:
Refer to policy language.
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(1)
Until the building is elevated, floodproofed, demolished, or
relocated on the same or to another premises; and
(2) Unless the building is elevated, floodproofed, demolished, or
relocated as soon as reasonably possible after the loss, not to
exceed two years.
f.
Any code upgrade requirements, e.g., plumbing or electrical wiring,
not specifically related to the State or local floodplain management
law or ordinance.
g.
Any compliance activities needed to bring additions or improvements
made after the loss occurred into compliance with State or local
floodplain management laws or ordinances.
h.
Loss due to any ordinance or law that you were required to comply
with before the current loss.
i.
Any rebuilding activity to standards that do not meet the NFIP’s
minimum requirements. This includes any situation where the insured
has received from the State or community a variance in connection
with the current flood loss to rebuild the property to an elevation
below the base flood elevation.
j.
Increased Cost of Compliance for a garage or carport.
k.
Any structure insured under an NFIP Group Flood Insurance Policy.
l.
Assessments made by a condominium association on individual
condominium unit owners to pay increased costs of repairing
commonly owned buildings after a flood in compliance with State or
local floodplain management ordinances or laws.
6.
Other Provisions
a.
Increased Cost of Compliance coverage will not be included in the
calculation to determine whether coverage meets the 80% insurance-
to-value requirement for replacement cost coverage as set forth in
VII. General Conditions, V. Loss Settlement.
b.
All other conditions and provisions of the policy apply.
Refer to policy language.
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IV. Property Not Covered
Policy Language Additional Explanation
We do not cover any of the following
1. Personal property not inside a building; The SFIP covers personal property inside of an SFIP-defined building at the location
described on the policy declarations page.
2. A building, and personal property in it, located entirely in, on, or over
water or seaward of mean high tide if it was constructed or
substantially improved after September 30, 1982;
• The SFIP allows coverage for a building not entirely over water, i.e., when
part of the exterior perimeter wall and foundation of the building is on land
or on the landward side of mean high tide (mean high water).
• When the exterior perimeter walls of the building are completely over water
and the support system or foundation underneath the insured building
extends onto land, or the extension of any mechanism for access into a
building (including, but not limited to, stairs, decks, walkways, piers, posts,
pilings, docks, or driveways), even if the mechanism is on or partially on
land, the building or the access will not be eligible for coverage.
• If the exterior perimeter walls of a building are completely over water, but
connected to another eligible building by means of an elevated walkway,
stairway, roof, and/or rigid exterior wall, or there is an appurtenant
structure on the same slab, foundation, or other continuous support system
that is on land (such as a shed or garage), the presence of the connected
building or appurtenant structure on land does not allow coverage to be
afforded to the building that has its exterior perimeter walls entirely over
water.
3. Open structures, including a building used as a boathouse or any
structure or building into which boats are floated, and personal
property located in, on, or over water;
The SFIP does not cover boathouses or buildings into which boats can float and
personal property located within buildings used solely as boathouses.
When a boathouse is also used as a dwelling, the SFIP covers the dwelling portion and
its foundation, even when the foundation includes the foundation and other building
elements shared with the boathouse subject to the provisions of the SFIP including IV.
Property Not Covered.
The SFIP does not cover a building and personal property in, located in, on, or over
water or seaward of mean high tide if the building was constructed or substantially
improved after September 30, 1982.
4. Recreational vehicles other than travel trailers described in the
Definitions section (see II.B.6.c.) whether affixed to a permanent
A recreational vehicle is a self-propelled vehicle (see Figure 15). A travel trailer is not
self-propelled and is towed behind a road vehicle (see Figure 16).
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We do not cover any of the following
foundation or on wheels;
Figure 15. Recreational Vehicle
Photograph credit Fleetwood RV
Figure 16. Travel Trailer
5. Self-propelled vehicles or machines, including their parts and
equipment. However, we do cover self-propelled vehicles or
machines not licensed for use on public roads that are:
a. Used mainly to service the described location or
b. Designed and used to assist handicapped persons, while the vehicles
or machines are inside a building at the described location;
The SFIP covers a self-propelled vehicle as described here located inside a building at
the location described on the declarations page. The vehicle type and design must be
consistent with the services provided at the location described on the declarations
page and used primarily for that purpose. For example, an all-terrain vehicle (ATV)
designed mainly for off-road recreation or sport would not be eligible under this
provision, even if the policyholder uses it to pull a trailer to collect litter at the
described location.
Under 5.b, the vehicle is covered if it is designed as a mobility vehicle for a
handicapped person. The vehicle must be inside a building at the location described
on the declarations page for coverage to apply. However, vehicles not designed for
handicapped persons, including but not limited to golf carts, ATVs, Segways® or the
like, and hoverboards/balance boards are never covered by the SFIP under 5.b.,
even if repurposed to provide mobility to a handicapped person.
6. Land, land values, lawns, trees, shrubs, plants, growing crops, or
The SFIP does not cover animals and live bait, such as worms or minnows. The SFIP
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We do not cover any of the following
animals; covers artificial plants inside an SFIP-defined building at the described location.
7. Accounts, bills, coins, currency, deeds, evidences of debt, medals,
money, scrip, stored value cards, postage stamps, securities, bullion,
manuscripts, or other valuable papers;
• Scrip is a form of money issued by a local government or private
organization, such as gift cards, coupons, or any substitute for legal tender.
• The SFIP does not cover financial loss from damage or destruction of
electronic data or the cost of restoring that data.
• Other valuable papers include stocks, certificates, and bonds.
8. Underground structures and equipment, including wells, septic
tanks, and septic systems;
• Underground structures and equipment include, but is not limited to, wires,
conduits, pipes, sewers, tanks, tunnels, sprinkler systems, similar property,
and any apparatus connected beneath the surface of the ground. The SFIP
provides coverage if other SFIP requirements are met for equipment installed
and used in the operation of underground structures and equipment
installed above ground and within a building, for example, a sprinkler timer
• When installed, a sewage grinder pump is an integral part of the building’s
septic system. The grinder pump pulverizes waste for discharge into the
septic drainage field. This item of property is not covered. However, the SFIP
covers the sewage grinder pump’s alarm service panel if installed above
ground level and affixed to the building or its foundation. The SFIP does not
cover alarm service panels installed to an item of property that is not
covered, such as a support post to a deck.
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Policy Language Additional Explanation
We do not cover any of the following
9. Those portions of walks, walkways, decks, driveways, patios and
other surfaces, all whether protected by a roof or not, located
outside the perimeter, exterior walls of the insured building or the
building in which the insured unit is located;
The SFIP pays to repair or replace damage to any existing egress on the sides of a
building, including underneath an elevated building. For each existing egress, the
SFIP covers one 16 square foot (SF) landing and a single set of stairs, and one landing
per staircase. The SFIP covers materials of a like kind and quality, such as concrete,
wood or composite wood material. Covered items include any existing hand or
support rail, support posts, and hardware. The SFIP does not cover improvements
such as lighting or finishing (paint or preservative stains).
Figure 17
shows a deck with a single set of stairs providing access to the building
through two doors. The SFIP would cover one 16 SF landing and the existing single set
of stairs.
Figure 17. Deck with Single Set of Stairs
The SFIP does not cover the second set of stairs of the double staircase, as shown in
Figure 18
because a single set of stairs provides egress.
Figure 18. Deck with Double Staircase
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IV. Property Not Covered
Policy Language Additional Explanation
We do not cover any of the following
The SFIP does not cover the cost to comply with Americans with Disabilities Act of
1990 (ADA) regulations; however, the SFIP will repair or replace an existing flood
damaged handicap ramp shown in Figure 19
for egress, in lieu of the 16 SF of landing
and stairs.
Figure 19. Existing Handicap Ramp
10. Containers, including related equipment, such as, but not limited to,
tanks containing gases or liquids;
The SFIP does not cover fuel tanks, pressure tanks, and well water tanks located
outside a basement or elevated building enclosure. The SFIP does not cover tanks
containing other liquids or gases. The SFIP does not cover containers, including
shipping containers used for storage or residential purposes, unless they meet the
definition of a building.
11. Buildings or units and all their contents if more than 49% of the
actual cash value of the building is below ground, unless the lowest
level is at or above the base flood elevation and is below ground by
reason of earth having been used as insulation material in
conjunction with energy efficient building techniques;
A building must have over 51 percent of its actual cash value above ground level. This
calculation relies solely upon the ACV, not on concepts like square footage, volume,
or otherwise.
12. Fences, retaining walls, seawalls, bulkheads, wharves, piers, bridges,
and docks;
The SFIP considers a structure physically connected to a building that directly
supports and is integral to the building’s foundation, even if it has a secondary
purpose such as a retaining wall.
13. Aircraft or watercraft, or their furnishings and equipment;
• The SFIP covers remote controlled boats, aircraft, and drones or UAVs
(Unmanned Aerial Vehicles) designed and intended for recreational use only,
and not used to carry people or cargo, or for commercial use. The same policy
provisions that apply to other personal property apply to these items.
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Policy Language Additional Explanation
We do not cover any of the following
•
The SFIP does not cover drones or UAVs registered with the Federal
Aviation Administration for purposes other than recreational model
aircraft.
• The SFIP does not cover furnishings and equipment for non-covered
watercraft and aircraft including parts and other items identified for use
with watercraft and aircraft.
14. Hot tubs and spas that are not bathroom fixtures, and swimming
pools, and their equipment, such as, but not limited to, heaters,
filters, pumps, and pipes, wherever located;
Refer to policy language.
15. Property not eligible for flood insurance pursuant to the provisions
of the Coastal Barrier Resources Act and the Coastal Barrier
Improvement Act and amendments to these Acts;
The SFIP does not provide flood insurance coverage for a structure built or
substantially improved after the U.S. Department of Interior’s Fish and Wildlife
Service designates it as within Coastal Barrier Resources System (CBRS) boundaries or
as Otherwise Protected Areas (OPAs). See FWS website
for more information.
16. Personal property you own in common with other unit owners
comprising the membership of a condominium association.
Refer to policy language.
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V. Exclusions
Policy Language Additional Explanation
A.
We only pay for direct physical loss by or from flood, which means that we do not pay you for:
1. Loss of revenue or profits;
2. Loss of access to the insured property or described location; Loss of
use of the insured property or described location; Loss from
interruption of business or production;
3. Any additional living expenses incurred while the insured building is
being repaired or is unable to be occupied for any reason;
4. The cost of complying with any ordinance or law requiring or
regulating the construction, demolition, remodeling, renovation, or
repair of property, including removal of any resulting debris. This
exclusion does not apply to any eligible activities we describe in
Coverage D—Increased Cost of Compliance; or,
5. Any other economic loss you suffer.
• The SFIP does not cover the costs to pack, move, or store personal property
from the insured building or return it to the building when an owner repairs
the building or cannot occupy it.
• The SFIP does not cover replacing non-flood damaged property required to
comply with government codes, ordinances, or regulations. For example,
the SFIP does not cover the cost of replacing an undamaged interior HVAC
unit to match a replaced exterior HVAC unit because of a change in size,
Seasonal energy efficiency ratio (SEER)-rating, refrigerant, or any other
reason even if local, state, or federal code required the upgrade.
B.
We do not insure a loss directly or indirectly caused by a flood that is already in progress at the time and date:
1. The policy term begins; or
2. Coverage is added at your request.
NFIP adjusts flood insurance losses individually. Flood insurance benefits are available
if an insured property suffers a covered loss caused by a general condition of
flooding, as defined by the SFIP.
See Flood in Progress
in Section 2 of this manual.
C.
We do not insure for loss to property caused directly by earth movement even if the earth movement is caused by flood. Some examples of earth movement
that we do not cover are:
1. Earthquake;
2. Landslide;
3. Land subsidence;
4. Sinkholes;
5. Destabilization or movement of land that results from accumulation
of water in subsurface land area; or
6. Gradual erosion.
The SFIP is a single-peril policy that only pays for covered damage due to direct
physical loss by or from flood, defined in the policy at Section II. The SFIP does not
cover damage resulting from an intervening cause of loss, even if the resulting cause
is due to flood. The SFIP does not cover damage that results when saturated soils
cause the soil below ground level to sink, expand, compact, destabilize, or otherwise
lose its load bearing capacity such as from voids or rotten organic matter when the
soil dries. The SFIP does not cover earth movement; each form of earth movement is
an intervening cause of loss and a separate peril.
The SFIP’s exclusion for other perils, such as fire, exemplifies the exclusion of earth
movement as a cause of loss. When a flood causes a fire, which damages the building
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We do, however, pay for losses from mudflow and land subsidence as a result
of erosion that are specifically covered under our definition of flood (see
II.A.1.c. and II.A.2.).
during inundation or after floodwaters recede, the SFIP does not cover the resulting
fire and smoke damage to the building even if flood directly caused the fire.
The SFIP covers damage to a building’s structure if the damage results from the
collapse or subsidence of land that is the direct result of erosion or undermining to the
building’s support soil underneath or directly along the perimeter foundation of the
building from waves or currents of floodwater (velocity flow) during a flood from the
overflow of inland or tidal waters. This includes damage to the foundation of the
building and any resulting damage to interior and exterior finishes. The SFIP does not
cover gradual erosion.
D.
We do not insure for direct physical loss caused directly or indirectly by
any of the following:
Refer to policy language.
1. The pressure or weight of ice;
2. Freezing or thawing;
3. Rain, snow, sleet, hail, or water spray;
4. Water, moisture, mildew, or mold damage that results primarily
from any condition:
a. Substantially confined to the dwelling; or
b. That is within your control, including but not limited to:
(1) Design, structural, or mechanical defects;
(2) Failure, stoppage, or breakage of water or sewer lines, drains,
pumps, fixtures, or equipment; or
(3) Failure to inspect and maintain the property after a flood
recedes;
When the policyholder is prevented access to promptly remove wetted building and
personal property items, and this delay directly results in water, moisture, mildew or
mold damage to other building and personal property items not in physical contact
with surface floodwater, this damage could be covered. As examples, local authorities
may restrict access by order or prolonged inundation of floodwater may prevent
access. The claim file must include the proper documentation, such as but not limited
to photographs, an acceptable explanation provided by the adjuster, or a signed
statement from the policyholder or community official, that supports the payment for
property damages above the waterline. For instances when coverage and payment is
not recommended, the claim file should include the proper documentation which
clearly points to the policyholder’s failure to inspect and maintain their insured
property or take reasonable measures to reduce damage when it is feasible to do so.
The SFIP does not cover damage caused by long-term exposure to moisture, water,
rot, and insect infestation. This includes damage from the lack of climate control
inside the building when the approach to repair does not include the timely repair
to the building HVAC.
The SFIP does not cover pre-existing damage to structural building components, such
as damage due to rot, or for any resulting damage to non-structural finished building
material.
5. Water or water-borne material that:
a. Backs up through sewers or drains;
The adjuster must document that a flood occurred in the area, and that the flood
was the proximate cause of the back-up of the sewer or drain, overflow of the
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b.
Discharges or overflows from a sump, sump pump or related
equipment; or
c. Seeps or leaks on or through the covered property;
d. unless there is a flood in the area and the flood is the proximate cause
of the sewer or drain backup, sump pump discharge or overflow, or
the seepage of water;
sump pump, pump failure, seepage of water, or damage due to the pressure or
weight of water (hydrostatic pressure) in the claim file. See SFIP Section II.A and
related discussion for the definition of flood.
When paying a loss due to a flood in the area proximately causing discharge or
overflow of water or water-borne material from a sump, sump pump, or related
equipment, the insurer must document the claim file to show that a homeowner’s
policy endorsement or policy rider did not pay for the loss. If the homeowner’s policy
covers the same loss, the SFIP payment must apply a proportional loss distribution, as
stated under Section VII.C. Other Insurance.
The adjuster must document a flood occurred in the area, and that the flood was the
proximate cause of the back-up of the sewer or drain, overflow of the sump pump,
pump failure, seepage of water, or damage due to the pressure or weight of water
(hydrostatic pressure). A flood is two or more parcels of partial or complete
inundation of normally dry land, or of two or more continuous acres of normally dry
land. For coverage under this provision the condition of flood does not have to be on
the parcel of land described at the location; it may be within the proximate area.
6. The pressure or weight of water unless there is a flood in the area
and the flood is the proximate cause of the damage from the
pressure or weight of water;
Refer to SFIP Section V.D.5. above.
7. Power, heating, or cooling failure unless the failure results from
direct physical loss by or from flood to power, heating, or cooling
equipment on the described location;
The SFIP does not cover damage to insured property when caused by a power surge or
power outage that originates from the failure or shutting down of equipment that is
not located
at the described location, even if the reason is a direct result of a flood. For
example, the local utility operator may shut down a section of the electrical grid to
avoid system damage from a flood. When the power returns to the electrical grid, the
initial surge of electricity can damage insured property. Under this loss description the
damage is not covered.
The SFIP covers damage to any covered building electrical system, such as the
building’s main service or home security system, or to the HVAC system, when a flood
physically damages equipment installed at the described location. For example, if the
flood damage creates an electrical short within the building system affecting a second
piece of equipment, the second piece of equipment is also covered, even though it
was not physically touched by water. Under this loss description, the damage is
considered a direct physical loss by or from flood. To cover the loss described, the
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adjuster must document the cause of loss in the claim file to rule out the possibility of
a non-covered cause, such as described in the previous paragraph.
8. Theft, fire, explosion, wind, or windstorm;
9. Anything you or any member of your household do or conspires to
do to deliberately cause loss by flood; or
10. Alteration of the insured property that significantly increases the risk
of flooding.
Refer to policy language.
E.
We do not insure for loss to any building or personal property
located on land leased from the Federal Government, arising from
or incident to the flooding of the land by the Federal Government,
where the lease expressly holds the Federal Government harmless
under flood insurance issued under any Federal Government
program.
Refer to policy language.
F.
We do not pay for the testing for or monitoring of pollutants unless
required by law or ordinance.
The SFIP only pays to test or monitor the removal of a pollutant when a law or
ordinance requires it. Insurers must have a copy of the law or ordinance for the file to
support their decision to pay for the testing for or monitoring of pollutants.
The law or ordinance must be in effect at the date of loss to apply.
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VI. Deductibles
Policy Language Additional Explanation
A.
When a loss is covered under this policy, we will pay only that part of the loss that exceeds your deductible amount, subject to the limit of liability that applies.
The deductible amount is shown on the Declarations Page.
However, when a building under construction, alteration, or repair does not have at least two rigid exterior walls and a fully secured roof at the time of loss, your
deductible amount will be two times the deductible that would otherwise apply to a completed building.
B.
In each loss from flood, separate deductibles apply to the building and personal property insured by this policy.
C.
The deductible does NOT apply to:
1. III.C.2. Loss Avoidance Measures;
2. III.C.3. Condominium Loss Assessments; or
3. III.D. Increased Cost of Compliance.
The SFIP applies a separate deductible to both building and personal property losses.
The SFIP will only pay that portion of the loss that exceeds the applicable deductibles.
For building and personal property losses, the insurer should take the deductible
from the gross loss before applying policy limits. For example, if the covered loss is
$110,000, the policy limit is $100,000, and the deductible is $5,000, the insurer
should apply the deductible to the $110,000 loss, which leaves $105,000, meaning
the insurer should pay the $100,000 policy limit.
The SFIP does not apply coverage of excess damage from a covered detached
garage to the deductible.
The SFIP does not apply excess loss to items subject to Special Limits to reduce the
personal property deductible.
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VII. General Conditions
Policy Language Additional Explanation
A.
Pair and Set Clause
In case of loss to an article that is part of a pair or set, we will have the option
of paying you:
1. An amount equal to the cost of replacing the lost, damaged, or
destroyed article, minus its depreciation, or
2. The amount that represents the fair proportion of the total value of
the pair or set that the lost, damaged, or destroyed article bears to
the pair or set.
If the damaged property item is ruined, and cannot be replaced individually as a
single item, and this renders the other item in the pair or the set unusable or
worthless, then the SFIP pays for the pair or set.
Examples:
Left shoe ruined by flood, and the right shoe undamaged. The left shoe
cannot be purchased without the right, rendering the undamaged right shoe
unusable. The SFIP allows for a new pair of shoes. Other similar examples include a
ruined china base cabinet and undamaged matching china base top; half the seats
ruined in a sectional sofa; a ruined left window curtain and an undamaged right
window curtain.
If the damaged property item is ruined and can be replaced individually as a single
item with like kind and quality, and this renders the other item or the set usable,
the SFIP will only cover the damaged/ruined item along with reasonable cost for
like kind and quality, except in the case of the Section V. Exclusion (A)(6) for
ordinance or law, and the like.
Examples:
Base cabinets ruined by flood with the upper cabinets undamaged. The
upper cabinets remain usable. The SFIP allows to replace the base cabinets with
like kind and quality, including reasonable costs to match the new base cabinets
with existing undamaged cabinets. Other similar examples include a damaged
dresser and undamaged or repairable matching armoire and night stands; a ruined
dining table leaf and undamaged or repairable dining table; a ruined granite
cabinet countertop and salvageable granite island countertop.
Example:
An outdoor heating ventilation, and air conditioning (HVAC) unit is ruined by
flood, interior HVAC unit is undamaged. Due to Department of Energy code
requirements regarding energy efficiency, or an Environmental Protection Agency
(EPA)-mandate regarding refrigerant type, a replacement outdoor HVAC unit that
works with the existing interior HVAC unit is unavailable, rendering the undamaged
interior unit unusable. Section VII (A) Pair and Set clause is superseded by Section V
Exclusions (A)(6) and the SFIP only allows to replace the outdoor HVAC unit with like
kind and quality; and does not cover replacement of the undamaged interior HVAC
unit.
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B.
Concealment or Fraud and Policy Voidance
1. With respect to all insureds under this policy, this policy:
a. Is void;
b. Has no legal force or effect;
c. Cannot be renewed; and
d. Cannot be replaced by a new NFIP policy, if, before or after a loss, you
or any other insured or your agent have at any time:
(1) Intentionally concealed or misrepresented any material fact or
circumstance;
(2) Engaged in fraudulent conduct; or
(3) Made false statements; relating to this policy or any other NFIP
insurance.
When claims professionals suspect wrongful acts or misrepresentations on a claim by
a policyholder or their representatives:
• The adjuster should promptly submit written notification with supporting
documentation to the insurer. The adjuster should not draw any conclusions
regarding the suspected fraud and should only present facts in written
reports.
• The examiner should engage management to determine if the insurer should
refer the matter to the FEMA Fraud Unit (email:
StopFEMAFraud@fema.dhs.gov) and to the insurer’s investigative unit for a
Reservation of Rights.
2. This policy will be void as of the date wrongful acts described in B.1.
above were committed.
3. Fines, civil penalties, and imprisonment under applicable Federal
laws may also apply to the acts of fraud or concealment described
above.
The SFIP will be void if the proper authorities determine any part of a claim was
fraudulent.
4. This policy is also void for reasons other than fraud,
misrepresentation, or wrongful act. This policy is void from its
inception and has no legal force under the following conditions:
a. If the property is located in a community that was not participating in
the NFIP on the policy’s inception date and did not join or reenter the
program during the policy term and before the loss occurred; or
b. If the property listed on the application is otherwise not eligible for
coverage under the NFIP.
When a community no longer participates in the NFIP, an active SFIP will remain in
force up to the day before the policy renewal date. Refer to the Flood Insurance
Manual for other reasons why a building may be ineligible for coverage.
C.
Other Insurance
1. If a loss covered by this policy is also covered by other insurance that
includes flood coverage not issued under the Act, we will not pay
more than the amount of insurance you are entitled to for lost,
Other insurance includes primary flood coverage provided by a private carrier, an
endorsement for sewer, sumps or drains backup, or any other insurance that
duplicates SFIP coverage.
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Policy Language Additional Explanation
damaged, or destroyed property insured under this policy subject to
the following:
a. We will pay only the proportion of the loss that the amount of
insurance that applies under this policy bears to the total amount of
insurance covering the loss, unless C.1.b. or c. immediately below
applies.
b. If the other policy has a provision stating that it is excess insurance,
this policy will be primary.
c. This policy will be primary (but subject to its own deductible) up to
the deductible in the other flood policy (except another policy as
described in C.1.b. above). When the other deductible amount is
reached, this policy will participate in the same proportion that the
amount of insurance under this policy bears to the total amount of
both policies, for the remainder of the loss.
•
Use the following formula to determine the NFIP’s share of the loss:
NFIP share
= ((SFIP policy limit ÷ total insurance) x loss) - other insurance
deductible
• Use the following formula to determine the other insurance’s share of the
loss:
Other insurance share
= ((other insurance policy limit ÷ total insurance) x loss)
- other insurance deductible
• Use the following formula to determine the NFIP payment:
NFIP payment
= NFIP share + other insurance deductible – SFIP deductible
Below is an example of how to apply the formulas to compute the insurer’s shares
and NFIP payment for a $480,000 loss.
Table 5: Insurance Coverage and Deductibles
Insurance
Coverage
Deductible
NFIP $250,000 $5,000
Other $500,000 $15,000
Total $750,000
•
NFIP share:
(($250,000 ÷ $750,000) x $480,000) - $15,000 = $145,000.00
•
Other insurance share:
(($500,000 ÷ $750,000) x $480,000) - $15,000 =
$305,000.00
•
NFIP payment:
$145,000.00 + $15,000 - $5,000 = $155,000.00
IMPORTANT
– Use the order of operations as shown, starting within the innermost
parentheses, for accurate calculation.
2. If there is other insurance in the name of your condominium
association covering the same property covered by this policy, then
this policy will be in excess over the other insurance.
The Biggert-Waters Flood Insurance Reform Act of 2012, Section 100214, does not
allow the NFIP to deny a unit owner’s claim based on flood insurance coverage
purchased by a condominium association.
The SFIP allows unit owner building payments for loss assessments when a
condominium association did not purchase insurance to at least 80 percent of the full
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replacement cost of the condominium building or the maximum insurance available
for the condominium building. The provision does not allow insurers to pay for a
building item more than once.
The SFIP cannot pay more than the maximum amount of insurance available for a
single-family residence, currently $250,000, for a single condominium even if the unit
has additional insurance available under other NFIP policies.
The legislation did not change the coverage provided under the Residential
Condominium Building Association Policy (RCBAP).
See the Biggert-Waters Flood Insurance Reform Act of 2012
for more information.
D.
Amendments, Waivers, Assignment
This policy cannot be changed nor can any of its provisions be waived without
the express written consent of the Federal Insurance Administrator. No action
we take under the terms of this policy constitutes a waiver of any of our rights.
You may assign this policy in writing when you transfer title of your property to
someone else except under these conditions:
1. When this policy covers only personal property; or
2. When this policy covers a structure during the course of
construction.
The SFIP allows assignment of the policy when the title to the property transfers to a
new owner.
The SFIP does not allow assignment of a claim. The only exception to this is a
Coverage D – Increased Cost of Compliance (ICC) claim that can transfer in
conjunction with a FEMA project, such as a Hazard Mitigation Grant Program (HMGP)
grant. Typically, the policyholder assigns the claim to a community, which typically
uses the payment for the community’s non-Federal match for the project. The
policyholder may only assign the part of the ICC benefit used to meet the project
requirements.
E.
Cancellation of the Policy by You
1. You may cancel this policy in accordance with the applicable rules
and regulations of the NFIP.
2. If you cancel this policy, you may be entitled to a full or partial
refund of premium also under the applicable rules and regulations of
the NFIP.
Policyholders must have a valid reason to cancel their flood insurance coverage
during a policy term. Cancellation does not automatically create a refund.
See the Cancellation section of the Flood Insurance Manual.
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VII. General Conditions
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F.
Non-Renewal of the Policy by Us
Your policy will not be renewed:
1. If the community where your covered property is located stops
participating in the NFIP, or
2. If your building has been declared ineligible under Section 1316 of
the Act.
When a community no longer participates in the NFIP, an active SFIP will remain in
force up to the day before the policy renewal date.
Coverage may not be available for a building constructed or altered in violation of
state or local floodplain management laws, regulations, or ordinances. Section 1316
of the Act allows a state or community to declare a building in violation of its
floodplain management rules. When a state or community declares that a building is
in violation of Section 1316, the building and any contents in it are not eligible for
SFIP coverage. Insurers have a list of buildings with Section 1316 violations that are
ineligible for NFIP coverage. When the owner corrects the violation, the building
becomes eligible for coverage again. The examiner should verify the building’s
eligibility.
G.
Reduction and Reformation of Coverage
1. If the premium we received from you was not enough to buy the
kind and amount of coverage you requested, we will provide only
the amount of coverage that can be purchased for the premium
payment we received.
2. The policy can be reformed to increase the amount of coverage
resulting from the reduction described in G.1. above to the amount
you requested as follows:
a. Discovery of Insufficient Premium or Incomplete Rating Information
Before a Loss:
If we discover before you have a flood loss that your premium
payment was not enough to buy the requested amount of
coverage, we will send you and any mortgagee or trustee known
to us a bill for the required additional premium for the current
policy term (or that portion of the current policy term following
any endorsement changing the amount of coverage). If you or
the mortgagee or trustee pay the additional premium within 30
days from the date of our bill, we will reform the policy to
increase the amount of coverage to the originally requested
amount effective to the beginning of the current policy term (or
If the policyholder gives the insurer a premium that will not purchase the amounts of
insurance requested, the insurer must issue the policy for the insurance coverage
amount the premium will purchase for a one-year policy term.
After a Loss:
• The insurer will send a bill for the required additional premium for the
current policy term only. This is an exception to the SFIP Provisions requiring
the current and the prior policy terms.
• If the insurer receives the premium within 30 days from the date of the bill,
the insurer should increase the policy limits to the originally requested
amount effective as of the beginning of the current policy term.
If the insurer does not receive the additional premium by the due date, the
insurer must settle the claim based on the previously submitted premium and
reduced policy limits.
Exceptions for Incorrect Flood Zone or BFE After a Loss. When the insurer discovers
that an incorrect flood zone or BFE resulted in insufficient premium, the following
exceptions apply:
• The insurer should calculate any additional premium due prospectively from
the date of discovery.
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subsequent date of any endorsement changing the amount of
coverage).
(2) If we determine before you have a flood loss that the rating
information we have is incomplete and prevents us from
calculating the additional premium, we will ask you to send the
required information. You must submit the information within
60 days of our request. Once we determine the amount of
additional premium for the current policy term, we will follow
the procedure in G.2.a.(1) above.
(3) If we do not receive the additional premium (or additional
information) by the date it is due, the amount of coverage can
only be increased by endorsement subject to any appropriate
waiting period.
b. Discovery of Insufficient Premium or Incomplete Rating Information
After a Loss:
(1) If we discover after you have a flood loss that your premium
payment was not enough to buy the requested amount of
coverage, we will send you and any mortgagee or trustee known
to us a bill for the required additional premium for the current
and the prior policy terms. If you or the mortgagee or trustee
pay the additional premium within 30 days of the date of our
bill, we will reform the policy to increase the amount of
coverage to the originally requested amount effective to the
beginning of the prior policy term.
If we discover after you have a flood loss that the rating
information we have is incomplete and prevents us from
calculating the additional premium, we will ask you to send the
required information. You must submit the information before
your claim can be paid. Once we determine the amount of
additional premium for the current and prior policy terms, we
will follow the procedure in G.2.b.(1) above.
(3) If we do not receive the additional premium by the date it is
due, your flood insurance claim will be settled based on the
•
The insurer should apply the automatic reduction in policy limits effective on
the date of discovery.
Incorrect Policy Form. The insurer must use the correct policy form before making a
loss payment. When the insurer issues coverage using an incorrect SFIP form, the
policy is void and the insurer must rewrite the coverage under the correct form. The
provisions of the correct SFIP form apply.
• The insurer must reform the coverage limits according to the provisions of
the correct SFIP form.
• Coverage cannot exceed the coverage issued under the incorrect policy form.
• See the Flood Insurance Manual
for detailed information
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reduced amount of coverage. The amount of coverage can only
be increased by endorsement subject to any appropriate waiting
period.
(1) However, if we find that you or your agent intentionally did
not tell us, or falsified, any important fact or circumstance or
did anything fraudulent relating to this insurance, the
provisions of Condition B. Concealment or Fraud and Policy
Voidance apply.
H.
Policy Renewal
1. This policy will expire at 12:01 a.m. on the last day of the policy term.
2. We must receive the payment of the appropriate renewal premium
within 30 days of the expiration date.
3. If we find, however, that we did not place your renewal notice into
the U.S. Postal Service, or if we did mail it, we made a mistake, e.g.,
we used an incorrect, incomplete, or illegible address, which delayed
its delivery to you before the due date for the renewal premium,
then we will follow these procedures:
a. If you or your agent notified us, not later than 1 year after the date on
which the payment of the renewal premium was due, of non-receipt
of a renewal notice before the due date for the renewal premium,
and we determine that the circumstances in the preceding paragraph
apply, we will mail a second bill providing a revised due date, which
will be 30 days after the date on which the bill is mailed.
b. If we do not receive the premium requested in the second bill by the
revised due date, then we will not renew the policy. In that case, the
policy will remain an expired policy as of the expiration date shown
on the Declarations Page.
4. In connection with the renewal of this policy, we may ask you during
the policy term to recertify, on a Recertification Questionnaire we
will provide to you, the rating information used to rate your most
recent application for or renewal of insurance.
The SFIP is not a continuous policy. It is a contract for a one-year term. Every policy
contract expires at 12:01 a.m. on the last day of the policy term. Renewal of an
expiring policy establishes a new policy term and new contractual agreement. See
the Flood Insurance Manual
for detailed information.
The adjuster should investigate the claim under a signed non-waiver agreement or
a reservation of rights by the insurer when a policyholder reports a loss and there
is uncertainty as to whether a policy is active.
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I.
Conditions Suspending or Restricting Insurance
We are not liable for loss that occurs while there is a hazard that is increased
by any means within your control or knowledge.
The SFIP will not cover a flood loss or increased flood damage to insured
property that the policyholder purposely or inadvertently causes. For
example, a policyholder constructs a flood barrier to prevent floodwater from
a river from reaching the building. However, the improvement now causes
runoff during heavy rainfall events to collect behind the barrier and flood the
building and a neighboring parcel.
When the investigation of a loss reveals this
provision might apply, the adjuster should
notify the insurer at once and request immediate guidance.
J.
Requirements in Case of Loss
In case of a flood loss to insured property, you must:
1. Give prompt written notice to us;
2. As soon as reasonably possible, separate the damaged and
undamaged property, putting it in the best possible order so that we
may examine it;
3. Prepare an inventory of damaged property showing the quantity,
description, actual cash value, and amount of loss. Attach all bills,
receipts, and related documents;
The policyholder’s claim begins with the written notice of loss.
The policyholder must report the loss to the insurer immediately; failure to provide a
notice of loss to the insurer could prejudice the ability of the insurer to inspect the
loss, identify the cause and extent of damage, and determine applicable coverage
under the SFIP. If the policyholder delays reporting a loss, adjusters cannot help
policyholders protect the property and avoid further damage.
A policyholder’s failure to provide timely notice of loss can be a basis for denial of a
claim.
• The adjuster should document the reason for a delay in the policyholder
reporting a loss to the insurer.
• The adjuster should execute a non-waiver agreement when there is a delay in
reporting the loss. The non-waiver agreement should include the reason for
the non-waiver and the policyholder’s explanation for the delay. The adjuster
should have the policyholder sign the non-waiver agreement immediately. If
the policyholder refuses to sign the non-waiver agreement, the insurer may
decide to send a Reservation of Rights. The adjuster should continue the
inspection and review.
The SFIP requires that the policyholder separate damaged from undamaged
property putting it in the best possible order, so the adjuster may examine it. It is
the policyholder’s duty to perform the separation described above and prepare an
inventory of damaged property including quantity, description, and the total
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amount of loss claimed. Any bills, receipts, photographs of damages, and related
documents should be attached to the inventory.
If flood-damaged building or contents property is removed before the adjuster can
examine it, the policyholder must photograph the items in their damaged location
prior to moving the property and prepare the inventory.
To minimize potential documentation issues and assist the adjuster’s investigation,
the policyholder should, if possible, retain samples or swatches of carpeting,
wallpaper, furniture upholstery, window treatments, and other items of exceptional
value where the type and quality of material will influence the amount payable on
the claim. Photographs should also include groups of items such as clothing, kitchen
items, furniture, etc. The insurer will evaluate and consider these items and the
policyholder’s written inventory of damaged items.
4. Within 60 days after the loss, send us a proof of loss, which is your
statement of the amount you are claiming under the policy signed
and sworn to by you, and which furnishes us with the following
information:
a. The date and time of loss;
b. A brief explanation of how the loss happened;
c. Your interest (for example, “owner”) and the interest, if any, of others
in the damaged property;
d. Details of any other insurance that may cover the loss;
e. Changes in title or occupancy of the covered property during the
term of the policy;
f. Specifications of damaged buildings and detailed repair estimates;
g. Names of mortgagees or anyone else having a lien, charge, or claim
against the insured property;
h. Details about who occupied any insured building at the time of loss
and for what purpose; and
i. The inventory of damaged personal property described in J.3. above.
5. In completing the proof of loss, you must use your own judgment
concerning the amount of loss and justify that amount.
The proof of loss is the policyholder’s statement of the amount of money they are
requesting. The policyholder must sign and swear to the proof of loss and provide
documentation to support the amount requested for the insurer to consider it
completed. The policyholder (or legal representative with a signed Power of Attorney
or Executor in the case of a deceased policyholder) is the only person who can sign
the proof of loss.
SIGNED AND SWORN:
FEMA encourages the use of electronic signatures on proof of loss and other NFIP-
related submissions. FEMA will not deny the legal effect, validity, or enforceability of
a signature solely because it is in electronic form. Insurers should accept electronic
signatures in accordance with their general business practices and applicable laws.
MULTIPLE PROOFS OF LOSS ALLOWED:
Policyholders must submit a completed proof of loss and documentation to support
the amount requested initially and completed proofs of loss for any additional
payment requests to the insurer within 60 days after the date of loss or within any
extension of that deadline granted by FEMA.
ONE CLAIM PER LOSS:
The proof of loss is not the claim. The claim is the policyholder’s assertion that they
are entitled to payment for a covered loss under the terms of the SFIP. A policyholder
has only one claim from a flood event regardless of the number of proofs of loss and
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6.
You must cooperate with the adjuster or representative in the
investigation of the claim.
7. The insurance adjuster whom we hire to investigate your claim may
furnish you with a proof of loss form, and she or he may help you
complete it. However, this is a matter of courtesy only, and you must
still send us a proof of loss within 60 days after the loss even if the
adjuster does not furnish the form or help you complete it.
documentation the policyholder may submit in support of that claim.
Refer to policy language.
8. We have not authorized the adjuster to approve or disapprove
claims or to tell you whether we will approve your claim.
Only the NFIP insurer has the authority to approve or deny a claim, to tell the
policyholder if they will approve or deny a claim, or to provide payment details.
The insurer must rely only upon the terms and conditions established by Federal
statute, NFIP regulations, the Federal Insurance Administrator’s interpretations, and
the express terms of the SFIP. See 44 C.F.R. § 61.5(e) (2018).
9. At our option, we may accept the adjuster’s report of the loss
instead of your proof of loss. The adjuster’s report will include
information about your loss and the damages you sustained. You
must sign the adjuster’s report. At our option, we may require you to
swear to the report.
The insurer, not the policyholder or their representative, determines whether to
accept the adjuster’s report signed and sworn to by the policyholder, instead of a
proof of loss.
K.
Our Options After a Loss
Options we may, in our sole discretion, exercise after loss include the
following:
This section sets forth the steps that insurers may take to require action on the part
of the policyholder. If the policyholder fails to comply with the insurer’s request, the
policyholder is in breach of the insuring agreement, which may affect the payment of
the claim.
1. At such reasonable times and places that we may designate, you
must:
a. Show us or our representative the damaged property;
The policyholder must make the flood damaged property available for examination as
often as needed to verify the loss and claim. Insurer representatives will give the
policyholder advanced notice of the specific time and meeting place to inspect the
damaged property.
The policyholder should document their loss with photographs before removing or
disposing of damaged items that pose a health hazard, such as perishable food.
b. Submit to examination under oath, while not in the presence of
another insured, and sign the same; and
The insurer can require the policyholder to submit to an examination under oath but
not in the presence of another policyholder when there are questions concerning
the claim. An examination under oath is a formal proceeding, conducted prior to a
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lawsuit, during which the insurer’s representative questions a policyholder under
oath in the presence of a court reporter. The insurer should ask the policyholder to
present information and documentation necessary to evaluate their claim when
requiring an examination under oath. This can include books of accounts, financial
records, receipts, income tax records, property settlement records, invoices,
purchase orders, affidavits, and other materials to verify the loss.
c. Permit us to examine and make extracts and copies of:
(1) Any policies of property insurance insuring you against loss and
the deed establishing your ownership of the insured real
property;
The SFIP will not pay more than the amount of insurance that the policyholder is
entitled to for the damaged, lost, or destroyed property insured under this policy if
non-NFIP insurance covers a loss covered by the SFIP.
The policyholder must confirm the availability of other insurance to determine what
the NFIP will pay. Examples include a homeowner’s policy water damage or sump
overflow endorsement, mobile-homeowner’s policy, scheduled property policy,
renter’s policy, builder’s risk policy, etc.
See SFIP Section VII.C. for Other Insurance.
(2) Condominium association documents including the Declarations
of the condominium, its Articles of Association or Incorporation,
Bylaws, rules and regulations, and other relevant documents if
you are a unit owner in a condominium building; and
A claim involving a unit in a condominium building requires the declarations of the
condominium, bylaws, etc. to determine the policyholder’s insurable interest in the
building. Adjusters may have to determine if the RCBAP paid for any damages. NFIP
will not pay for the same damage item twice nor pay a claim for a residential unit
that exceeds the statutory limits. Adjusters must provide documentation that a
condominium association owns the insured building, not a homeowners’ association
or a building cooperative.
(3) All books of accounts, bills, invoices and other vouchers, or
certified copies pertaining to the damaged property if the
originals are lost.
Insurers may require the policyholder to provide information that documents the
extent of the loss and the amount of the claim. Examples include books of accounts,
bills, invoices, vouchers, and items showing the actual amounts paid to stores,
contractors, or others for repair or replacement of items. This may also include
photographs of the flood-damaged property that sufficiently and reasonably
document the damage, quality of the item, and describe the damaged property. The
policyholder can provide certified copies when the originals are lost or destroyed.
2. We may request, in writing, that you furnish us with a complete
inventory
“Costs” is the amount to replace a personal property item with like kind and quality at
of the lost, damaged or destroyed property, including: current pricing, including the price for sales tax plus any applicable shipping and
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a. Quantities and costs; product assembly.
b. Actual cash values or replacement cost (whichever is appropriate);
• Replacement cost is the cost to replace a building, a building item, or a
personal property item that includes all charges related to material, labor,
equipment, any charges, if applicable, for design, delivery, assembly, sales
tax, and applicable overhead and profit.
• Actual cash value is replacement cost to replace, not repair, less
applicable depreciation of all components of the price.
c. Amounts of loss claimed; The amounts of loss claimed is the amount of payment the policyholder asks to
receive for the damaged and covered property.
d. Any written plans and specifications for repair of the damaged
property that you can reasonably make available to us; and
Written plans and specifications for repair of the damaged property include
contractor estimates, subcontractor bids, invoices, architectural reports and
drawings, engineering reports, etc. This also includes water restoration or structural
drying invoices and supporting documentation.
NFIP will not accept a non-itemized, lump sum, or single line estimate or invoice in
support of a claim.
e. Evidence that prior flood damage has been repaired. Policyholders must provide evidence that previous flood damage was repaired,
whether or not they owned or insured the property at the time of the previous flood.
This includes any flood damages unrepaired by a previous owner.
NFIP expects policyholders to maintain proof of repairs such as receipts, cancelled
checks, etc. in a safe location away from the threat of flood.
When policyholders do not have proof of repairs, adjusters should request other
forms of documentation such as:
• Pre-flood photographs (social media or other family members) to compare
old and replaced items.
• Credit card or bank statements showing dates and dollar amount of
payments to contractors.
• Itemized statements and paid invoices from contractors.
3. If we give you written notice within 30 days after we receive your
signed, sworn proof of loss, we may:
a. Repair, rebuild, or replace any part of the lost, damaged, or destroyed
3.a. Refer to policy language.
3.b. Refer to Section VII.O. and other guidance including Salvage
in Section 2 of this
manual.
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property with material or property of like kind and quality or its
functional equivalent; and
b. Take all or any part of the damaged property at the value that we
agree upon or its appraised value.
L.
No Benefit to Bailee
No person or organization, other than you, having custody of covered property
will benefit from this insurance.
Bailment is the delivery of personal property by one person (the bailor) to another
(the bailee) who holds the property for a certain purpose, such as a service, under
an expressed or implied-in-fact contract.
The SFIP does not cover the bailee because bailment is a change of possession, not a
change of ownership or title. An example is when a customer (bailor) takes personal
clothing to the drycleaner (bailee). A bailment exists when the bailee has the clothing.
The articles of clothing in the possession of the bailee are bailee goods and are not
covered.
Consignment is a written agreement where a consignor provides owned personal
property to a consignee for sale and gives the consignee a percentage of the sale
price when sold. The SFIP does not cover property on consignment.
M.
Loss Payment
1. We will adjust all losses with you. We will pay you unless some other
person or entity is named in the policy or is legally entitled to receive
payment. Loss will be payable 60 days after we receive your proof of
loss (or within 90 days after the insurance adjuster files the
adjuster’s report signed and sworn to by you in lieu of a proof of
loss) and:
a. We reach an agreement with you;
b. There is an entry of a final judgment; or
c. There is a filing of an appraisal award with us, as provided in VII.P.
Adjusters and examiners should work with a policyholder or their authorized
representative to understand the loss, prepare the estimate, and reach an agreed
value for the loss.
The insurer’s obligation to pay and the timeframe to pay begins once the
policyholder meets the requirements in Paragraph J, a proof of loss that meets all
NFIP requirements, or after the signed and sworn to adjuster’s report is received,
and,
• Insurer and the policyholder agree on the payment amount, or
• There is an entry of final judgment or an appraisal award by a court of
competent jurisdiction.
The insurer should promptly process all claims and payment requests. The insurer
should communicate to policyholders any unforeseen delays in the claim examination
process and advance undisputed claimed amounts at the earliest opportunity.
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When the insurer cannot pay a completed proof of loss, the examiner and the
adjuster should promptly communicate the necessary adjustments or documentation
required to the policyholder. Insurers should work with policyholders to settle the
loss without resorting to a denial of the claim by the insurer.
See Section 4
Appeals of this manual for information on denial letters.
2. If we reject your proof of loss in whole or in part you may:
a. Accept our denial of your claim;
b. Exercise your rights under this policy; or
c. File an amended proof of loss as long as it is filed within 60 days of
the date of the loss.
Courts have not accepted the language “reject your proof of loss” as sufficient to
communicate to the policyholder that the insurer has denied their claim in whole or
in part. Hence, insurers should not use this language to deny all or part of a claim.
When the insurer issues a written denial, the policyholder has certain rights, which
include filing an appeal directly to FEMA (see Section 4
Appeals), filing suit against the
insurer, or submitting an amended proof of loss with the documentation to support
the requested loss and payment amount.
The one year statute of limitations for filing suit begins when the insurer issues the
first denial letter (42 U.S.C. § 4072; 44 C.F.R. § 62.22(a)). Submitting subsequent
additional or amended proofs of loss does not reset the one-year statute of
limitations. Adjusters and examiners must assist policyholders in identifying all
opportunities for payment. This helps the policyholder recover, ensures customer
satisfaction, and prevents unnecessary appeals and lawsuits.
N.
Abandonment
You may not abandon to us damaged or undamaged property insured under
this policy.
Refer to policy language.
O.
Salvage
We may permit you to keep damaged property insured under this policy after
a loss, and we will reduce the amount of the loss proceeds payable to you
under the policy by the value of the salvage.
The insurer always has the right to seek salvage or to take possession of damaged
property. Insurers should pursue opportunities for a financial recovery when
available.
See Salvage
in Section 2 of this manual.
P.
Appraisal
If you and we fail to agree on the actual cash value or, if applicable,
replacement cost of your damaged property to settle upon the amount of loss,
then either may demand an appraisal of the loss. In this event, you and we will
See Appraisal in Section 2 of this manual.
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each choose a competent and impartial appraiser within 20 days after
receiving a written request from the other. The two appraisers will choose an
umpire. If they cannot agree upon an umpire within 15 days, you or we may
request that the choice be made by a judge of a court of record in the State
where the covered property is located. The appraisers will separately state the
actual cash value, the replacement cost, and the amount of loss to each item.
If the appraisers submit a written report of an agreement to us, the amount
agreed upon will be the amount of loss. If they fail to agree, they will submit
their differences to the umpire. A decision agreed to by any two will set the
amount of actual cash value and loss, or if it applies, the replacement cost and
loss.
Each party will:
1. Pay its own appraiser; and
2. Bear the other expenses of the appraisal and umpire equally.
Q.
Mortgage Clause
The word “mortgagee” includes trustee.
Any loss payable under Coverage A—Building Property will be paid to any
mortgagee of whom we have actual notice, as well as any other mortgagee or
loss payee determined to exist at the time of loss, and you, as interests appear.
If more than one mortgagee is named, the order of payment will be the same
as
the order of precedence of the mortgages.
If we deny your claim, the denial will not apply to a valid claim of the
mortgagee, if the mortgagee:
1. Notifies us of any change in the ownership or occupancy, or
substantial change in risk of which the mortgagee is aware;
2. Pays any premium due under this policy on demand if you have
neglected to pay the premium; and
3. Submits a signed, sworn proof of loss within 60 days after receiving
notice from us of your failure to do so.
All of the terms of this policy apply to the mortgagee.
The mortgagee has the right to receive loss payment even if the mortgagee has
The SFIP pays claims for building property to the named policyholder, mortgage
holders, lienholders, other loss payees for whom we have actual notice, and any loss
payee determined to exist at the time of loss. The mortgage clause is a contract
within a contract. It is a contract between the mortgagee and the insurer within the
contract between the policyholder and the insurer. Including the name of the
mortgagee on each building claim payment is the surest way to keep this promise to
the mortgagee. For all building payments, except Coverage C – Other Coverages and
Coverage D – ICC, include all known mortgagees, as they are additional insureds.
The insurer may potentially include a loss payee or lienholder on Coverage B –
Personal Property of whom the insurer received actual notice such as from the U.S.
Small Business Administration (SBA). If the insurer receives a letter of an SBA-
approved loan, the SBA must be included on the building check(s) and the contents
check(s) if the loan is for both real estate and personal or business property.
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started foreclosure or similar action on the building.
If we decide to cancel or not renew this policy, it will continue in effect for the
benefit of the mortgagee only for 30 days after we notify the mortgagee of the
cancellation or non-renewal.
If we pay the mortgagee for any loss and deny payment to you, we are
subrogated to all the rights of the mortgagee granted under the mortgage
on the property. Subrogation will not impair the right of the mortgagee to
recover the full amount of the mortgagee’s claim.
R.
Suit Against Us
You may not sue us to recover money under this policy unless you have
complied with all the requirements of the policy. If you do sue, you must start
the suit within 1 year after the date of the written denial of all or part of the
claim, and you must file the suit in the United States District Court of the
district in which the covered property was located at the time of loss. This
requirement applies to any claim that you may have under this policy and to
any dispute that you may have arising out of the handling of any claim under
the policy.
The statute of limitations begins with the insurer’s first written denial of the claim.
Subsequent denial letters do not re-start the statute of limitations. Policyholders
must file suit in a U.S. District Court in the district where the loss occurred within one
year after the insurer’s first written denial. Neither the Federal Insurance
Administrator nor the insurer may extend the one year statute of limitation to file
suit.
S.
Subrogation
Whenever we make a payment for a loss under this policy, we are subrogated
to your right to recover for that loss from any other person. That means that
your right to recover for a loss that was partly or totally caused by someone
else is automatically transferred to us, to the extent that we have paid you for
the loss. We may require you to acknowledge this transfer in writing. After the
loss, you may not give up our right to recover this money or do anything that
would prevent us from recovering it. If you make any claim against any person
who caused your loss and recover any money, you must pay us back first
before you may keep any of that money.
When the adjuster believes there may be potential for subrogation, the adjuster
should complete FEMA Form 086-0-16 – Cause of Loss and Subrogation Report,
to
identify a potentially responsible third party; and characterize how their actions may
have caused or worsened flood damage. When the adjuster believes the cause of loss
may be completely or in part due to an intentional or human cause, the adjuster
should complete the NFIP Subrogation Form. Claim handling, review, and payment
should proceed as normal. The insurer should make sure the subrogation form Cause
of Loss and Subrogation Report is complete and escalate the matter for a subrogation
review.
See Subrogation in Section 2 of this manual.
T.
Continuous Lake Flooding
1. If an insured building has been flooded by rising lake waters
continuously for 90 days or more and it appears reasonably certain
Refer to policy language.
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that a continuation of this flooding will result in a covered loss to the
insured building equal to or greater than the building policy limits
plus the deductible or the maximum payable under the policy for any
one building loss, we will pay you the lesser of these two amounts
without waiting for the further damage to occur if you sign a release
agreeing:
a. To make no further claim under this policy;
b. Not to seek renewal of this policy;
c. Not to apply for any flood insurance under the Act for property at the
described location; and
d. Not to seek a premium refund for current or prior terms.
If the policy term ends before the insured building has been flooded
continuously for 90 days, the provisions of this paragraph T.1. will apply
when the insured building suffers a covered loss before the policy term
ends.
c. If your insured building is subject to continuous lake flooding
from a closed basin lake, you may elect to file a claim under
either paragraph T.1. above or T.2. (A “closed basin lake” is a
natural lake from which water leaves primarily through
evaporation and whose surface area now exceeds or has
exceeded 1 square mile at any time in the recorded past. Most
of the nation’s closed basin lakes are in the western half of the
United States where annual evaporation exceeds annual
precipitation and where lake levels and surface areas are subject
to considerable fluctuation due to wide variations in the climate.
These lakes may overtop their basins on rare occasions.) Under
this paragraph T.2. we will pay your claim as if the building is a
total loss even though it has not been continuously inundated
for 90 days, subject to the following conditions:
d. Lake flood waters must damage or imminently threaten to damage
your building.
e. Before approval of your claim, you must:
The only Closed Basin Lake recognized by FEMA at this time is Devils Lake, North
Dakota.
Subject to all other provisions of the SFIP, if an insured building is subject to
continuous lake flooding from Devils Lake, the following requirements must be met
to be eligible for coverage under the terms of all SFIP forms:
• The building must be in a participating community eligible for this coverage;
and,
• The subject building must have had NFIP flood insurance coverage
continuously beginning on November 30, 1999, and any subsequent owner
on or after November 30, 1999, must have an NFIP policy in effect within 60
days of the transfer of title (see: T. 2. g.); and,
• The policyholder must grant a conservation easement (see: T. 2. b. (2), and
the community must have adopted a permanent land-use ordinance on or
before July 15, 2001 (see: T. 2. e. (1), (2), and (3).
FEMA will not recognize any increases in coverage limits with effective dates on or
after November 30, 1999 (see: T. 2. g.), except when offered by the insurer as a
routine inflation-guard increase and purchased by the policyholder. Insured buildings
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(1)
Agree to a claim payment that reflects your buying back the
salvage on a negotiated basis; and
Grant the conservation easement described in FEMA’s
“Policy Guidance for Closed Basin Lakes” to be recorded in
the office of the local recorder of deeds. FEMA, in
consultation with the community in which the property is
located, will identify on a map an area or areas of special
consideration (ASC) in which there is a potential for flood
damage from continuous lake flooding. FEMA will give the
community the agreed-upon map showing the ASC. This
easement will only apply to that portion of the property in
the ASC. It will allow certain agricultural and recreational
uses of the land. The only structures it will allow on any
portion of the property within the ASC are certain simple
agricultural and recreational structures. If any of these
allowable structures are insurable buildings under the NFIP
and are insured under the NFIP, they will not be eligible for
the benefits of this paragraph T.2. If a U.S. Army Corps of
Engineers certified flood control project or otherwise
certified flood control project later protects the property,
FEMA will, upon request, amend the ASC to remove areas
protected by those projects. The restrictions of the
easement will then no longer apply to any portion of the
property removed from the ASC; and
(3) Comply with paragraphs T.1.a. through T.1.d. above.
f. Within 90 days of approval of your claim, you must move your
building to a new location outside the ASC. FEMA will give you an
additional 30 days to move if you show there is sufficient reason to
extend the time.
g. Before the final payment of your claim, you must acquire an elevation
certificate and a floodplain development permit from the local
floodplain administrator for the new location of your building.
h. Before the approval of your claim, the community having jurisdiction
not eligible for the provisions of T. 2. described above, but damaged by continuous
lake flooding, will be eligible for those provisions described at T. 1. of the SFIP, subject
to the terms and conditions of the T. 1. and the SFIP.
Buildings in eligible communities that are subject to damage from the effects of
the Closed Basin Lake, Devils Lake, North Dakota, may file claims if any portion of
the insured building, as defined in the SFIP, is at the still-water level derived by
official National Weather Service (NWS) still-water levels.
See Appendix C
in this manual for FEMA’s “Policy Guidance for Closed Basin Lakes”.
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over your building must:
(1) Adopt a permanent land use ordinance, or a temporary
moratorium for a period not to exceed 6 months to be
followed immediately by a permanent land use ordinance that
is consistent with the provisions specified in the easement
required in paragraph T.2.b. above.
(2) Agree to declare and report any violations of this ordinance to
FEMA so that under Section 1316 of the National Flood
Insurance Act of 1968, as amended, flood insurance to the
building can be denied; and
(3) Agree to maintain as deed-restricted, for purposes
compatible with open space or agricultural or recreational
use only, any affected property the community acquires an
interest in. These deed restrictions must be consistent with
the provisions of paragraph T.2.b. above, except that, even if
a certified project protects the property, the land use
restrictions continue to apply if the property was acquired
under the Hazard Mitigation Grant Program or the Flood
Mitigation Assistance Program. If a non-profit land trust
organization receives the property as a donation, that
organization must maintain the property as deed-restricted,
consistent with the provisions of paragraph T.2.b. above.
i. Before the approval of your claim, the affected State must take all
action set forth in FEMA’s “Policy Guidance for Closed Basin Lakes.”
j. You must have NFIP flood insurance coverage continuously in effect
from a date established by FEMA until you file a claim under
paragraph T.2. If a subsequent owner buys NFIP insurance that goes
into effect within 60 days of the date of transfer of title, any gap in
coverage during that 60-day period will not be a violation of this
continuous coverage requirement. For the purpose of honoring a
claim under this paragraph T.2., we will not consider to be in effect
any increased coverage that became effective after the date
established by FEMA. The exception to this is any increased coverage
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in the amount suggested by your insurer as an inflation adjustment.
k. This paragraph T.2. will be in effect for a community when the FEMA
Regional Administrator for the affected region provides to the
community, in writing, the following:
(1) Confirmation that the community and the State are in
compliance with the conditions in paragraphs T.2.e. and T.2.f.
above, and
(2) The date by which you must have flood insurance in effect.
U.
Duplicate Policies Not Allowed
1. We will not insure your property under more than one NFIP policy.
If we find that the duplication was not knowingly created, we will give you
written notice. The notice will advise you that you may choose one of several
options under the following procedures:
a. If you choose to keep in effect the policy with the earlier effective
date, you may also choose to add the coverage limits of the later
policy to the limits of the earlier policy. The change will become
effective as of the effective date of the later policy.
b. If you choose to keep in effect the policy with the later effective
date, you may also choose to add the coverage limits of the
earlier policy to the limits of the later policy. The change will be
effective as of the effective date of the later policy.
In either case, you must pay the pro rata premium for the increased
coverage limits within 30 days of the written notice. In no event will the
resulting coverage limits exceed the permissible limits of coverage under
the Act or your insurable interest, whichever is less.
We will make a refund to you, according to applicable NFIP rules, of the
premium for the policy not being kept in effect.
2. Your option under Condition U. Duplicate Policies Not Allowed to elect
which NFIP policy to keep in effect does not apply when duplicates have
been knowingly created. Losses occurring under such circumstances will be
adjusted according to the terms and conditions of the earlier policy. The
The policyholder cannot benefit from the duplicate flood insurance coverage if a
policyholder has two NFIP policies insuring the same property. The first policy
purchased is the policy in force at the time of loss. When there is no loss involved,
the policyholder may choose to keep either policy. The effective date of the increased
coverage begins on the renewal date of the second policy purchased if the
policyholder chooses to combine the coverage amounts purchased, and the
combined coverage does not exceed the maximum statutory limits.
The policyholder may not purchase an SFIP as excess insurance above the coverage
provided by the GFIP if a policyholder has a Group Flood Insurance Policy (GFIP) from
of a Federal Disaster Declaration. The policyholder may cancel the GFIP and have the
coverage purchased under the SFIP become effective on the date no sooner than 30
days after the date the insurer receives the application and payment. GFIP does not
refund the unused portion of the premium.
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policy with the later effective date must be canceled.
V.
Loss Settlement
1. Introduction
This policy provides three methods of settling losses: Replacement Cost,
Special Loss Settlement, and Actual Cash Value. Each method is used for a
different type of property, as explained in a–c. below.
a. Replacement Cost loss settlement, described in V.2. below, applies to
a single-family dwelling provided:
(1) It is your principal residence, which means that, at the time of
loss, you or your spouse lived there for 80% of:
(a) The 365 days immediately preceding the loss; or
(b) The period of your ownership, if you owned the dwelling for
less than 365 days; and
(2) At the time of loss, the amount of insurance in this policy that
applies to the dwelling is 80% or more of its full replacement
cost immediately before the loss, or is the maximum amount
of insurance available under the NFIP.
b. Special loss settlement, described in V.3. below, applies to a single-
family dwelling that is a manufactured or mobile home or a travel
trailer.
c. Actual Cash Value loss settlement applies to a single-family
dwelling not subject to replacement cost or special loss
settlement, and to the property listed in V.4. below.
Refer to policy language.
2. Replacement Cost Loss Settlement
The following loss settlement conditions apply to a single-family dwelling
described in V.1.a. above:
a. We will pay to repair or replace the damaged dwelling after
application of the deductible and without deduction for depreciation,
but not more than the least of the following amounts:
(1) The building limit of liability shown on your Declarations Page;
The insurer does not have to withhold the recoverable depreciation until the owner
makes the building repairs as required in SFIP Section VII.V.2.c above when the
dwelling is eligible for replacement cost loss settlement.
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(2)
The replacement cost of that part of the dwelling damaged, with
materials of like kind and quality and for like use; or
(3) The necessary amount actually spent to repair or replace the
damaged part of the dwelling for like use.
b. If the dwelling is rebuilt at a new location, the cost described above is
limited to the cost that would have been incurred if the dwelling had
been rebuilt at its former location.
c. When the full cost of repair or replacement is more than $1,000 or
more than 5 percent of the whole amount of insurance that applies to
the dwelling, we will not be liable for any loss under V.2.a. above or
V.4.a.(2) below unless and until actual repair or replacement is
completed.
d. You may disregard the replacement cost conditions above and make
claim under this policy for loss to dwellings on an actual cash value
basis. You may then make claim for any additional liability according
to V.2.a., b., and c. above, provided you notify us of your intent to do
so within 180 days after the date of loss.
e. If the community in which your dwelling is located has been
converted from the Emergency Program to the Regular Program
during the current policy term, then we will consider the maximum
amount of available NFIP insurance to be the amount that was
available at the beginning of the current policy term.
3. Special Loss Settlement
a. The following loss settlement conditions apply to a single-family
dwelling that:
(1) Is a manufactured or mobile home or a travel trailer, as defined
in II.B.6.b. and c.,
(2) Is at least 16 feet wide when fully assembled and has an area of
at least 600 square feet within its perimeter walls when fully
assembled, and
(3) Is your principal residence, as specified in V.1.a.(1) above.
There are two ways to settle a loss on a manufactured or mobile home or a travel
trailer:
Total loss is a property that is either not repairable (i.e. destroyed) or the cost to
repair exceeds the value of the property:
• If the dwelling is 16 feet wide, at least 600 total square feet, and the principal
residence, the loss adjustment is the lesser of the following:
− Replacement cost, i.e. the value of a new manufactured or mobile home,
or travel trailer of like kind and quality, delivered to and installed at the
described location.
− 1.5 times the actual cash value, i.e. 1.5 times the documented book
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b.
If such a dwelling is totally destroyed or damaged to such an extent
that, in our judgment, it is not economically feasible to repair, at least
to its pre-damage condition, we will, at our discretion pay the least of
the following amounts:
(1) The lesser of the replacement cost of the dwelling or 1.5 times
the actual cash value, or
(2) The building limit of liability shown on your Declarations Page.
c. If such a dwelling is partially damaged and, in our judgment, it is
economically feasible to repair it to its pre-damage condition, we will
settle the loss according to the Replacement Cost conditions in V.2.
above.
value for the year of the existing manufactured or mobile home, or travel
trailer, delivered to and installed at the described location.
− Amount of coverage purchased under Coverage A - Building.
Repairable loss or a loss not considered a total loss:
• If the dwelling is 16 feet wide, at least 600 total square feet, and the principal
residence, settle the loss under Replacement Cost Loss Settlement. (See
Section VII.V.2.)
• If the dwelling is not 16 feet wide, or not at least 600 total square feet, or not
the principal residence, settle the loss under Actual Cash Value Loss
Settlement. (See Section VII.V.4.)
The requirement for a policyholder to purchase building coverage to at least 80
percent of the dwelling’s replacement cost value does not apply under Special Loss
Settlement.
4. Actual Cash Value Loss Settlement
The types of property noted below are subject to actual cash value (or in the
case of V.4.a.(2), below, proportional) loss settlement.
a. A dwelling, at the time of loss, when the amount of insurance on the
dwelling is both less than 80% of its full replacement cost
immediately before the loss and less than the maximum amount of
insurance available under the NFIP. In that case, we will pay the
greater of the following amounts, but not more than the amount of
insurance that applies to that dwelling:
(1) The actual cash value, as defined in II.B.2., of the damaged
part of the dwelling; or
An actual cash value loss settlement is the cost to repair or replace insured building
items at the time of the loss, less the building deductible and less its physical
depreciation.
(2) A proportion of the cost to repair or replace the damaged part
of the dwelling, without deduction for physical depreciation
and after application of the deductible. This proportion is
deter-mined as follows: If 80% of the full replacement cost of
the dwelling is less than the maximum amount of insurance
available under the NFIP, then the proportion is determined
by dividing the actual amount of insurance on the dwelling by
the amount of insurance that represents 80% of its full
When the dwelling is a single-family building and the policyholder’s principal
residence, but the insurance carried does not meet the criteria for the replacement
cost loss settlement (80 percent of the dwelling’s full replacement cost or maximum
policy limits), proportional loss settlement can be more advantageous than the actual
cash value settlement. If proportional settlement benefits the policyholder, use the
following formulas to calculate a proportional loss settlement:
•
RCV to pay
= (Insurance carried ÷ insurance required) x RCV loss
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replacement cost. But if 80% of the full replacement cost of
the dwelling is greater than the maximum amount of
insurance available under the NFIP, then the proportion is
determined by dividing the actual amount of insurance on the
dwelling by the maximum amount of insurance available
under the NFIP.
• Proportional loss payable
= RCV to pay – deductible
Proportional loss payments should not be:
• Less than the ACV payable loss, because you would then settle at ACV;
• More than the RCV payable loss;
• More than the policy building limit; or,
• More than the maximum statutory amount available for the coverage.
Below is an example of how to calculate a proportional loss settlement.
Table 6: Proportional Loss Settlement Example
Item
Value
Building RCV $135,000
Insurance Required (80%) RCV $108,000
Insurance Carried $92,000
Deductible $2,000
RCV Loss $50,500
• (($92,000 ÷ $108,000) x $50,500) = $43,018.52
• $43,018.52 - $2,000 = $41,018.52
IMPORTANT – Use the order of operations as shown, starting within the innermost
parentheses, for accurate calculation.
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b. A two-, three-, or four-family dwelling.
c. A unit that is not used exclusively for single-family dwelling purposes.
d. Detached garages.
e. Personal property.
f. Appliances, carpets, and carpet pads.
g. Outdoor awnings, outdoor antennas or aerials of any type, and other
outdoor equipment.
h. Any property covered under this policy that is abandoned after a loss
and remains as debris anywhere on the described location.
i. A dwelling that is not your principal residence.
Appliances include refrigerators, stoves, ovens, ranges, trash compactors, garbage
disposals, and the like.
5. Amount of Insurance Required
To determine the amount of insurance required for a dwelling immediately
before the loss, we do not include the value of:
a. Footings, foundations, piers, or any other structures or devices that
are below the undersurface of the lowest basement floor and support
all or part of the dwelling;
b. Those supports listed in V.5.a. above, that are below the surface of the
ground inside the foundation walls if there is no basement; and
c. Excavations and underground flues, pipes, wiring, and drains. The
Coverage D—Increased Cost of Compliance limit of liability is not
included in the determination of the amount of insurance required.
The replacement cost value (RCV) and the amount of insurance required to qualify for
replacement cost loss settlement are two separate amounts. The RCV of the building
is pertinent to the adjuster completing the Adjuster’s Preliminary Damage
Assessment form or determining a potential total loss. Adjusters use adjustment
valuation software to generate RCV which typically includes the value to excavate and
install foundation components that are below the ground level of a building with no
basement, underneath the floor of a building with a basement, and the cost to install
underground utility connections. The adjuster should not include the value of the
items listed when determining the amount of insurance required. If the loss meets all
the criteria for replacement cost loss settlement, except for the required amount of
insurance, the adjuster and examiner must adjust the RCV to exclude the value of the
items listed before adjusting the loss settlement at Actual Cash Value
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VIII. Liberalization Clause
Policy Language Additional Explanation
If we make a change that broadens your coverage under this edition of our
policy, but does not require any additional premium, then that change will
automatically apply to your insurance as of the date we implement the
change, provided that this implementation date falls within 60 days before or
during the policy term stated on the Declarations Page.
Insurers cannot apply additional coverages provided through the liberalization clause
retroactively to losses that have occurred; insurers can apply it prospectively. The
clause permits FEMA to give existing, active policyholders beneficial amendments
without needing to separately endorse their policies but does not provide any
retroactive effect.
IX. What Law Governs
Policy Language Additional Explanation
This policy and all disputes arising from the handling of any claim under the
policy are governed exclusively by the flood insurance regulations issued by
FEMA, the National Flood Insurance Act of 1968, as amended (42 U.S.C. 4001,
et seq.), and Federal common law.
Refer to policy language.
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3 General Property Form
The General Property Form provides flood insurance coverage for owners or leaseholders of non-residential buildings or units, other
residential buildings, and personal property in those buildings or units. The General Property form also covers residential
condominium buildings that are not insurable under the Residential Condominium Building Association Policy (RCBAP).
I. Agreement
Policy Language Additional Explanation
The Federal Emergency Management Agency (FEMA) provides flood
insurance under the terms of the National Flood Insurance Act of 1968 and its
Amendments, and Title 44 of the Code of Federal Regulations.
We will pay you for direct physical loss by or from flood to your
insured property if you:
1. Have paid the correct premium;
2. Comply with all terms and conditions of this policy; and
3. Have furnished accurate information and statements.
We have the right to review the information you give us at any time and
to revise your policy based on our review.
This policy is under Federal law, unlike other property lines. Relevant definition at
II.B.12 (direct physical loss). Policyholder responsibilities appear at Section VII.J, K.
post-loss underwriting at Section VII.G.
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II. Definitions
Policy Language Additional Explanation
A.
In this policy, “you” and “your” refer to the insured(s) shown on the Declarations Page of this policy. Insured(s) includes: Any mortgagee and loss payee named in
the Application and Declarations Page, as well as any other mortgagee or loss payee determined to exist at the time of loss in the order of precedence. “We,” “us,”
and “our” refer to the insurer.
Some definitions are complex because they are provided as they appear in the law or regulations or result from court cases. The precise definitions are intended
to protect you.
Flood, as used in this flood insurance policy, means:
1. 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.
For a general condition of flood to exist, the inundation must cover two or more
acres of normally dry land or two or more parcels of land, one of which can be public
property such as a roadway.
The reference to “partial or complete inundation of two or more acres of normally
dry land area or of two or more properties” requires that the two or more acres must
be continuous acres, and that the two or more inundated parcels of land must touch.
For mudflow definition, see SFIP Section II.B.19.
2. Collapse or subsidence of land along the shore of a lake or similar
body of water as a result of erosion or undermining caused by waves
or currents of water exceeding anticipated cyclical levels which
result in a flood as defined in A.1.a. above
The SFIP also defines a flood as the collapse or subsidence of land along the shore of
a lake or similar body of water from erosion or undermining caused by waves or
currents of water (velocity flow) exceeding anticipated cyclical levels during a flood
from the overflow of inland or tidal waters.
The SFIP does not cover damage from any other cause, form, or type of
earth movement. It also does not cover gradual erosion. See Exclusions at
SFIP Section V.C.
B.
The following are the other key definitions we use in this policy:
1. Act
The National Flood Insurance Act of 1968 and any amendments to it.
Refer to policy language.
2. Actual Cash Value
The cost to replace an insured item of property at the time of loss, less
the value of its physical depreciation.
Actual cash value (ACV) is the cost to replace a building, a building item, or a
personal property item, that includes all charges related to material, labor, and
equipment. The unit price may include charges such as delivery, assembly, sales
tax, and any applicable overhead and profit, and the like, less applicable
depreciation on all components of such price.
3. Application The statement made and signed by the prospective policyholder or the agent when
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The statement made and signed by you or your agent in applying for this
policy. The application gives information we use to determine the eligibility of
the risk, the kind of policy to be issued, and the correct premium payment.
The application is part of this flood insurance policy. For us to issue you a
policy, the correct premium payment must accompany the application.
applying for a policy. The application contains information including the property
description, information to determine eligibility, the policy form selected, selected
coverage and limits, deductible, and the premium amount.
4. Base Flood
A flood having a one percent chance of being equaled or exceeded in
any given year.
Refer to policy language.
5. Basement
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.
The SFIP definition for a basement means the floor level of a room, or any area of a
floor level in a building is below the ground level on all sides. This definition may
differ from what policyholders consider as their “basement”. The SFIP considers a
sunken room or sunken portion of a room is a basement if the floor level is below the
ground level on all sides. The entire below-ground-floor-level area, including walls
and the ceiling that may extend above grade, is subject to basement coverage
limitations.
Ground level is the surface of the ground immediately along the perimeter of the
building. If an exterior area of egress into the building to be below the ground level
on all sides, installed over a subgrade, the area of egress is below ground level.
A subgrade is a surface of earth leveled off to receive a foundation such as a concrete
slab of a building.
The insurer may need to engage a qualified, licensed professional (e.g., surveyor) to
measure the floor level in question. See Section 2
of this manual.
Sump wells and elevator pits are not basements because they are not a floor level.
6. Building
a. A structure with two or more outside rigid walls and a fully
secured roof, that is affixed to a permanent site;
b. A manufactured home (a “manufactured home,” also known as
a mobile home, is a structure: built on a permanent chassis,
transported to its site in one or more sections, and affixed to a
permanent foundation); or
• The SFIP covers a building, manufactured home (mobile home), or travel
trailer, if located at the described location as shown on the Declaration
Page. The policy insures only one building.
• The SFIP requires a building to be affixed to a permanent site, whereas it
requires a manufactured home and a travel trailer to be affixed to a
permanent foundation.
• A travel trailer (recreational vehicle) with attached wheels is not a
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c.
A travel trailer without wheels built on a chassis and affixed to a
permanent foundation, that is regulated under the community’s
floodplain management and building ordinances or laws.
Building does not mean a gas or liquid storage tank or a recreational
vehicle, park trailer, or other similar vehicle, except as described in
B.6.c., above.
building.
• Apply the same rules to determine building and contents coverage with a
storage or shipping container, if it is used as a shed, storage building, or
residence, as you would a manufactured home or travel trailer.
7. Cancellation
Represents the ending of the insurance coverage provided by this
policy before the expiration date.
• The NFIP Flood Insurance Manual
provides an exhaustive list for all valid policy
cancellation reasons.
• The expiration date is the ending of the policy term, the period of
coverage provided by the insurance policy.
• The policy term for the SFIP is one year, after any applicable waiting period.
8. Condominium
A form of ownership of real property in which each unit owner has
an undivided interest in common elements.
Refer to policy language.
9. Condominium Association
The entity, formed by the unit owners, responsible for the maintenance
and operation of:
a. Common elements owned in undivided shares by unit owners; and
b. Other real property in which the unit owners have use rights where
membership in the entity is a required condition of unit ownership.
A Condominium Association is an entity recognized by a state.
Homeowners’ associations, townhome associations, and cooperatives, and the like
are not condominium associations.
10. Declarations Page
A computer-generated summary of information you provided in the
application for insurance. The Declarations Page also describes the term of
the policy, limits of coverage, and displays the premium and our name. The
Declarations Page is a part of this flood insurance policy.
Refer to policy language.
11. Described Location
The location where the insured building or personal property is found.
The described location is shown on the Declarations Page.
Refer to policy language.
12. Direct Physical Loss By or From Flood The SFIP only pays for damage caused by direct physical loss by or from flood, as
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Loss or damage to insured property, directly caused by a flood. There must
be evidence of physical changes to the property.
defined by the SFIP. Direct physical loss means flood must physically contact the
insured property and there must be evidence of physical change by or from flooding
to the insured building or to insured personal property.
Several SFIP provisions, each with its own criteria, address specific situations where
the condition of direct physical loss by or from flood occurs despite an exclusion that
would suggest otherwise. In these specific situations, listed below, the insurer must
thoroughly document the presence of the relevant criteria in the claim file for
coverage and payment:
• Losses from mudflow and collapse or subsidence of land as a result of erosion
specifically covered under the SFIP definition of flood (see SFIP Section V.C., as
well as II.A.1.c and II.A.2)
• Back up of water and water-borne material through sewers or drains, where a
flood is the proximate cause of the sewer or drain backup (see SFIP Section
V.D.5.a.)
• Discharge or overflow from a sump, sump pump, or related equipment, where
a flood is the proximate cause of the sump pump discharge or overflow (see
SFIP Section V.D.5.b.)
• Seepage or leakage on or through the insured building, where a flood is the
proximate cause of the seepage of water (see SFIP Section V.D.5.c.)
• Pressure or weight of water, where a flood is the proximate cause of the
damage from the pressure or weight of water (see SFIP Section V.D.6.)
13. Elevated Building
A building that has no basement and has its lowest elevated floor raised
above ground level by foundation walls, shear walls, posts, piers, pilings, or
columns.
For more information about elevated buildings, see Section 2 of this manual, Lowest
Floor Elevation.
14. Emergency Program
The initial phase of a community's participation in the National Flood
Insurance Program; only limited amounts of insurance are available under
the Act.
Refer to policy language.
15. Expense Constant
A flat charge you must pay on each new or renewal policy to defray
There is no longer an Expense Constant charge.
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the expenses of the Federal Government related to flood insurance.
16. Federal Policy Fee
A flat charge you must pay on each new or renewal policy to defray certain
administrative expenses incurred in carrying out the National Flood
Insurance Program. This fee covers expenses not covered by the expense
constant.
Refer to policy language.
17. Improvements
Fixtures, alterations, installations, or additions comprising a part of the
insured building.
Refer to policy language.
18. Mudflow
A river of liquid and flowing mud on the surfaces of normally dry land areas,
as when earth is carried by a current of water. Other earth movements, such
as landslide, slope failure, or a saturated soil mass moving by liquidity down a
slope, are not mudflows.
A mudflow is liquid mud flowing in a manner akin to water flowing, which causes
damage in a manner similar to moving water.
19. National Flood Insurance Program (NFIP)
The program of flood insurance coverage and floodplain management
administered under the Act and applicable Federal regulations in Title 44
of the Code of Federal Regulations, Subchapter B.
Refer to policy language.
20. Policy
The entire written contract between you and us. It includes:
a. This printed form;
b. The application and Declarations Page;
c. Any endorsement(s) that may be issued; and,
d. Any renewal certificate indicating that coverage has been
instituted for a new policy and new policy term.
Only one building, which you specifically described in the application, may
be insured under this policy.
Refer to policy language.
21. Pollutants
Substances that include, but that are not limited to, any solid, liquid, gaseous
The policy covers up to $10,000 damage caused by pollutants to covered property if
the discharge, seepage, migration, release, or escape of the pollutants is caused by or
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or thermal irritant or contaminant, including smoke, vapor, soot, fumes,
acids, alkalis, chemicals, and waste. "Waste" includes, but is not limited to,
materials to be recycled, reconditioned, or reclaimed.
results from flood. Testing for or monitoring of pollutants is not covered unless
required by law. See the General Property Form Section III.C.3.
22. Post-FIRM Building
A building for which construction or substantial improvement occurred
after December 31, 1974, or on or after the effective date of an initial Flood
Insurance Rate Map (FIRM), whichever is later.
Start of construction or substantial improvement after December 31, 1974, or on or
after the issuance of the community’s initial Flood Insurance Rate Map (FIRM),
whichever is later. Note: A pre-FIRM building is a building constructed or substantially
improved on or before December 31, 1974, or prior to the effective date of the
community’s initial FIRM, whichever is later.
23. Probation Premium
A flat charge you must pay on each new or renewal policy issued
covering property in a community that has been placed on probation
under the provisions of 44 CFR 59.24.
Refer to policy language.
24. Regular Program
The final phase of a community's participation in the National Flood Insurance
Program. In this phase, a Flood Insurance Rate Map is in effect and full limits
of coverage are available under the Act.
Refer to policy language.
25. Residential Condominium Building
A building owned and administered as a condominium, containing one or
more family units and in which at least 75% of the floor area is residential.
Refer to policy language.
26. Special Flood Hazard Area (SFHA)
An area having special flood or mudflow, and/or flood-related erosion
hazards, and shown on a Flood Hazard Boundary Map or Flood Insurance Rate
Map as Zone A, AO, A1-A30, AE, A99, AH, AR, AR/A, AR/AE, AR/AH, AR/AO,
AR/A1-A30, V1-V30, VE, V.
All zones listed are SFHAs. However, the post-FIRM elevated building coverage
limitations apply only to Zones A1–A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1–A30,
V1–V30, and VE, at SFIP Section III.A.8.
27. Stock
Merchandise held in storage or for sale, raw materials, and in-process or
finished goods, including supplies used in their packing or shipping. Stock
does not include any property not covered under Section IV. Property Not
Covered, except the following:
a. Parts and equipment for self-propelled vehicles;
Refer to policy language.
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b.
Furnishings and equipment for watercraft;
c. Spas and hot-tubs, including their equipment; and
d. Swimming pool equipment.
28. Unit
A unit in a condominium building.
Refer to policy language.
29. Valued Policy
A policy in which the insured and the insurer agree on the value of the
property insured, that value being payable in the event of a total loss.
The Standard Flood Insurance Policy is not a valued policy.
The SFIP is not a valued policy. A valued policy is a policy where the policyholder and
insurer agree on the dollar value of the property at the time a policy is placed. In the
event of a total loss, a valued policy pays the agreed dollar value of coverage, without
the policyholder proving the value of the loss.
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A.
Coverage A—Building Property
We insure against direct physical loss by or from flood to:
1. The building described on the Declarations Page at the described location.
If the building is a condominium building and the named insured is the
condominium association, Coverage A includes all units within the building
and the improvements within the units, provided the units are owned in
common by all unit owners.
Refer to policy language.
2. We also insure building property for a period of 45 days at another
location, as set forth in III.C.2.b. Property Removed to Safety.
Refer to policy language.
3. Additions and extensions attached to and in contact with the building by
means of a rigid exterior wall, a solid loadbearing interior wall, a stairway,
an elevated walkway, or a roof. At your option, additions and extensions
connected by any of these methods may be separately insured. Additions
and extensions attached to and in contact with the building by means of a
common interior wall that is not a solid load-bearing wall are always
considered part of the building and cannot be separately insured.
A property owner has the option to separately insure an SFIP-defined addition
if the insured property meets the definition of a building. Otherwise, an
addition or extension meeting the requirements of General Property Form III.A
is covered under the General Property Form as part of the building.
4. The following fixtures, machinery, and equipment, which are covered
under Coverage A only:
a. Awnings and canopies;
b. Blinds;
c. Carpet permanently installed over unfinished flooring;
d. Central air conditioners;
e. Elevator equipment;
f. Fire extinguishing apparatus;
g. Fire sprinkler systems;
h. Walk-in freezers;
i. Furnaces;
j. Light fixtures;
k. Outdoor antennas and aerials attached to buildings;
• Blinds include vertical, horizontal, and wood or wood-like
blinds.
• Central air conditioners include related built-in equipment for
dehumidification, air filtering, and ventilation.
• Walk-in freezers and coolers must be permanently installed or built-
in. Furnaces and radiators include heat pumps, boilers, and related
installed equipment for humidification, air filtering, and ventilation.
• Ranges, cooking stoves, ovens include cooktops, range hoods, and
built- in cooking exhaust apparatuses.
• Refrigerators include beverage coolers, and other major
appliances that refrigerate.
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l.
Permanently installed cupboards, bookcases, paneling, and wallpaper;
m. Pumps and machinery for operating pumps;
n. Ventilating equipment; and
o. Wall mirrors, permanently installed;
p. In the units within the building, installed:
(1) Built-in dishwashers;
(2) Built-in microwave ovens;
(3) Garbage disposal units;
(4) Hot water heaters, including solar water heaters;
(5) Kitchen cabinets;
(6) Plumbing fixtures;
(7) Radiators;
(8) Ranges;
(9) Refrigerators; and
(10) Stoves.
5. Materials and supplies to be used for construction, alteration, or repair of
the insured building while the materials and supplies are stored in a fully
enclosed building at the described location or on an adjacent property.
Refer to policy language.
6. A building under construction, alteration, or repair at the described
location:
a. If the structure is not yet walled or roofed as described in the definition
for building (see II.6.a.), then coverage applies:
(1) Only while such work is in progress; or
(2) If such work is halted, only for a period of up to 90 continuous
days thereafter.
b. However, coverage does not apply until the building is walled and roofed if
the lowest floor, including the basement floor, of a non-elevated building
or the lowest elevated floor of an elevated building is:
(1) Below the base flood elevation in Zones AH, AE, A1–A30, AR, AR/AE,
The SFIP only covers buildings under construction affixed to a permanent site.
For example, NFIP does not cover a building elevated on temporary cribbing
and not affixed to a permanent site.
The SFIP covers building materials and supplies for the insured building under
construction stored in a fully enclosed building up to building policy limits per
General Property Form Section III.A.5.
When a building under construction, alteration, or repair does not have at
least two rigid exterior walls and a fully secured roof at the time of loss,
your deductible amount will be two times the deductible that would
otherwise apply to a completed building. See General Property Form
Section VI. Deductibles.
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AR/AH, AR/A1–A30, AR/A, AR/AO; or
(2) Below the base flood elevation adjusted to include the effect of wave
action in Zones VE or V1–V30.
The lowest floor levels are based on the bottom of the lowest horizontal structural
member of the floor in Zones VE or V1–V30 and the top of the floor in Zones AH, AE,
A1–A30, AR, AR/AE, AR/AH, AR/A1–A30, AR/A, AR/AO.
The SFIP does not cover a building under construction if work stops for
more than 90 continuous days. Coverage will resume when work
resumes.
The SFIP does not cover tools for construction, such as forms, cribbing,
power tools, etc.
7. A manufactured home or a travel trailer as described in the Definitions
Section (see II.B.6.b. and II.B.6.c.).
If the manufactured home or travel trailer is in a special flood hazard area,
it must be anchored in the following manner at the time of the loss:
a. By over-the-top or frame ties to ground anchors; or
b. In accordance with the manufacturer’s specifications; or
c. In compliance with the community’s floodplain management
requirements unless it has been continuously insured by the NFIP at the
same described location since September 30, 1982.
A manufactured (mobile) home is a structure built on a permanent chassis,
transported to its site in one or more sections, and affixed to a permanent
foundation. It can be a travel trailer without wheels, built on a chassis, affixed
to a permanent foundation that a community regulates under its floodplain
management and building ordinances. The term “manufactured home” does
not include a recreational vehicle.
For the SFIP to insure a manufactured home, the owner must affix it to a
permanent foundation. A permanent foundation for a manufactured home
may be a poured masonry slab, foundation walls, piers, or block supports. The
foundation, not the wheels and or the axles, must support all of the weight of
the manufactured (mobile) home.
If the mobile home is in an SFHA, the owner must anchor it to a permanent
foundation to resist flotation, collapse, or lateral movement by:
• Providing over-the-top or frame ties to ground anchors.
• Following the manufacturer’s specification for anchoring.
• Complying with the community’s floodplain management requirements.
8. Items of property in a building enclosure below the lowest elevated floor of
an elevated post-FIRM building located in zones A1–A30, AE, AH, AR, AR/A,
AR/AE, AR/AH, AR/A1–A30, V1– V30, or VE, or in a basement, regardless of
the zone. Coverage is limited to the following:
a. Any of the following items, if installed in their functioning locations and, if
necessary for operation, connected to a power source:
When the Declarations Page reflects two zones, a current zone and a rating
zone (or FIRM zone), the rating zone represents the zone in force at the time
of the policy’s inception, which is applicable to the claim during the policy term
period. This zone may be a grandfathered zone that remains in effect for
coverage unless or until the home is substantially damaged, substantially
improved, or there is a lapse in coverage.
The current zone may be a different zone that reflects the zone designation in
the current flood map. This zone is intended only for non-claim related
purposes such as underwriting premiums and ICC applicability.
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This post-FIRM elevated building limitation does not apply to SFHA Zones A,
AO, A99, AR/AO, V, and VO. Basement limitations apply in all zones.
The SFIP does not cover items of property that are not listed under this
provision when installed or located in a basement, even if the item of property
is installed or located above an equal point with the ground level. The policy
limitation applies to the complete area defined as a basement--floors, walls,
and ceilings.
For a post-FIRM elevated building enclosure subject to this policy limitation,
the SFIP does not cover items of property that are not listed under this
provision when installed or located at a level below the level of the lowest
elevated floor, whether or not the item is on an exterior part of the building or
part of the enclosure, in, on, or within. Subject to all other terms and conditions
of the SFIP, all items of property installed or located at or above the level of the
lowest elevated floor are covered, exterior or interior.
For items of property that originate or straddle the line level with the lowest
elevated floor, the item(s) is subject to the coverage limitation. For example, a
cabinet, door, window, or refrigerator that originates below, or straddles the
line level equal with the lowest elevated floor is not covered, even that portion
or value at or above the lowest elevated floor.
However, coverage can be provided for building materials and finishes
installed above the line level with the lowest elevated floor, even if the
items originate or straddle the line level with the lowest elevated floor,
when the function of the building material or finish is not reduced by
cutting or removing the damaged and otherwise excluded building material
physically located at or below the line level equal with the lowest elevated
floor. Examples include exterior siding, wood trim, drywall, paint, or
insulation, even if the same item extends below the level of the lowest
elevated floor. The building materials and finishes below the line level with
the lowest elevated floor are still excluded. This coverage interpretation is
in sync with new FEMA-approved building codes for new construction and
substantially improved buildings.
(1) Central air conditioners; Central air conditioners include related built-in equipment for
dehumidification, air filtering, and ventilation.
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(2) Cisterns and the water in them; See Section 2 Claims Processes and Guidance in this manual.
(3) Drywall for walls and ceilings in a basement and the cost of labor to nail it,
unfinished and unfloated and not taped, to the framing;
Unfinished, unfloated, and not taped drywall installed anywhere in a
basement. The SFIP will also pay for unfinished, unfloated, and not taped
drywall in lieu of paneling or any finished wall treatment.
The SFIP does not cover interior framed walls or interior partition walls.
For an elevated building located in an SFHA, full coverage begins at the lowest
elevated floor. This is the lowest floor raised above ground, even if the pilings
extend beyond it (see Lowest Elevated Floor Determination,
in Section 2 this
manual). Items of property that include but not limited to, garage doors,
exterior doors, windows, and drywall that originate below the lowest elevated
floor are subject to the post-FIRM limitations and excluded.
The SFIP does not cover items, interior or exterior, located below the lowest
elevated floor of a post-FIRM elevated building.
(4) Electrical junction and circuit breaker boxes;
(5) Electrical outlets and switches;
Electrical junction and circuit breaker boxes include a junction box, which
serves as an unfinished basic light fixture. See Figure 20
below. The SFIP does
not cover finished lighting, which is an improvement as defined in Section
II.B.17 of the SFIP.
Figure 20: Unfinished Basic Light Fixture
(6) Elevators, dumbwaiters, and related equipment, except for related
equipment installed below the base flood elevation after September
30, 1987;
An elevator or dumbwaiter is
covered if within the covered building enclosure or
attached to and in contact with the insured building, or directly attached to the
16 square foot landing area used for egress if unattached.
For elevators and dumbwaiters installed below the BFE after September 30,
1987, coverage is limited to the cab and the included controls installed on or in
the cab. Related equipment is everything except the cab and the included
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controls and is not covered unless the damaged part of the equipment is
installed above the level at or above the BFE.
A chair lift is covered if within the covered building enclosure or attached to an
in contact with the insured building or attached directly to the 16 square foot
landing area used for egress (See Figures 21 and 22
).
Figure 21. Example of a Covered Chair Lift Attached to the Building
Photograph credit BFA, LLC
Figure 22: Example of a Non-covered Chair Lift.
(7) Fuel tanks and the fuel in them; Fuel tanks and the fuel in them include a connected fuel gauge or fuel filter.
(8) Furnaces and hot water heaters;
Furnaces and hot water heaters include boilers and permanently installed
equipment for humidification, air filtering, and ventilation. This includes those
portions of the central HVAC in a building enclosure below the LFE or
basement, including boilers and connected radiators and hot water
baseboards. This does not include electric baseboard heaters whether
hardwired to the electrical system or not.
(9) Heat pumps; Heat pumps and other central HVAC units permanently installed equipment
related to humidification, dehumidification, air filtering, and ventilation.
(10) Nonflammable insulation in a basement; Nonflammable insulation in a basement includes:
• Nonflammable insulation in walls and ceilings.
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•
Nonflammable insulation installed between joists within the lowest
elevated floor and unfinished protective weather barriers affixed to
floor
joists.
The SFIP covers unattached protective barriers located in a crawlspace as
personal property provided the area is not subject to basement or post-FIRM
coverage limitations and the policyholder purchased contents coverage.
When installed underneath a building in a crawlspace the barrier must be
physically attached to the building’s foundation or floor framing.
(11) Pumps and tanks used in solar energy systems; Refer to policy language.
(12) Stairways and staircases attached to the building, not separated from it
by elevated walkways;
The SFIP covers unfinished base support material for staircases and stairways
(underneath the finished treads and risers) attached to the building, not
separated from it by elevated walkways, includes an exterior staircase into a
basement that is part of the building and enclosed by an addition defined under
SFIP Section III.A.2. This also includes interior basement or post-FIRM elevated
building staircases.
The SFIP does not pay to treat, paint, or stain the base support material in a
basement, or below the lowest elevated floor of a post-FIRM elevated building
in an SFHA.
The SFIP does not cover damage to finish materials used for a tread, riser, or
stringer, if such material is installed onto unfinished base support material for
stairways and staircases. If finish material is the base support material, such as
with a floating staircase or step, the finish material is covered but not the cost to
apply a finish coating, or paint.
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Figure 23. Unfinished base stairs (left) are covered in basement or below post-
FIRM elevated building; however, improvements added to finish treads, risers,
and stringers (right) are not:
Figure 24: Covered stairs where the finish material is the base material; however,
no coverage to paint, stain, or coat
The SFIP does not cover the basement exterior egress staircase located outside
of the perimeter building walls, even if covered by a roof or door. See SFIP
Section IV.9.
(13) Sump pumps;
(14) Water softeners and the chemicals in them, water filters, and
faucets installed as an integral part of the plumbing system;
Refer to policy language.
The SFIP allows for a faucet that is affixed directly to the plumbing line, as
opposed to a faucet that is connected to plumbing lines but mounted onto a
sink as a finished fixture.
(15) Well water tanks and pumps;
Well water tanks and pumps include the pressure switch, pressure valve, and
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gauge.
(16) Required utility connections for any item in this list; and Refer to policy language.
(17) Footings, foundations, posts, pilings, piers, or other foundation walls
and anchorage systems required to support a building.
Footings, foundations, posts, pilings, piers, or other foundation walls and
anchorage systems required to support a building:
• Includes windows and doors installed in the perimeter foundation walls
of an SFIP-defined basement area such as a perimeter wall basement
garage door or sliding glass door.
• Include vents installed in and considered part of the covered
foundation walls of a post-FIRM elevated building. However, there is no
coverage for breakaway walls or for vents in breakaway walls.
• Does not include screen or storm doors, or a door covering or
enclosing an exterior egress in a basement, such as a Bilco™ door.
• Does not include doors and windows of any type in an enclosure
subject to post-FIRM limitations when located below the lowest
elevated floor.
b. Clean-up. Clean-up includes:
• Pumping out trapped floodwater
• Labor to remove or extract spent cleaning solutions
• Treatment for mold and mildew
• Structural drying of salvageable interior foundation elements
The SFIP does not cover clean-up of an item or property located in areas
subject to basement and post-FIRM coverage limitations – that is, the property
must itself be covered under SFIP Section III(A)(8) –or for items or loss
otherwise excluded under this policy.
Clean-up is not debris removal. See SFIP Section III.C.1. for Debris Removal.
B.
Coverage B—Personal Property
1. If you have purchased personal property coverage, we insure, subject to
B.2., 3. and 4. below, against direct physical loss by or from flood to
personal property inside the fully enclosed insured building:
• The SFIP does not cover personal property items not within the fully
enclosed insured building at the described location. This differs from
the Dwelling Form in that the Dwelling Form covers personal property
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a.
Owned solely by you, or in the case of a condominium, owned solely by
the condominium association and used exclusively in the conduct of the
business affairs of the condominium association; or
b. Owned in common by the unit owners of the condominium association.
We also insure such personal property for 45 days while stored at a temporary
location, as set forth in III.C.2.b. Property Removed to Safety.
within any SFIP-defined building at the described location.
• See SFIP Section III.C.2.b. for Property Removed to Safety.
• Property leased under a “capital lease”, a contract that entitles a renter
the temporary use of an item and to account for the financial effect of
ownership on the balance sheet, qualifies as insurable interest and can be
claimed even if the property is not solely owned by the policyholder.
In contrast, an “operating lease” is a contract that entitles a renter the
temporary use of an item but does not convey ownership rights. Property
in the possession of a policyholder obtained through an operating lease
cannot be represented in balancing sheet financials according to
Generally Accepted Accounting Principles (GAAP) and is not covered
under the SFIP Coverage B-Personal Property.
2. When this policy covers personal property, coverage will be either for
household personal property or other than household personal property,
while within the insured building, but not both.
a. If this policy covers household personal property, it will insure
household personal property usual to a living quarters, that:
(1) Belongs to you, or a member of your household, or at your option:
(a) Your domestic worker;
(b) Your guest; or
(2) You may be legally liable for.
b. If this policy covers other than household personal property, it will
insure your:
(1) Furniture and fixtures;
(2) Machinery and equipment;
(3) Stock; and
(4) Other personal property owned by you and used in your business,
subject to IV. Property Not Covered.
The SFIP does not cover personal property items not within the building as
defined by the policy.
3. Coverage for personal property includes the following property, subject to
B.1.a. and B.1.b. above, which is covered under Coverage B only:
• Coverage A – Building Property covers through-the-wall air
conditioning units that are permanently installed.
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a.
Air conditioning units installed in the building;
b. Carpet, not permanently installed, over unfinished flooring;
c. Carpets over finished flooring;
d. Clothes washers and dryers;
e. “Cook-out” grills;
f. Food freezers, other than walk-in, and food in any freezer;
g. Outdoor equipment and furniture stored inside the insured building;
h. Ovens and the like; and
i. Portable microwave ovens and portable dishwashers.
•
Clothes washers and dryers including the dryer exhaust vent kit.
• Coverage B applies to food freezers only. NFIP considers an appliance
that both refrigerates and freezes as a refrigerator and covers it under
Coverage A–Building Property
This provision does not apply to Zones A, AO, A99, AR/AO, V, and VO.
4. Items of property in a building enclosure below the lowest elevated floor of
an elevated post-FIRM building located in Zones A1-A30, AE, AH, AR, AR/A,
AR/AE, AR/AH, AR/A1-A30, V1-V30, or VE, or in a basement, regardless of
the zone, is limited to the following items, if installed in their functioning
locations and, if necessary for operation, connected to a power source:
a. Air conditioning units, portable or window type;
b. Clothes washers and dryers; and
c. Food freezers, other than walk-in, and food in any freezer.
• Coverage A – Building Property covers through-the-wall air
conditioning units that are permanently installed.
• Clothes washers and dryers include a dryer exhaust vent kit. The
connectors and plumbing line for a gas dryer are covered under building
coverage only.
• Coverage B applies to food freezers only. NFIP considers an appliance
that both refrigerates and freezes as a refrigerator and covers it
under Coverage A – Building Property.
This provision does not apply to Zones A, AO, A99, AR/AO, V, and VO.
5. Special Limits: We will pay no more than $2,500 for any loss to one or more
of the following kinds of personal property:
a. Artwork, photographs, collectibles, or memorabilia, including but not limited
to, porcelain or other figures, and sports cards;
b. Rare books or autographed items;
c. Jewelry, watches, precious and semi-precious stones, articles of gold,
silver, or platinum;
d. Furs or any article containing fur which represents its principal value.
Payments for these items may not exceed $2,500.00 in aggregate.
6. We will pay only for the functional value of antiques. The SFIP does not value an antique based on the rarity of the item, nor does it
apply depreciation based solely on age or its physical condition. The SFIP bases
the value of an antique item on its functional value considering its quality. The
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adjuster should apply depreciation based on its restored condition at the time
of the loss.
SFIP-covered Functional value for an antique = Agreed appraised value –
Intangible value – Depreciation
As an example, a 400-year-old fully restored chair formerly owned by a
historical figure is appraised by a certified industry professionally at $25,000.
The chair has seen general usage for 3-years after its restoration date.
Applying judgment, a new chair with the same or similar functional design,
material quality, and craftsmanship is comparably worth $3,500. Less 3
percent depreciation, the SFIP would pay the functional value of $3,395, as
functional value must also consider depreciation.
7. If you are a tenant, you may apply up to 10% of the Coverage B limit to
improvements:
a. Made a part of the building you occupy; and
b. You acquired, or made at your expense, even though you cannot
legally remove.
This coverage does not increase the amount of insurance that applies to
insured personal property.
The SFIP does not allow duplication of benefits with another NFIP policy.
Insurers may not pay for property as tenant improvements and pay for the
same scope for the same items under a building owner’s policy. The insurer
must obtain the lease agreement to verify the insurable interest before making
a payment under this provision. For policyholders who are tenants, appliances
such as refrigerators, stoves, ovens, ranges, and dishwashers are not subject to
the 10 percent limitation.
8. If you are a condominium unit owner, you may apply up to 10% of the
Coverage B limit to cover loss to interior:
a. Walls,
b. Floors, and
c. Ceilings,
that are not covered under a policy issued to the condominium
association insuring the condominium building.
This coverage does not increase the amount of insurance that applies to insured
personal property.
Refer to policy language.
9. If you are a tenant, personal property must be inside the fully enclosed
building.
Refer to policy language.
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C.
Coverage C—Other Coverages
1. Debris Removal
a. We will pay the expense to remove non-owned debris that is on or
in insured property and debris of insured property anywhere.
b. If you or a member of your household perform the removal work, the
value of your work will be based on the Federal minimum wage.
c. This coverage does not increase the Coverage A or Coverage B limit
of liability
Insured property means the insured dwelling and covered personal property.
The SFIP does not pay for removal of:
• Non-covered debris anywhere, such as a non-covered damaged
property or debris located in the yard, driveway, or on another parcel
of land.
• Non-covered items of property even if the removal of the item
facilitates cleanup or covered building repairs, such as the removal of
carpet installed inside a basement, or the removal plants, shrubs or
trees along the perimeter of the building to access foundation or
siding repairs.
2. Loss Avoidance Measures
a. Sandbags, Supplies, and Labor
(1) We will pay up to $1,000 for the costs you incur to protect the
insured building from a flood or imminent danger of flood, for the
following:
(a) Your reasonable expenses to buy:
(i)
Sandbags, including sand to fill them;
(ii)
Fill for temporary levees;
(iii)
Pumps; and
(iv)
Plastic sheeting and lumber used in connection with
these items; and
(b) The value of work, at the Federal minimum wage, that you
perform.
(2) This coverage for Sandbags, Supplies, and Labor only applies if
damage to insured property by or from flood is imminent and the
threat of flood damage is apparent enough to lead a person of
common prudence to anticipate flood damage. One of the following
must also occur:
(a) General and temporary condition of flooding in the area near the
The SFIP only covers those items specifically noted. The policyholder must
provide receipts for covered materials they purchased. Additionally, the NFIP
reimburses the policyholder labor at the Federal minimum wage at the time of
the loss.
Water-filled bladders, as shown in Figure 25,
are considered a temporary
levee for the purposes of loss avoidance coverage. However, because these
are reusable, the SFIP will pay the cost to purchase the bladder once, but only
when the initial purchased is in connection to the claimed flood event. After
that event, any future claim for loss avoidance here is limited to the labor and
fill material.
Figure 25: Water-Filled Bladder
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described location must occur, even if the flood does not reach
the insured building; or
(b) A legally authorized official must issue an evacuation order or
other civil order for the community in which the insured building
is located calling for measures to preserve life and property from
the peril of flood.
This coverage does not increase the Coverage A or Coverage B limit of liability.
Photograph credit Randy Wagner
b. Property Removed to Safety
(1) We will pay up to $1,000 for the reasonable expenses you incur to
move insured property to a place other than the described
location that contains the property in order to protect it from
flood or the imminent danger of flood.
Reasonable expenses include the value of work, at the
Federal minimum wage, that you perform.
(2) If you move insured property to a place other than the described
location that contains the property, in order to protect it from
flood or the imminent danger of flood, we will cover such property
while at that location for a period of 45 consecutive days from the
date you begin to move it there. The personal property that is
moved must be placed in a fully enclosed building, or otherwise
reasonably protected from the elements.
Any property removed, including a moveable home described in II.6.b. and
c., must be placed above ground level or outside of the special flood
hazard area.
This coverage does not increase the Coverage A or Coverage B limit of
liability.
• The SFIP coverage of “reasonable expenses” under this provision is
limited to the policyholder’s removal, storage, and return of covered
building and personal property to the location described on the
declarations page. The insurer may reimburse the policyholder for
related expenses for labor of the policyholder and family members at
Federal minimum wage, and incurred transportation and storage costs.
The policyholder must itemize and support these expenses with valid
proof of payment. Coverage here is limited only to the length of time
that a flood or the imminent danger of flood exists. Payment under this
provision does not increase Coverage A – Building Property or Coverage
B – Personal Property limits of liability.
• The SFIP will cover from the peril of flood, the property relocated to
another location for a period of 45 consecutive days from the date the
policyholder began to move the property. If the policyholder does not
place the property in a fully enclosed building, the property must be
secured to prevent flotation out of the building. If the property floats
out or away from the building used to reasonably protect the property
from the elements, it will be conclusively presumed that the
policyholder did not reasonably secure the property. In that case there
is no coverage for the property.
• Regarding the provision “must be placed above ground level or outside
of the SFHA”, the relocated site of the property must be a reasonable
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location to prevent loss compared to the described location. For
example, where surrounding terrain is sloped, the site of the relocated
property must be on a higher elevation than the floor level of the
building at described location where the property was originally
located; the policyholder may not relocate the property to a basement.
Where the surrounding terrain is level and the site of the relocated
property is considered within the same flood hazard area, the property
must be placed on a floor level in the relocated building that is a higher
elevation compared to the floor level in the building at the described
location where the property was originally located. The property may
not be relocated into a lower enclosure below an elevated floor within
a post-FIRM building located in a SFHA.
3. Pollution Damage
We will pay for damage caused by pollutants to covered property if the discharge,
seepage, migration, release, or escape of the pollutants is caused by or results
from flood. The most we will pay under this coverage is $10,000. This coverage
does not increase the Coverage A or Coverage B limits of liability. Any payment
under this provision when combined with all other payments for the same loss
cannot exceed the replacement cost or actual cash value, as appropriate, of the
covered property. This coverage does not include the testing for or monitoring of
pollutants unless required by law or ordinance.
Refer to policy language.
D.
Coverage D— Increased Cost of Compliance
1. General
This policy pays you to comply with a State or local floodplain management law or
ordinance affecting repair or reconstruction of a structure suffering flood damage.
Compliance activities eligible for payment are: elevation, floodproofing, relocation, or
demolition (or any combination of these activities) of your struc
ture. Eligible
floodproofing activities are limited to:
a. Non-residential structures.
b. Residential structures with basements that satisfy FEMA’s standards
published in the Code of Federal Regulations [44 CFR 60.6 (b) or (c)].
Refer to policy language.
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2. Limit of Liability
We will pay you up to $30,000 under this Coverage D—Increased Cost of
Compliance, which only applies to policies with building coverage (Coverage A). Our
payment of claims under Coverage D is in addition to the amount of coverage which
you selected on the application and which appears on the Declarations Page. But the
maximum you can collect under this policy for both Coverage A (Building Property)
and Coverage D (Increased Cost of Compliance) cannot exceed the maximum
permitted under the Act.
We do NOT charge a separate deductible for a claim under Coverage D.
All three SFIP forms provide Increased Cost of Compliance (ICC) benefits as
Coverage D. Increased Cost of Compliance. ICC provides up to $30,000 toward
the cost of bringing a flood-damaged structure into compliance with state or
community floodplain management laws or ordinances governing repair or
reconstruction following a flood.
3. Eligibility
a. A structure covered under Coverage A—Building Property sustaining a
loss caused by a flood as defined by this policy must:
(1) Be a “repetitive loss structure.” A “repetitive loss structure” is one
that meets the following conditions:
(a) The structure is covered by a contract of flood insurance
issued under the NFIP.
(b) The structure has suffered flood damage on 2 occasions during
a 10-year period that ends on the date of the second loss.
The cost to repair the flood damage, on average, equaled or
exceeded 25% of the market value of the structure at the time
of each flood loss.
(d) In addition to the current claim, the NFIP must have paid the
previous qualifying claim, and the State or community must have
a cumulative, substantial damage provision or repetitive loss
provision in its floodplain management law or ordinance being
enforced against the structure; or
(2) Be a structure that has had flood damage in which the cost to repair
equals or exceeds 50% of the market value of the structure at the
time of the flood. The State or community must have a substantial
damage provision in its floodplain management law or ordinance
being enforced against the structure.
To be eligible for ICC, the community must declare the building substantially
damaged. The amount paid for Coverage D – ICC and Coverage A – Building
Property cannot exceed the maximum program limits of $500,000 General
Property Form.
ICC is not available in Emergency Program communities.
ICC is not available for:
• Contents-only policies.
• Group Flood Insurance policies.
• Dwelling Form policies on individual condominium units in a multi-
unit building.
ICC coverage is available through the condominium association’s flood policy.
No separate deductible applies.
ICC Claims
The date of loss of the ICC claim is the date of loss of the underlying flood
claim that triggers the requirement to comply with a community law or
ordinance.
Policyholders have up to six years from the date of the underlying flood loss to
complete the eligible mitigation activity. Policyholders should know that
initiating a mitigation project before receiving a substantial damage
declaration from the community may jeopardize their eligibility to receive an
ICC payment.
For buildings in Zones B, C, X, D, unnumbered A and V, and A99, the adjuster
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b.
This Coverage D pays you to comply with State or local floodplain
management laws or ordinances that meet the minimum standards of the
National Flood Insurance Program found in the Code of Federal Regulations
at 44 CFR 60.3. We pay for compliance activities that exceed those
standards under these conditions:
(1) 3.a.(1) above.
(2) Elevation or floodproofing in any risk zone to preliminary or advisory
base flood elevations provided by FEMA which the State or local
government has adopted and is enforcing for flood-damaged
structures in such areas. (This includes compliance activities in B, C, X,
or D zones which are being changed to zones with base flood
elevations. This also includes compliance activities in zones where
base flood elevations are being increased, and a flood-damaged
structure must comply with the higher advisory base flood elevation.)
Increased Cost of Compliance coverage does not apply to situations in
B, C, X, or D zones where the community has derived its own
elevations and is enforcing elevation or floodproofing requirements
for flood-damaged structures to elevations derived solely by the
community.
Elevation or floodproofing above the base flood elevation to meet State
or local “freeboard” requirements, i.e., that a structure must be
elevated above the base flood elevation.
c. Under the minimum NFIP criteria at 44 CFR 60.3 (b)(4), States and
communities must require the elevation or floodproofing of structures in
unnumbered A zones to the base flood elevation where elevation data is
obtained from a Federal, State, or other source. Such compliance
activities are also eligible for Coverage D.
d. This coverage will also pay for the incremental cost, after demolition or
relocation, of elevating or floodproofing a structure during its rebuilding at
the same or another site to meet State or local floodplain management
laws or ordinances, subject to Exclusion D.5.g. below.
(c) This coverage will also pay to bring a flood damaged structure into
compliance with State or local floodplain management laws or
must document why a building must undergo mitigation and obtain a written
statement from the community to substantiate the ICC claim.
ICC does not pay for testing, monitoring, clean up, removal, containment,
treatment, detoxification, or neutralization of pollutants even if required by
community ordinance.
Repetitive Loss Properties
ICC is also available for repetitive loss properties for communities with a
cumulative damage provision in their ordinance. The NFIP defines a
Repetitive Loss Structure as a building covered by an NFIP policy that has
incurred flood- related damages on two occasions during a 10-year
period ending on the date of the event for which the policyholder makes
a second claim. The cost of repairing the flood damage, on the average,
must equal or exceed 25 percent of the market value of the building at
the time of each flood. The adjuster must verify that the community
ordinance has such cumulative damage language and that the NFIP paid
a claim for both qualifying losses.
Substantial Damage
Insurers may only open an ICC claim when the community declares a building
substantially damaged in writing. Neither FEMA nor the insurer can determine
substantial damage or issue a substantial damage declaration. The community
has the sole authority to determine substantial damage.
Note that in some cases a community may declare a building substantially
damaged, based in whole or in part on non-flood-related damage. While
having more than 50 percent damage may trigger a requirement to comply
with the local floodplain management ordinances, the SFIP requires the
percentage of damage to be by or from flood, whether covered by the SFIP or
not.
See Section 3
Increased Cost of Compliance in this manual for more
detail.
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ordinances even if the structure had received a variance before the
present loss from the applicable floodplain management
requirements
4. Conditions
a. When a structure covered under Coverage A-Building Property sustains a
loss caused by a flood, our payment for the loss under this Coverage D will
be for the increased cost to elevate, floodproof, relocate, or demolish (or
any combination of these activities) caused by the enforcement of current
State or local floodplain management ordinances or laws. Our payment for
eligible demolition activities will be for the cost to demolish and clear the
site of the building debris or a portion thereof caused by the enforcement
of current State or local floodplain management ordinances or laws. Eligible
activities for the cost of clearing the site will include those necessary to
discontinue utility service to the site and ensure proper abandonment of
on- site utilities.
b. When the building is repaired or rebuilt, it must be intended for the same
occupancy as the present building unless otherwise required by current
floodplain management ordinances or laws.
ICC pays for the following mitigation activities or combination thereof:
• Floodproofing to reduce the potential for flood damage by keeping
floodwater out of a building, for nonresidential structures and for
certain residential structures that satisfy FEMA’s standards under
44 C.F.R. 60.6(b) or (c).
• Elevation to raise a building to or above the BFE plus freeboard adopted
by a community, adopted Advisory Base Flood Elevations (ABFE), or the
best available data provided by FEMA.
• Demolition when a building is in such poor condition that elevation
and relocation are not technically feasible or cost effective.
• Relocation to move a building outside of the floodplain.
See Section 3
Increased Cost of Compliance in this manual for more detail.
5. Exclusions
Under this Coverage D-Increased Cost of Compliance, we will not pay for:
a. The cost to comply with any floodplain management law or ordinance
in communities participating in the Emergency Program.
b. The cost associated with enforcement of any ordinance or law that
requires any insured or others to test for, monitor, clean up, remove,
contain, treat, detoxify or neutralize, or in any way respond to, or assess
the effects of pollutants.
c. The loss in value to any insured building or other structure due to
the requirements of any ordinance or law.
d. The loss in residual value of the undamaged portion of a building
demolished as a consequence of enforcement of any State or local
floodplain management law or ordinance.
Refer to policy language.
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e.
Any Increased Cost of Compliance under this Coverage D:
(1) Until the building is elevated, floodproofed, demolished, or
relocated on the same or to another premises; and
(2) Unless the building is elevated, floodproofed, demolished, or
relocated as soon as reasonably possible after the loss, not to exceed
two years.
f. Any code upgrade requirements, e.g., plumbing or electrical wiring,
not specifically related to the State or local floodplain management
law or ordinance.
g. Any compliance activities needed to bring additions or improvements
made after the loss occurred into compliance with State or local floodplain
management laws or ordinances.
h. Loss due to any ordinance or law that you were required to comply
with before the current loss.
i. Any rebuilding activity to standards that do not meet the NFIP's minimum
requirements. This includes any situation where the insured has received
from the State or community a variance in connection with the current flood
loss to rebuild the property to an elevation below the base flood elevation.
j. Increased Cost of Compliance for a garage or carport.
k. Any structure insured under an NFIP Group Flood Insurance Policy.
Assessments made by a con-dominium association on individual
condominium unit owners to pay increased costs of repairing commonly
owned buildings after a flood in compliance with State or local floodplain
management ordinances or laws.
6. Other Provisions
All other conditions and provisions of this policy apply.
Refer to policy language.
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We do not cover any of the following property:
1. Personal property not inside the fully enclosed building; This provision applies to tenants and building owners for personal property
inside the insured building.
2. A building, and personal property in it, located entirely in, on, or over water
or seaward of mean high tide, if it was constructed or substantially
improved after September 30, 1982;
• The SFIP allows coverage for a building not entirely over water, i.e.,
when part of the exterior perimeter wall and foundation of the
building is on land or on the landward side of mean high tide (mean
high water).
• When the exterior perimeter walls of the building are completely
over water and the support system or foundation underneath the
insured building extends onto land, or the extension of any
mechanism for access into a building (including, but not limited to,
stairs, decks, walkways, piers, posts, pilings, docks, or driveways),
even if the mechanism is on or partially on land, the building or the
access will not be eligible for coverage.
• If the exterior perimeter walls of a building are completely over water,
but connected to another eligible building by means of an elevated
walkway, stairway, roof, and/or rigid exterior wall, or there is an
appurtenant structure on the same slab, foundation, or ot
her continuous
support system that is on land (such as a shed or garage), the presence
of the connected building or appurtenant structure on land does not
allow coverage to be afforded to the building that has its exterior
perimeter walls entirely over water.
3. Open structures, including a building used as a boathouse or any structure
or building into which boats are floated, and personal property located in,
on, or over water;
The SFIP does not cover boathouses or buildings into which boats can
float and personal property located within buildings used solely as
boathouses.
The SFIP does not cover a building and personal property in it, located in, on,
or over water or seaward of mean high tide if the building was constructed or
substantially improved after September 30, 1982.
4. Recreational vehicles other than travel trailers described in II.B.6.c.,
whether affixed to a permanent foundation or on wheels;
A recreational vehicle is a self-propelled vehicle (see Figure 26). A travel trailer
is not self-propelled and is towed behind a road vehicle (see Figure 27).
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We do not cover any of the following property:
Figure 26. Recreational Vehicle
Photograph credit Fleetwood RV
Figure 27. Travel Trailer
5. Self-propelled vehicles or machines, including their parts and equipment.
However, we do cover self-propelled vehicles or machines, provided they
are not licensed for use on public roads and are:
a. Used mainly to service the described location; or
b. Designed and used to assist handicapped persons, while the vehicles or
machines are inside a building at the described location;
The SFIP covers a self-propelled vehicle located inside the building at the
location described on the declarations page. The vehicle type and design
must be consistent with the services provided at the location described on
the declarations page and used primarily for that purpose. For example, an
all-terrain vehicle (ATV) designed mainly for off-road recreation or sport
would not be eligible under this provision, even if the policyholder uses it to
pull a trailer to collect litter at the described location.
Under 5.b, the vehicle is covered if it is designed as a mobility vehicle for a
handicapped person. The vehicle must be inside a building at the location
described on the declarations page for coverage to apply. However, vehicles
not designed for handicapped persons, including but not limited to golf carts,
ATVs, Segways® or the like, and hoverboards/balance boards are never
covered by the SFIP under 5.b., even if repurposed to provide mobility to a
handicapped person.
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We do not cover any of the following property:
6. Land, land values, lawns, trees, shrubs, plants, growing crops, or animals; The SFIP does not cover animals and live bait, such as worms or minnows, sold
in fishing tackle shops. The SFIP covers artificial plants inside the insured
building at the described location.
7. Accounts, bills, coins, currency, deeds, evidences of debt, medals, money,
scrip, stored value cards, postage stamps, securities, bullion, manuscripts,
or other valuable papers;
• Scrip is a form of money issued by a local government or private
organization, such as gift cards, coupons, or any substitute for legal
tender.
• The SFIP does not cover financial loss from damage or destruction of
electronic data or the cost of restoring that data.
• Other valuable papers include stocks certificates and bonds.
8. Underground structures and equipment, including wells, septic tanks, and
septic systems;
• Underground structures and equipment include, but is not limited to,
wires, conduits, pipes, sewers, tanks, tunnels, sprinkler systems, similar
property, and any apparatus connected beneath the surface of the
ground. The SFIP provides coverage if other SFIP requirements are met
for equipment installed used in the operation of underground
structures and equipment installed above ground and within a building,
for example sprinkler timer.
• When installed, a sewage grinder pump is an integral part of the
building’s septic system. The grinder pump pulverizes waste for
discharge into the septic drainage field. This item of property is not
covered. However, the SFIP covers the sewage grinder pump’s alarm
service panel if installed above ground level and affixed to the
building or its foundation. The SFIP does not cover alarm service
panels installed to an item of property that is not covered, such as a
support post to a deck.
9. Those portions of walks, walkways, decks, driveways, patios, and other
surfaces, all whether protected by a roof or not, located outside the
perimeter, exterior walls of the insured building;
The SFIP pays to repair or replace damage to any existing egress on the sides
of a building, including underneath an elevated building. For each existing
egress, NFIP covers one 16 square foot landing and a single set of stairs, and
one landing per staircase. The SFIP covers materials of a like kind and quality,
such as concrete, wood or composite wood material. Covered items include
any existing hand or support rail, support posts, and hardware. The SFIP does
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We do not cover any of the following property:
not cover improvements such as lighting or finishing (paint or preservative
stains).
The SFIP does not cover the cost to comply with Americans with Disabilities Act
of 1990 (ADA) regulations; however, the SFIP will repair or replace an existing
flood damaged handicap ramp shown in Figure 28
for egress, in lieu of the 16
SF of landing and steps.
Figure 28. Existing Handicap Ramp
10. Containers including related equipment, such as, but not limited to, tanks
containing gases or liquids;
The SFIP does not cover fuel tanks, pressure tanks, and well water tanks
located outside a basement or elevated building enclosure. The SFIP does
not cover tanks containing other liquids or gases. The SFIP does not cover
containers, including shipping containers used for storage or residential
purposes, unless they meet the definition of a building.
11. Buildings or units and all their contents if more than 49% of the actual cash
value of the building or unit is below ground, unless the lowest level is at or
above the base flood elevation and is below ground by reason of earth
having been used as insulation material in conjunction with energy efficient
building techniques;
A building must have over 51 percent of its actual cash value above ground
level. This calculation relies solely upon the ACV, not on concepts like square
footage, volume, or otherwise.
12. Fences, retaining walls, seawalls, bulkheads, wharves, piers, bridges, and
docks;
The SFIP considers a structure physically connected to a building that
directly supports and is integral to the building’s foundation, even if it
has a secondary purpose such as a retaining wall.
13. Aircraft or watercraft, or their furnishings and equipment;
• The SFIP covers remote controlled boats, aircraft, and drones or UAVs
(Unmanned Aerial Vehicles) designed and intended for recreational use
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We do not cover any of the following property:
only, and not used to carry people or cargo, or for commercial use. The
same policy provisions that apply to other personal property apply to
these items.
• The SFIP does not cover drones or UAVs registered with the
Federal Aviation Administration for purposes other than
recreational model aircraft.
• The SFIP does not cover furnishings and equipment for non-covered
watercraft and aircraft including parts and other items identified for
use with watercraft and aircraft.
14. Hot tubs and spas that are not bathroom fixtures, and swimming pools,
and their equipment such as, but not limited to, heaters, filters, pumps,
and pipes, wherever located;
Refer to policy language.
15. Property not eligible for flood insurance pursuant to the provisions of the
Coastal Barrier Resources Act and the Coastal Barrier Improvement Act of
1990 and amendments to these Acts;
The SFIP does not provide flood insurance coverage for a structure built or
substantially improved after the U.S. Department of Interior’s Fish and
Wildlife Service (FWS) designates it as within Coastal Barrier Resources
System (CBRS) boundaries or as Otherwise Protected Areas (OPAs). See
FWS
website for more information.
16. Personal property owned by or in the care, custody or control of a unit
owner, except for property of the type and under the circumstances set
forth under III. Coverage B-Personal Property of this policy;
The SFIP covers household property usually found in living quarters (See
General Property Form Section III.B.2.a.)
17. A residential condominium building located in a Regular Program
community.
Refer to policy language.
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A.
We only pay for direct physical loss by or from flood, which means that we do not pay you for:
1. Loss of revenue or profits;
2. Loss of access to the insured property or described location;
3. Loss of use of the insured property or described location;
4. Loss from interruption of business or production;
5. Any additional expenses incurred while the insured building is being
repaired or is unable to be occupied for any reason;
The SFIP does not cover the costs to pack, move, or store personal property from the
insured building or return it to the building when an owner repairs the building or
cannot occupy it.
6. The cost of complying with any ordinance or law requiring or
regulating the construction, demolition, remodeling, renovation, or
repair of property, including removal of any resulting debris. This
exclusion does not apply to any eligible activities we describe in
Coverage D—Increased Cost of Compliance; or
7. Any other economic loss you suffer.
The SFIP does not cover replacing non-flood damaged property required to comply
with government codes, ordinances, or regulations. For example, the SFIP does not
cover the cost of replacing an undamaged interior HVAC unit to match a replaced
exterior HVAC unit because of a change in size, SEER-rating, refrigerant, or any other
reason even if local, state, or federal code required the upgrade.
B.
We do not insure a loss directly or indirectly caused by a flood that is already in progress at the time and date:
1. The policy term begins; or
2. Coverage is added at your request.
NFIP adjusts flood insurance losses individually. Flood insurance benefits are available
if an insured property suffers a covered loss caused by a general condition of
flooding, as defined by the SFIP.
See Flood in Progress
in Section 2 of this manual.
C.
We do not insure for loss to property caused directly by earth movement even if the earth movement is caused by flood. Some examples of earth movement that
we do not cover are:
1. Earthquake;
2. Landslide;
3. Land subsidence;
4. Sinkholes;
5. Destabilization or movement of land that results from accumulation
of water in subsurface land areas; or
6. Gradual erosion
We do, however, pay for losses from mudflow and land subsidence as a result
The SFIP is a single-peril policy that only pays for covered damage due to direct
physical loss by or from flood, defined in the policy at Section II. The SFIP does not
cover damage resulting from an intervening cause of loss, even if the resulting cause
is due to flood. The SFIP does not cover damage that results when saturated soils
cause the soil below ground level to sink, expand, compact, destabilize, or otherwise
lose its load bearing capacity such as from voids or rotten organic matter when the
soil dries. The SFIP does not cover earth movement; each form of earth movement is
an intervening cause of loss and a separate peril.
The SFIP’s exclusion for other perils, such as fire, exemplifies the exclusion of earth
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of erosion that are specifically covered under our definition of flood (see A.1.c.
and II.A.2.).
movement as a cause of loss. When a flood causes a fire, which damages the building
during inundation or after floodwaters recede, NFIP does not cover the resulting fire
and smoke damage to the building even if flood directly caused the fire.
The SFIP covers damage to a building’s structure if the damage results from the
collapse or subsidence of land that is the direct result of erosion or undermining to
the building’s support soil underneath or directly along the perimeter foundation of
the building from waves or currents of floodwater (velocity flow) during a flood from
the overflow of inland or tidal waters. This includes damage to the foundation of the
building and any resulting damage to interior and exterior finishes. The SFIP does not
cover gradual erosion.
D.
We do not insure for direct physical loss caused directly or indirectly
by:
1. The pressure or weight of ice;
2. Freezing or thawing;
3. Rain, snow, sleet, hail, or water spray;
4. Water, moisture, mildew, or mold damage that results primarily
from any condition:
a. Substantially confined to the insured building; or
b. That is within your control including, but not limited to:
(1) Design, structural, or mechanical defects;
(2) Failures, stoppages, or breakage of water or sewer lines, drains,
pumps, fixtures, or equipment; or
(3) Failure to inspect and maintain the property after a flood
recedes;
The SFIP may cover damage that occurs when the policyholder cannot access to
promptly remove wetted building and personal property items, and this delay directly
results in water, moisture, mildew, or mold damage to other building and personal
property items not in physical contact with surface floodwater. As examples, local
authorities may restrict access by order or prolonged inundation of floodwater may
prevent access. The claim file must include the proper documentation, such as but
not limited to photographs, an acceptable explanation provided by the adjuster, or a
signed statement from the policyholder or community official, that supports the
payment for property damages above the waterline. For instances when coverage
and payment is not recommended, the claim file should include the proper
documentation which clearly points to the policyholder’s failure to inspect and
maintain their insured property or take reasonable measures to reduce damage
when it is feasible to do so.
The SFIP does not cover damage caused by long-term exposure to moisture, water,
rot, and insect infestation. This includes damage from the lack of climate control
inside the building when the approach to repair does not include the timely repair
to the building HVAC.
The SFIP does not cover pre-existing damage to structural building components, such
as damage due to rot, or for any resulting damage to non-structural finished building
material.
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5. Water or water-borne material that:
a. Backs up through sewers or drains;
b. Discharges or overflows from a sump, sump pump, or related
equipment; or
c. Seeps or leaks on or through the covered property;
unless there is a flood in the area and the flood is the proximate cause of
the sewer or drain backup, sump pump discharge or overflow, or the
seepage of water;
The adjuster must document that a flood occurred in the area, and that the flood was
the proximate cause of the back-up of the sewer or drain, overflow of the sump
pump, pump failure, seepage of water, or damage due to the pressure or weight of
water (hydrostatic pressure), in the claim file. See SFIP Section II.A and related
discussion for the definition of flood.
When paying a loss due to a flood in the area proximately causing discharge or
overflow of water or water-borne material from a sump, sump pump, or related
equipment, the insurer must document the claim file to show that a homeowner’s
policy endorsement or policy rider did not pay for the loss. If the homeowner’s policy
covers the same loss, the SFIP payment must apply a proportional loss distribution, as
stated under Section VII.C. “Other Insurance”.
The adjuster must document a flood occurred in the area, and that the flood was the
proximate cause of the back-up of the sewer or drain, overflow of the sump pump,
pump failure, seepage of water, or damage due to the pressure or weight of water
(hydrostatic pressure). A flood is two or more parcels of partial or complete
inundation of normally dry land, or of two or more continuous acres of normally dry
land. For coverage under this provision the condition of flood does not have to be on
the parcel of land described at the location; it may be within the proximate area.
6. The pressure or weight of water unless there is a flood in the area
and the flood is the proximate cause of the damage from the
pressure or weight of water;
Refer to SFIP Section V.D.5. above.
7. Power, heating, or cooling failure unless the failure results from
direct physical loss by or from flood to power, heating, or cooling
equipment situated on the described location;
The S
FIP does not cover damage to insured property when caused by a power surge or
power outage that originates from the failure or shutting down of equipment that is
not located at the described location, ev
en if the reason is a direct result of a flood. For
example, the local utility operator may shut down a section of the electrical grid to
avoid system damage from a flood. When the power returns to the electrical grid, the
initial surge of electricity can damage insured property. Under this loss description the
damage is not covered.
The SFIP covers damage to any covered building electrical system, such as the
building’s main service or home security system, or to the HVAC system, when a flood
physically damages equipment installed at the described location. For example, if the
flood damage creates an electrical short within the building system affecting a second
piece of equipment, the second piece of equipment is also covered, even though it
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was not physically touched by water. Under this loss description, the damage is
considered a direct physical loss by or from flood. To cover the loss described, the
adjuster must document the cause of loss in the claim file to rule out the possibility of
a non-covered cause, such as described in the previous paragraph.
8. Theft, fire, explosion, wind, or windstorm;
9. Anything that you or your agents do or conspire to do to cause loss
by flood deliberately; or
10. Alteration of the insured property that significantly increases the risk
of flooding.
Refer to policy language.
E.
We do not insure for loss to any building or personal property
located on land leased from the Federal Government, arising from or
incident to the flooding of the land by the Federal Government,
where the lease expressly holds the Federal Government harmless
under flood insurance issued under any Federal Government
program.
Refer to policy language.
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A.
When a loss is covered under this policy, we will pay only that part of the loss that exceeds the applicable deductible amount, subject to the limit of liability that
amount, subject to the limit of liability that applies. The deductible amount is shown on the Declarations Page.
However, when a building under construction, alteration, or repair does not have at least two rigid exterior walls and a fully secured roof at the time of loss, your
deductible amount will be two times the deductible that would otherwise apply to a completed building.
B.
In each loss from flood, separate deductibles apply to the building and personal property insured by this policy.
C.
No deductible applies to:
1. III.C.2. Loss Avoidance Measures; or
2. III.D. Increased Cost of Compliance.
The SFIP applies a separate deductible to both building and personal property loses.
The SFIP will only pay that portion of the loss that exceeds the applicable deductibles.
For building and personal property losses, the insurer should take the deductible
from the gross loss before applying policy limits. For example, if the covered loss is
$340,000, the policy limit is $300,000, and the deductible is $10,000. The insurer
should apply the deductible to the $340,000 loss, which leaves $330,000, meaning
the insurer should pay the $300,000 policy limit.
The SFIP does not apply excess loss to items subject to Special Limits to reduce the
personal property deductible.
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A.
Pair and Set Clause
In case of loss to an article that is part of a pair or set, we will have the option
of paying you:
1. An amount equal to the cost of replacing the lost, damaged, or
destroyed article, less depreciation, or
2. An amount which represents the fair proportion of the total value of
the pair or set that the lost, damaged, or destroyed article bears to
the pair or set.
If the damaged property item is ruined, and cannot be replaced individually as a
single item, and this renders the other item in the pair or the set unusable or
worthless, then the SFIP pays for the pair or set.
Examples
: Left shoe ruined by flood, and the right shoe undamaged. The left shoe
cannot be purchased without the right, rendering the undamaged right shoe
unusable. The SFIP covers a new pair of shoes. Other similar examples include a
ruined china base cabinet and undamaged matching china base top; half the seats
ruined in a sectional sofa; a ruined left window curtain and an undamaged right
window curtain.
If the damaged property item is ruined and can be replaced individually as a single
item with like kind and quality, and this renders the other item or the set usable, the
SFIP will only cover the damaged/ruined item along with reasonable cost for like kind
and quality, except in the case of the Section V. Exclusion (A)(6) for ordinance or law,
and the like.
Examples
: Base cabinets ruined by flood with the upper cabinets undamaged. The
upper cabinets remain usable. The SFIP allows to replace the base cabinets with like
kind and quality, including reasonable costs to match the new base cabinets with
existing undamaged cabinets. Other similar examples include a damaged dresser and
undamaged or repairable matching armoire and night stands; a ruined dining table
leaf and undamaged or repairable dining table; a ruined granite cabinet countertop
and salvageable granite island countertop.
Example
: An outdoor heating ventilation, and air conditioning (HVAC) unit is ruined
by flood, interior HVAC unit is undamaged. Due to Department of Energy code
requirements regarding energy efficiency, or an Environmental Protection Agency
(EPA)-mandate regarding refrigerant type, a replacement outdoor HVAC unit that
works with the existing interior HVAC unit is unavailable, rendering the undamaged
interior unit unusable. Section VII (A) Pair and Set clause is superseded by Section V
Exclusions (A)(6) and the SFIP only allows to replace the outdoor HVAC unit with like
kind and quality; and does not cover replacement of the undamaged interior HVAC
unit.
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B.
Concealment of Fraud and Policy Voidance
1. With respect to all insureds under this policy, this policy:
a. Is void,
b. Has no legal force or effect,
c. Cannot be renewed, and
d. Cannot be replaced by a new NFIP policy, if, before or after a loss, you
or any other insured or your agent have at any time:
(1) Intentionally concealed or misrepresented any material fact or
circumstance,
(2) Engaged in fraudulent conduct, or
(3) Made false statements
relating to this policy or any other NFIP insurance.
When claim professionals suspect wrongful acts or misrepresentations on a claim by
a policyholder or their representatives:
• The adjuster should promptly submit written notification with supporting
documentation to the insurer. The adjuster should not draw any conclusions
regarding the suspected fraud and should only present facts in written reports.
• The examiner should engage management to determine if the insurer should
refer the matter to the FEMA Fraud Unit (email:
StopFEMAFraud@fema.dhs.gov) and to the insurer’s investigative unit for a
Reservation of Rights.
2. This policy will be void as of the date wrongful acts described in B.1.
above were committed.
3. Fines, civil penalties, and imprisonment under applicable Federal
laws may also apply to the acts of fraud or concealment described
above.
The SFIP will be void if the proper authorities determine any part of a claim was
fraudulent.
4. This policy is also void for reasons other than fraud, misrepresentation,
or wrongful act. This policy is void from its inception and has no legal
force under the following conditions:
a. If the property is located in a community that was not participating in
the NFIP on the policy’s inception date and did not join or re-
enter the
program during the policy term and before the loss occurred; or
b. If the property listed on the application is otherwise not eligible for
coverage under the NFIP.
When a community no longer participates in the NFIP, an active SFIP will remain in
force up to the day before the policy renewal date. Refer to the Flood Insurance
Manual for other reasons why a building may be ineligible for coverage.
C.
Other Insurance
1. If a loss covered by this policy is also covered by other insurance that
includes flood coverage not issued under the Act, we will not pay more
Other insurance includes primary flood coverage provided by a private carrier, an
endorsement for sewer, sumps or drains backup, or any other insurance that
duplicates SFIP coverage.
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than the amount of insurance that you are entitled to for lost,
damaged, or
destroyed property insured under this policy subject to the following:
a. We will pay only the proportion of the loss that the amount of
insurance that applies under this policy bears to the total amount of
insurance covering the loss, unless C.1.b. or c. below applies.
b. If the other policy has a provision stating that it is excess insurance,
this policy will be primary.
c. This policy will be primary (but subject to its own deductible) up to
the deductible in the other flood policy (except another policy as
described in C.1.b. above). When the other deductible amount is
reached, this policy will participate in the same proportion that the
amount of insurance under this policy bears to the total amount of
both policies, for the remainder of the loss.
•
Use the following formula to determine the NFIP’s share of the loss:
NFIP share
= ((SFIP policy limit ÷ total insurance) x loss) - other insurance
deductible
• Use the following formula to determine the other insurance’s share of the loss:
Other insurance share
= ((other insurance policy limit ÷ total insurance) x loss) -
other insurance deductible
• Use the following formula to determine the NFIP payment:
NFIP payment
= NFIP share + other insurance deductible – SFIP deductible
Below is an example of how to apply the formulas to compute the insurer’s shares
and NFIP payment for a $480,000 loss.
Table 7: Insurance Coverage and Deductibles
Insurance
Coverage
Deductible
NFIP $250,000 $5,000
Other $500,000 $15,000
Total $750,000
•
NFIP share:
(($250,000 ÷ $750,000) x $480,000) - $15,000 = $145,000
•
Other insurance share:
(($500,000 ÷ $750,000) x $480,000) - $15,000 =
$305,000.00
•
NFIP payment:
$145,000.00 + $15,000 - $5,000 = $155,000.00
IMPORTANT – Use the order of operations as shown, starting with the innermost
parentheses, for accurate calculation.
2. Where this policy covers a condominium association and there is a flood
insurance policy in the name of a unit owner that covers the same loss as
this policy, then this policy will be primary.
Refer to policy language.
D.
Amendments, Waivers, Assignment
This policy cannot be changed nor can any of its provisions be waived without
the express written consent of the Federal Insurance Administrator. No action
The SFIP allows assignment of the policy when the title to the property transfers to a
new owner.
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that we take under the terms of this policy can constitute a waiver of any of
our rights. You may assign this policy in writing when you transfer title of your
property to someone else except under these conditions:
1. When this policy covers only personal property; or
2. When this policy covers a structure during the course of construction.
The SFIP does not allow assignment of a claim. The only exception to this is a
Coverage D – Increased Cost of Compliance (ICC) claim that can transfer in
conjunction with a FEMA project, such as a Hazard Mitigation Grant Program (HMGP)
grant. Typically, the policyholder assigns the claim to a community, which typically
uses the payment for the community’s non-Federal match for the project. The
policyholder may only assign the part of the ICC benefit used to meet the project
requirements.
E.
Cancellation of Policy by You
1. You may cancel this policy in accordance with the applicable rules and
regulations of the NFIP.
2. If you cancel this policy, you may be entitled to a full or partial refund of
premium also under the applicable rules and regulations of the NFIP.
Policyholders must have a valid reason to cancel their flood insurance coverage
during a policy term.
See the Flood Insurance Manual
for detailed information.
F.
Non-Renewal of Policy by Us
Your policy will not be renewed:
1. If the community where your covered property is located stops
participating in the NFIP; or
2. If your building has been declared ineligible under section 1316 of the Act.
When a community no longer participates in the NFIP, an active SFIP will remain in
force up to the day before the policy renewal date.
Coverage may not be available for a building constructed or altered in violation of
state or local floodplain management laws, regulations, or ordinances. Section 1316
of the Act allows a state or community to declare a building in violation of its
floodplain management rules. When a state or community declares that a building is
in violation of Section 1316, the building and any contents in it are not eligible for
SFIP coverage. Insurers have a list of buildings with Section 1316 violations that are
ineligible for NFIP coverage. When the owner corrects the violation, the building
becomes eligible for coverage again. The examiner should verify the building’s
eligibility.
G.
Reduction and Reformation Coverage
1. If the premium we received from you was not enough to buy the kind and
amount of coverage that you requested, we will provide only the amount
of coverage that can be purchased for the premium payment we received.
If the policyholder gives the insurer a premium that will not purchase the amounts of
insurance requested, the insurer must issue the policy for the insurance coverage
amount the premium will purchase for a one-year policy term.
After a Loss:
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2.
The policy can be reformed to increase the amount of coverage resulting
from the reduction described in G.1. above to the amount you requested
as follows:
a. Discovery of Insufficient Premium or Incomplete Rating Information
Before a Loss.
(1) If we discover before you have a flood loss that your premium
payment was not enough to buy the requested amount of
coverage, we will send you and any mortgagee or trustee
known to us a bill for the required additional premium for the
current policy term (or that portion of the current policy term
following any endorsement changing the amount of
coverage). If you or the mortgagee or trustee pay the
additional premium within 30 days from the date of our bill,
we will reform the policy to increase the amount of coverage
to the originally requested amount effective to the beginning
of the current policy term (or subsequent date of any
endorsement changing the amount of coverage).
(2) If we determine before you have a flood loss that the rating
information we have is incomplete and prevents us from
calculating the additional premium, we will ask you to send the
required information. You must submit the information within
60 days of our request. Once we determine the amount of
additional premium for the current policy term, we will follow
the procedure in G.2.a.(1) above.
(3) If we do not receive the additional premium (or additional
information) by the date it is due, the amount of coverage can
only be increased by endorsement subject to any appropriate
waiting period.
b. Discovery of Insufficient Premium or Incomplete Rating Information
After a Loss.
(1) If we discover after you have a flood loss that your premium
payment was not enough to buy the requested amount of
coverage, we will send you and any mortgagee or trustee known
•
The insurer will send a bill for the required additional premium for the current
policy term only. This is an exception to the SFIP Provisions requiring the
current and the prior policy terms.
• If the insurer receives the premium within 30 days from the date of the bill, the
insurer should increase the policy limits to the originally requested amount
effective as of the beginning of the current policy term.
• If the insurer does not receive the additional premium by the due date, the
insurer must settle the claim based on the previously submitted premium and
results in reduced policy limits.
Exceptions for Incorrect Flood Zone or BFE After a Loss. When the insurer discovers
that an incorrect flood zone or BFE resulted in insufficient premium, the following
exceptions apply:
• The insurer should calculate any additional premium due prospectively
from the date of discovery.
• The insurer should apply the automatic reduction in policy limits effective
on the date of discovery.
Incorrect Policy Form. The insurer must use the correct policy form before making a
loss payment. When the insurer issues coverage using an incorrect SFIP form, the
policy is void and the insurer must rewrite the coverage under the correct form. The
provisions of the correct SFIP form apply.
• The insurer must reform the coverage limits according to the provisions of
the correct SFIP form.
• Coverage cannot exceed the coverage issued under the incorrect policy form.
See the Flood Insurance Manual
for detailed information.
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to us a bill for the required additional premium for the current
and the prior policy terms. If you or the mortgagee or trustee
pay the additional premium within 30 days of the date of our
bill, we will reform the policy to increase the amount of
coverage to the originally requested amount effective to the
beginning of the prior policy term.
(2) If we discover after you have a flood loss that the rating
information we have is incomplete and prevents us from
calculating the additional premium, we will ask you to send the
required information. You must submit the information before
your claim can be paid. Once we determine the amount of
additional premium for the current and prior policy terms, we
will follow the procedure in G.2.b.(1) above.
(3) If we do not receive the additional premium by the date it is due,
your flood insurance claim will be settled based on the reduced
amount of coverage. The amount of coverage can only be
increased by endorsement subject to any appropriate waiting
period.
3. However, if we find that you or your agent intentionally did not tell us, or
falsified any important fact or circumstance or did anything fraudulent
relating to this insurance, the provisions of Condition B. above apply.
H.
Policy Renewal
1. This policy will expire at 12:01 a.m. on the last day of the policy term.
2. We must receive the payment of the appropriate renewal premium within
30 days of the expiration date.
3.
If we find, however, that we did not place your renewal notice into the U.S.
Postal Service, or if we did mail it, we made a mistake, e.g., we used an
incorrect, incomplete, or illegible address, which delayed its delivery to you
before the due date for the renewal premium, then we will follow these
procedures:
a. If you or your agent notified us, not later than one year after the date
on which the payment of the renewal premium was due, of
The SFIP is not a continuous policy. It is a contract for a one-year term. Every policy
contract expires at 12:01 a.m. on the last day of the policy term. Renewal of an
expiring policy establishes a new policy term and new contractual agreement. See
the Flood Insurance Manual for detailed information.
The adjuster should investigate the claim under a signed non-waiver agreement or
a reservation of rights by the insurer when a policyholder reports a loss and there
is uncertainty as to whether a policy is active.
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nonreceipt of a renewal notice before the due date for the renewal
premium, and we determine that the circumstances in the preceding
paragraph apply, we will mail a second bill providing a revised due
date, which will be 30 days after the date on which the bill is mailed.
b. If we do not receive the premium requested in the second bill by the
revised due date, then we will not renew the policy. In that case, the
policy will remain as an expired policy as of the expiration date shown
on the Declarations Page.
4. In connection with the renewal of this policy, we may ask you during the
policy term to re-certify, on a Recertification Questionnaire that we will
provide to you, the rating information used to rate your most recent
application for or renewal of insurance.
I.
Conditions Suspending or Restricting Insurance
We are not liable for loss that occurs while there is a hazard that is increased
by any means within your control or knowledge.
The SFIP will not cover a flood loss or increased flood damage to insured
property that the policyholder purposely or inadvertently causes. For
examples, a policyholder constructs a flood barrier to prevent floodwater
from a river from reaching the building. However, the improvement now
causes runoff during heavy rainfall events to collect behind the barrier and
flood the building and a neighboring parcel.
When the investigation of a loss reveals this provision might apply, the adjuster should
notify the insurer at once and request immediate guidance.
J.
Requirements in Case of Loss
In case of a flood loss to insured property, you must:
1. Give prompt written notice to us;
The policyholder’s claim begins with the written notice of loss.
The policyholder must report the loss to the insurer immediately; failure to provide a
notice of loss to the insurer could prejudice the ability of the insurer to inspect the
loss, identify the cause and extent of damage, and determine applicable coverage
under the SFIP. If the policyholder delays reporting a loss, adjusters cannot help
policyholders protect the property and avoid further damage.
A policyholder’s failure to provide timely notice of loss can be a basis for denial of a
claim.
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•
The adjuster should document the reason for a delay in the policyholder
reporting a loss to the insurer.
• The adjuster should execute a non-waiver agreement when there is a delay
in reporting the loss. The non-waiver agreement should include the reason
for the non- waiver and the policyholder’s explanation for the delay. The
adjuster should have the policyholder sign the non-waiver agreement
immediately. If the policyholder refuses to sign the non-waiver agreement,
the insurer may decide to send a Reservation of Rights. The adjuster should
continue the inspection and review.
2. As soon as reasonably possible, separate the damaged and undamaged
property, putting it in the best possible order so that we may examine it;
3. Prepare an inventory of damaged property showing the quantity,
description, actual cash value, and amount of loss. Attach all bills, receipts,
and related documents;
The SFIP requires that the policyholder separate damaged from undamaged property
putting it in the best possible order, so the adjuster may examine it. It is the
policyholder’s duty to perform the separation described above and prepare an
inventory of damaged property including quantity, description, and the total amount
of loss claimed. Any bills, receipts, photographs of damages, and related documents
should be attached to the inventory.
If building or contents flood-damaged property is removed before the adjuster can
examine it, the policyholder must photograph the items in their damaged location
prior to moving the property and prepare the inventory. To minimize potential
documentation issues, if possible, the policyholder should retain for the adjuster,
samples or swatches of carpeting, wallp
aper, furniture upholstery, window treatments,
and other items of exceptional value where the type and quality of material will
influence the amount payable on the claim. Photographs should also include groups of
items such as clothing, kitchen items, furniture, etc. The insurer will evaluate and
consider these items and the policyholder’s written inventory of damaged items.
4. Within 60 days after the loss, send us a proof of loss, which is your
statement of the amount you are claiming under the policy signed and
sworn to by you, and which furnishes us with the following information:
a. The date and time of loss;
b. A brief explanation of how the loss happened;
c. Your interest (for example, "owner") and the interest, if any, of
others in the damaged property;
d. Details of any other insurance that may cover the loss;
The proof of loss is the policyholder’s statement of the amount of money they are
requesting. The policyholder must sign and swear to the proof of loss and provide
documentation to support the amount requested for the insurer to consider it
completed. The policyholder (or legal representative with a signed Power of
Attorney or Executor in the case of a deceased policyholder) is the only person who
can sign the proof of loss.
SIGNED AND SWORN:
FEMA encourages the use of electronic signatures on proofs of loss and other NFIP-
related submissions. FEMA will not deny the legal effect, validity, or enforceability of
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e.
Changes in title or occupancy of the insured property during the
term of the policy;
f. Specifications of damaged buildings and detailed repair estimates;
g. Names of mortgagees or anyone else having a lien, charge, or claim
against the insured property;
h. Details about who occupied any insured building at the time of loss
and for what purpose; and
i. The inventory of damaged property described in J.3. above.
5. In completing the proof of loss, you must use your own judgment
concerning the amount of loss and justify that amount.
a signature solely because it is in electronic form. Insurers should accept electronic
signatures in accordance with their general business practices and applicable laws.
MULTIPLE PROOFS OF LOSS ALLOWED:
Policyholders must submit a completed proof of loss and documentation to support
the amount requested initially and completed proofs of loss for any additional
payment requests to the insurer within 60 days after the date of loss or within any
extension of that deadline granted by FEMA.
ONE CLAIM PER LOSS:
The proof of loss is not the claim. The claim is the policyholder’s assertion that they are
entitled to payment for a covered loss under the terms of t
he SFIP. A policyholder has
only one claim from a flood event regardless of the number of proofs of loss and
documentation the policyholder may submit in support of that claim.
6. You must cooperate with the adjuster or representative in the
investigation of the claim.
7.
The insurance adjuster whom we hire to investigate your claim may furnish
you with a proof of loss form, and she or he may help you complete it.
However, this is a matter of courtesy only, and you must still send us a
proof of loss within sixty days after the loss even if the adjuster does not
furnish the form or help you complete it.
Refer to policy language.
8. We have not authorized the adjuster to approve or disapprove cl
aims or to
tell you whether we will approve your claim.
Only the NFIP insurer has the authority to approve or deny a claim, to tell the
policyholder if they will approve or deny a claim, or to provide payment details.
The insurer must rely only upon the terms and conditions established by Federal
statute, NFIP regulations, the Federal Insurance Administrator’s interpretations, and
the express terms of the SFIP. See 44 C.F.R. § 61.5(e) (2018).
9. At our option, we may accept the adjuster's report of the loss instead of
your proof of loss. The adjuster's report will include information about
your loss and the damages you sustained. You must sign the adjuster's
report. At our option, we may require you to swear to the report.
The insurer, not the policyholder or their representative, determines whether to
accept the adjuster’s report signed and sworn to by the policyholder, instead of a
proof of loss.
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K. Our Options After Loss
Options we may, in our sole discretion, exercise after loss includes the
following:
This section sets forth the steps that insurers may take to require action on the part
of the policyholder. If the policyholder fails to comply with the insurer’s request, the
policyholder is in breach of the insuring agreement, which may affect the payment of
the claim.
1. At such reasonable times and places that we may designate, you must:
a. Show us or our representative the damaged property;
The policyholder must make the flood damaged property available for examination as
often as needed to verify the loss and claim. Insurer representatives will give the
policyholder advanced notice of the specific time and meeting place to inspect the
damaged property.
The policyholder should document their loss with photographs before removing or
disposing of damaged items that pose a health hazard, such as perishable food.
b. Submit to examination under oath, while not in the presence of
another insured, and sign the same; and
The insurer can require the policyholder to submit to an examination under oath but
not in the presence of another policyholder when there are questions concerning the
claim. An examination under oath is a formal proceeding, typically conducted prior to
a lawsuit, during which the insurer’s representative questions a policyholder under
oath in the presence of a court reporter. When requiring an examination under oath,
the insurer should ask the policyholder to present information and documentation
necessary to evaluate their claim. This can include books of accounts, financial
records, receipts, income tax records, property settlement records, invoices,
purchase orders, affidavits, and other materials to verify the loss.
c. Permit us to examine and make extracts and copies of:
(1) Any policies of property insurance insuring you against loss and
the deed establishing your ownership of the insured real
property;
The SFIP will not pay more than the amount of insurance that the policyholder is
entitled to for the damaged, lost, or destroyed property insured under this policy if
non-NFIP insurance covers a loss covered by the SFIP.
The policyholder must confirm the availability of other insurance to determine what
the NFIP will pay. Examples include a homeowner’s policy water damage or sump
overflow endorsement, mobile-homeowner’s policy, scheduled property policy,
renter’s policy, builder’s risk policy, etc.
See SFIP Section VII.C. for Other Insurance.
(2) Condominium association documents including the Declarations
of the condominium, its Articles of Association or Incorporation,
Bylaws, and rules and regulations; and
A claim involving a unit in a condominium building requires the declarations of the
condominium, bylaws, etc. to determine the policyholder’s insurable interest in the
building. Adjusters may have to determine if the RCBAP paid for any damages. NFIP
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will not pay for the same damage item twice or pay a claim for a residential unit that
exceeds the statutory limits. Adjusters must provide documentation that a
condominium association owns the insured building, not a homeowners’ association
or a building cooperative.
(3) All books of accounts, bills, invoices, and other vouchers, or
certified copies pertaining to the damaged property if the
originals are lost.
Insurers may require the policyholder to provide information that documents the
extent of the loss and the amount of the claim. Examples include books of accounts,
bills, invoices, vouchers, and items showing the actual amounts paid to stores,
contractors, or others for repair or replacement of items. This may also include
photographs of the flood-damaged property that sufficiently and reasonably
document the damage, quality of the item, and describe the damaged property. The
policyholder can provide certified copies when the originals are lost or destroyed.
2. We may request, in writing, that you furnish us with a complete inventory
of the lost, damaged, or destroyed property, including:
a. Quantities and costs;
“Costs” is the amount to replace a personal property item with like kind and quality at
current pricing, including the price for sales tax plus any applicable shipping and
product assembly.
b. Actual cash values; The actual cash value represents the replacement cost to replace, not repair, less
applicable depreciation of all components of the price.
c. Amounts of loss claimed; The amounts of loss claimed is the amount of payment the policyholder asks to
receive
for the damaged and covered property.
d. Any written plans and specifications for repair of the damaged
property that you can reasonably make available to us; and
Written plans and specifications for repair of the damaged property include
contractor estimates, subcontractor bids, invoices, architectural reports and
drawings, engineering reports, etc. This also includes water restoration or structural
drying invoices and supporting documentation.
NFIP will not accept a non-itemized, lump sum, or single line estimate or invoice in
support of a claim.
e. Evidence that prior flood damage has been repaired. Policyholders must provide evidence of repair from the previous flood damage
whether or not they owned or insured the property. This includes any damage
unrepaired by a previous owner.
NFIP expects policyholders to maintain proof of repairs such as receipts, cancelled
checks, etc. in a safe location away from the threat of flood.
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When policyholders do not have proof of repairs, adjusters should request other
forms of documentation such as:
• Pre-flood photographs (social media or other family members) to compare
old and replaced items.
• Credit card or bank statements showing dates and dollar amount of
payments to contractors.
• Itemized statements and paid invoices from contractors.
3. If we give you written notice within 30 days after we receive your signed,
sworn proof of loss, we may:
a. Repair, rebuild, or replace any part of the lost, damaged, or destroyed
property with material or property of like kind and quality or its
functional equivalent; and
b. Take all or any part of the damaged property at the value we agree
upon or its appraised value.
3.a. Refer to policy language.
3.b. Refer to Section VII.O. and other guidance including Salvage
in Section 2 of this
manual.
L.
No Benefit to Bailee
No person or organization, other than you, having custody of covered property
will benefit from this insurance.
Bailment is the delivery of personal property by one person (the bailor) to another
(the bailee) who holds the property for a certain purpose, such as service, under
an expressed or implied-in-fact contract.
The SFIP does not cover the bailee because bailment is a change of possession, not a
change of ownership or title. When a customer (bailor) takes personal clothing to the
drycleaner (bailee) illustrates a good example. A bailment exists when the bailee has
the clothing. The articles of clothing in the possession of the bailee are bailee goods
and are not covered.
Consignment is a written agreement where a consignor provides owned personal
property to a consignee for sale and gives the consignee a percentage of the sale
price when sold. The SFIP does not cover property on consignment.
M.
Loss Payment
1. We will adjust all losses with you. We will pay you unless some other
person or entity is named in the policy or is legally entitled to receive
payment. Loss will be payable 60 days after we receive your proof of loss
Adjusters and examiners should work with a policyholder and/or their authorized
representative to understand the loss, prepare the estimate, and reach an agreed
value for the loss.
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(or within 90 days after the insurance adjuster files an adjuster’s report
signed and sworn to by you in lieu of a proof of loss) and:
a. We reach an agreement with you;
b. There is an entry of a final judgment; or
c. There is a filing of an appraisal award with us, as provided in VII.P.
The insurer’s obligation to pay and the 60-day timeframe to pay begin once the
policyholder meets the requirements in Paragraph J, a proof of loss that meets all
NFIP requirements, or after the signed and sworn to adjuster’s report is received,
and,
• Insurer and the policyholder agree on the payment amount, or
• There is an entry of final judgment or an appraisal award by a court
of competent jurisdiction.
The insurer should promptly process all claims and payment requests. The insurer
should communicate to policyholders any unforeseen delays in the claim examination
process and advance undisputed claimed amounts at the earliest opportunity.
When the insurer cannot pay a completed proof of loss, the examiner and the
adjuster should promptly communicate the necessary adjustments or documentation
required to the policyholder. Insurers should work with policyholders to settle the loss
without resorting to a denial of the claim by the insurer.
See Section 4
Appeals of this manual for information on denial letters
2. If we reject your proof of loss in whole or in part you may:
a. Accept such denial of your claim;
b. Exercise your rights under this policy; or
c. File an amended proof of loss, as long as it is filed within 60 days of
the date of the loss.
Courts have not accepted the language “reject your proof of loss” as sufficient to
communicate to the policyholder that the insurer has denied their claim in whole or
in part. Hence, insurers should not use this language to deny all or part of a claim.
When the insurer issues a written denial, the policyholder has certain rights, which
include filing an appeal directly to FEMA, filing suit against the insurer, or submitting
an amended proof of loss with the documentation to support the requested loss and
payment amount.
The one-year statute of limitations for filing suit begins when the insurer issues the
first denial letter (42 U.S.C. § 4072; 44 C.F.R. § 62.22(a)). Submitting subsequent
additional or amended proofs of loss does not reset the one-year statute of
limitation. Adjusters and examiners must assist policyholders in identifying all
opportunities for payment. This helps the policyholder recover, ensures customer
satisfaction, and prevents unnecessary appeals and lawsuits.
N.
Abandonment
You may not abandon damaged or undamaged insured property to us. Refer to policy language.
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O.
Salvage
We may permit you to keep damaged insured property after a loss, and we will
reduce the amount of the loss proceeds payable to you under the policy by the
value of the salvage.
The insurer always has the right to seek salvage or to take possession of damaged
property. Insurers should pursue opportunities for a financial recovery when
available.
See Salvage
in Section 2 of this manual.
P.
Appraisal
If you and we fail to agree on the actual cash value of the damaged property so
as to determine the amount of loss, either may demand an appraisal of the
loss. In this event, you and we will each choose a competent and impartial
appraiser within 20 days after receiving a written request from the other. The
two appraisers will choose an umpire. If they cannot agree upon an umpire
within 15 days, you or we may request that the choice be made by a judge of a
court of record in the state where the insured property is located. The
appraisers will separately state the actual cash value and the amount of loss to
each item. If the appraisers submit a written report of an agreement to us, the
amount agreed upon will be the amount of loss. If they fail to agree, they will
submit their differences to the umpire. A decision agreed to by any two will set
the amount of actual cash value and loss.
Each party will:
1. Pay its own appraiser; and
2. Bear the other expenses of the appraisal and umpire equally.
See Appraisal
in Section 2 of this manual.
Q.
Mortgage Clause
The word “mortgagee” includes trustee.
Any loss payable under Coverage A—Building Property will be paid to any
mortgagee of whom we have actual notice, as well as any other mortgagee or
loss payee determined to exist at the time of loss, and you, as interests appear.
If more than one mortgagee is named, the order of payment will be the same
as the order of precedence of the mortgages. If we deny your claim, that
denial will not apply to a valid claim of the mortgagee, if the mortgagee:
The SFIP pays claims for building property to the named policyholder, mortgage
holders, lienholders, other loss payees for whom we have actual notice, and any loss
payee determined to exist at the time of loss. The mortgage clause is a contract
within a contract. It is a contract between the mortgagee and the insurer within the
contract between the policyholder and the insurer. Including the name of the
mortgagee on each building claim payment is the surest way to keep this promise to
the mortgagee. For all building payments, except Coverage C – Other Coverages and
Coverage D – ICC, include all known mortgagees, as they are additional insureds.
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1.
Notifies us of any change in the ownership or occupancy, or substantial
change in risk of which the mortgagee is aware;
2. Pays any premium due under this policy on demand if you have neglected
to pay the premium; and
3. Submits a signed, sworn proof of loss within 60 days after receiving notice
from us of your failure to do so.
All terms of this policy apply to the mortgagee.
The mortgagee has the right to receive loss payment even if the mortgagee
has started foreclosure or similar action on the building.
If we decide to cancel or not renew this policy, it will continue in effect for the
benefit of the mortgagee only for 30 days after we notify the mortgagee of the
cancellation or non-renewal.
If we pay the mortgagee for any loss and deny payment to you, we are
subrogated to all the rights of the mortgagee granted under the mortgage
on the property. Subrogation will not impair the right of the mortgagee to
recover the full amount of the mortgagee’s claim.
The insurer may potentially include a loss payee or lienholder on Coverage B –
Personal Property of whom the insurer received actual notice such as from the U.S.
Small Business Administration (SBA). If the insurer receives a letter of an SBA-
approved loan, the SBA must be included on the building check(s) and the contents
check(s) if the loan is for both real estate and personal or business property.
R.
Suit Against Us
You may not sue us to recover money under this policy unless you have
complied with all the requirements of the policy. If you do sue, you must start
the suit within one year of the date of the written denial of all or part of the
claim, and you must file the suit in the United States District Court of the
district in which the insured property was located at the time of loss. This
requirement applies to any claim that you may have under this policy and to
any dispute that you may have arising out of the handling of any claim under
the policy.
The statute of limitations begins with the insurer’s first written denial of the claim.
Subsequent denial letters do not re-start the statute of limitations. Policyholders
must file suit in a U.S. District Court in the district where the loss occurred within one
year after the insurer’s first written denial. Neither the Federal Insurance
Administrator nor the insurer may extend the one-year statute of limitation to file
suit.
S.
Subrogation
Whenever we make a payment for a loss under this policy, we are subrogated
to your right to recover for that loss from any other person. That means that
your right to recover for a loss that was partly or totally caused by someone
else is automatically transferred to us, to the extent that we have paid you for
the loss. We may require you to acknowledge this transfer in writing. After the
When the adjuster believes there may be potential for subrogation, the adjuster
should complete FEMA Form 086-0-16 – Cause of Loss and Subrogation Report,
to
identify a potentially responsible third party; and characterize how their actions may
have caused or worsened flood damage. Claim handling, review, and payment should
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loss, you may not give up our right to recover this money or do anything that
would prevent us from recovering it. If you make any claim against any person
who caused your loss and recover any money, you must pay us back first
before you may keep any of that money.
proceed as normal. The insurer should make sure the Cause of Loss and Subrogation
Report is complete and escalates the matter for a subrogation review.
See Subrogation
in Section 2 of this manual.
T.
Continuous Lake Flooding
1. If an insured building has been flooded by rising lake waters continuously
for 90 days or more and it appears reasonably certain that a continuation
of this flooding will result in a covered loss to the insured building equal to
or greater than the building policy limits plus the deductible or the
maximum payable under the policy for any one building loss, we will pay
you the lesser of these two amounts without waiting for the further
damage to occur if you sign a release agreeing:
a. To make no further claim under this policy;
b. Not to seek renewal of this policy;
c. Not to apply for any flood insurance under the Act for property at the
described location; and
d. Not to seek a premium refund for current or prior terms.
If the policy term ends before the insured building has been flooded
continuously for 90 days, the provisions of this paragraph T.1. will apply when
as the insured building suffers a covered loss before the policy term ends.
Refer to policy language.
2. If your insured building is sub
ject to continuous lake flooding from a closed
basin lake, you may elect to file a claim under either paragraph T.1. above
or this paragraph T.2. (A “closed basin lake” is a natural lake from which
water leaves primarily through evaporation and whose surface area now
exceeds or has exceeded one square mile at any time in the r
ecorded past.
Most of the nation’s closed basin lakes are in the western half of the
United States, where annual evaporation exceeds annual precipitation and
where lake levels and surface areas are subject to considerable fluctuation
due to wide variations in the climate. These lakes may overtop their basins
on rare occasions.) Under this paragraph T.2 we will pay your claim as if
The only Closed Basin Lake recognized by FEMA at this time is Devils Lake, North
Dakota.
Subject to all other provisions of the SFIP, if an insured building is subject to
continuous lake flooding from Devils Lake, the following requirements must be met
to be eligible for coverage under the terms of all SFIP forms:
• The building must be in a participating community eligible for this
coverage; and,
• The subject building must have had NFIP flood insurance coverage
continuously beginning on November 30, 1999, and any subsequent owner
on or after November 30, 1999, must have an NFIP policy in effect within 60
days of the transfer of title (see: T. 2. g.) and,
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the building is a total loss even though it has not been continuously
inundated for 90 days, subject to the following conditions:
a. Lake flood waters must damage or imminently threaten to damage
your building.
b. Before approval of your claim, you must:
(1) Agree to a claim payment that reflects your buying back the
salvage on a negotiated basis; and
(2) Grant the conservation easement described in FEMA’s “Policy
Guidance for Closed Basin Lakes,” to be recorded in the office of
the local recorder of deeds. FEMA, in consultation with the
community in which the property is located, will identify on a
map an area or areas of special consideration (ASC) in which
there is a potential for flood damage from continuous lake
flooding. FEMA will give the community the agreed-upon map
showing the ASC. This easement will only apply to that portion
of the property in the ASC. It will allow certain agricultural and
recreational uses of the land. The only structures that it will
allow on any portion of the property within the ASC are certain,
simple agricultural and recreational structures. If any of these
allowable structures are insurable buildings under the NFIP and
are insured under the NFIP, they will not be eligible for the
benefits of this paragraph T.2. If a U.S. Army Corps of Engineers
certified flood control project or otherwise certified flood
control project later protects the property, FEMA will, upon
request, amend the ASC to remove areas protected by those
projects. The restrictions of the easement will then no longer
apply to any portion of the property removed from the ASC; and
(3) Comply with paragraphs T.1.a. through T.1.d. above.
c. Within 90 days of approval of your claim, you must move your
building to a new location outside the ASC. FEMA will give you an
additional 30 days to move if you show that there is sufficient reason
to extend the time.
•
The policyholder must grant a conservation easement (see: T. 2. b. (2), and
the community must have adopted a permanent land-use ordinance on or
before July 15, 2001 (see: T. 2. e. (1), (2), and (3).
FEMA will not recognize any increases in coverage limits with effective dates on or
after November 30, 1999 (see: T. 2. g.), except when offered by the insurer as a
routine inflation-guard increase and purchased by the policyholder. Insured buildings
not eligible for the provisions of T. 2. described above, but damaged by continuous
lake flooding, will be eligible for those provisions described at T. 1. of the SFIP, subject
to the terms and conditions of the T. 1. and the SFIP.
Buildings in eligible communities that are subject to damage from the effects of the
Closed Basin Lake, Devils Lake, North Dakota, may file claims if any portion of the
insured building, as defined in the SFIP, is at the still-water level derived by official
National Weather Service (NWS) still-water levels.
See Appendix C
in this manual for FEMA’s “Policy Guidance for Closed Basin
Lakes”.
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d.
Before the final payment of your claim, you must acquire an elevation
certificate and a floodplain development permit from the local
floodplain administrator for the new location of your building.
e. Before the approval of your claim, the community having jurisdiction
over your building must:
(1) Adopt a permanent land use ordinance, or a temporary
moratorium for a period not to exceed 6 months to be followed
immediately by a permanent land use ordinance, that is
consistent with the provisions specified in the easement
required in paragraph T.2.b. above;
(2) Agree to declare and report any violations of this ordinance to
FEMA so that under Sec. 1316 of the National Flood Insurance
Act of 1968, as amended, flood insurance to the building can
be denied; and
(3) Agree to maintain as deed- restricted, for purposes compatible
with open space or agricultural or recreational use only, any
affected property the community acquires an interest in. These
deed restrictions must be consistent with the provisions of
paragraph T.2.b. above except that even if a certified project
protects the property, the land use restrictions continue to
apply if the property was acquired under the Hazard Mitigation
Grant Program or the Flood Mitigation Assistance Program. If a
non-profit land trust organization receives the property as a
donation, that organization must maintain the property as
deed- restricted, consistent with the provisions of paragraph
T.2.b. above.
f. Before the approval of your claim, the affected State must take all
action set forth in FEMA’s “Policy Guidance for Closed Basin Lakes.”
g. You must have NFIP flood insurance coverage continuously in effect
from a date established by FEMA until you file a claim under this
paragraph T.2. If a subsequent owner buys NFIP insurance that goes
into effect within 60 days of the date of transfer of title, any gap in
coverage during that 60-day period will not be a violation of this
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continuous coverage requirement. For the purpose of honoring a
claim under this paragraph T.2, we will not consider to be in effect
any increased coverage that became effective after the date
established by FEMA. The exception to this is any increased coverage
in the amount suggested by your insurer as an inflation adjustment.
h. This paragraph T.2. will be in effect for a community when the FEMA
Regional Administrator for the affected region provides to the
community, in writing, the following:
(1) Confirmation that the community and the State are in
compliance with the conditions in paragraphs T.2.e. and T.2.f.
above, and
(2) The date by which you must have flood insurance in effect.
U.
Duplicate Policies Not Allowed
1. Property may not be insured under more than one NFIP policy.
If we find that the duplication was not knowingly created, we will give you
written notice. The notice will advise you that you may choose one of several
options under the following procedures:
a. If you choose to keep in effect the policy with the earlier effective
date, you may also choose to add the coverage limits of the later
policy to the limits of the earlier policy. The change will become
effective as of the effective date of the later policy.
b. If you choose to keep in effect the policy with the later effective date,
you may also choose to add the coverage limits of the earlier policy to
the limits of the later policy. The change will be effective as of the
effective date of the later policy.
In either case, you must pay the pro rata premium for the increased coverage
limits within 30 days of the written notice. In no event will the resulting
coverage limits exceed the permissible limits of coverage under the Act or your
insurable interest, whichever is less.
We will make a refund to you, according to applicable NFIP rules, of the
premium for the policy not being kept in effect.
The policyholder cannot benefit from the duplicate flood insurance coverage if a
policyholder has two NFIP policies insuring the same property. The first policy
purchased is the policy in force at the time of loss.
When there is no loss involved, the policyholder may choose to keep either policy. If
the policyholder chooses to combine the coverage amounts purchased, and the
combined coverage does not exceed the maximum statutory limits, the effective
date of the increased coverage begins on the renewal date of the second policy
purchased.
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VII. General Conditions
Policy Language Additional Explanation
2.
Your option under this Condition U. Duplicate Policies Not Allowed to elect
which NFIP policy to keep in effect does not apply when duplicates have
been knowingly created. Losses occurring under such circumstances will be
adjusted according to the terms and conditions of the earlier policy. The
policy with the later effective date must be canceled.
V.
Loss Settlement
We will pay the least of the following amounts after application of the
deductible:
1. The applicable amount of insurance under this policy;
2. The actual cash value; or
3.
The amount it would cost to repair or replace the property with material of
like kind and quality within a reasonable time after the loss.
An actual cash value loss settlement is the cost to repair or replace insured building
items at the time of the loss, less the building deductible and less its physical
depreciation.
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VIII. Liberalization Clause
Policy Language Additional Explanation
If we make a change that broadens your coverage under insurance as of the
date we implement the change, provided this edition of our policy, but does
not require any additional that this implementation date falls within 60 days
before, or premium, then that change will automatically apply to your during,
the policy term stated on the Declarations Page.
Insurers cannot apply additional coverages provided through the liberalization clause
retroactively to losses that have occurred; insurers can apply it prospectively. The
clause permits FEMA to give existing, active policyholders beneficial amendments
without needing to separately endorse their policies but does not provide any
retroactive effect.
IX. What Law Governs
Policy Language Additional Explanation
This policy and all disputes arising from the handling of any Insurance Act of
1968, as amended (42 U.S.C. 4001, et seq.), claim under the policy are
governed exclusively by the flood and Federal common law insurance
regulations issued by FEMA, the National Flood Insurance Act of 1968, as
amended (42 U.S.C. 4001, et seq.), and Federal common law.
Refer to policy language.
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4. Residential Condominium Building Association Policy
I. Agreement
Policy Language Additional
Explanation
Please read the policy carefully. The flood insurance provided is subject
to limitations, restrictions, and exclusions.
This policy covers only a residential condominium building in a regular
program community. If the community reverts to emergency program
status during the policy term and remains as an emergency program
community at time of renewal, this policy cannot be renewed.
The Federal Emergency Management Agency (FEMA) provides flood
insurance under the terms of the National Flood Insurance Act of 1968
and its Amendments, and Title 44 of the Code of Federal Regulations.
We will pay you for direct physical loss by or from flood to your insured
property if you:
1. Have paid the correct premium;
2. Comply with all terms and conditions of this policy; and
3. Have furnished accurate information and statements.
We have the right to review the information you give us at any time and
to revise your policy based on our review.
This policy is under Federal law, unlike other property lines. Relevant definition at
II.B.12 (direct physical loss). Policyholder responsibilities appear at Section VIII.J, K.
post-loss underwriting at Section VIII.G.
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II. Definitions
Policy Language Additional Explanation
A.
In this policy, "you" and "your" refer to the insured(s) shown on the Declarations Page of this policy. Insured(s) includes: Any mortgagee and loss payee named in
the Application and Declarations Page, as well as any other mortgagee or loss payee determined to exist at the time of loss in the order of precedence. "We," "us,"
and "our" refer to the insurer.
Some definitions are complex because they are provided as they appear in the law or regulations or result from court cases. The precise definitions are intended
to protect you.
Flood
1. 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.
For a general condition of flood to exist, the inundation must cover two or more
acres of normally dry land or two or more parcels of land, one of can be public
property such as a roadway).
The reference to “partial or complete inundation of two or more acres of normally
dry land area or of two or more properties” requires that the two or more acres must
be continuous acres, and that the two or more inundated parcels of land must touch.
For mudflow definition, see SFIP Section II.B.19.
2. Collapse or subsidence of land along the shore of a lake or similar body of
water as a result of erosion undermining caused by waves or currents of
water exceeding anticipated cyclical levels which result in a flood as
defined in A.1.a. above.
The SFIP also defines a flood as the collapse or subsidence of land along the shore of
a lake or similar body of water from erosion or undermining caused by waves or
currents of water (velocity flow) exceeding anticipated cyclical levels during a flood
from the overflow of inland or tidal waters.
The SFIP does not cover damage from any other cause, form, or type of earth
movement. It also does not cover gradual erosion.
See Exclusions at SFIP Section V.C.
B.
The following are the other key definitions we use in this policy:
1. Act
The National Flood Insurance Act of 1968 and any amendments to it.
Refer to policy language.
2. Actual Cash Value
The cost to replace an insured item of property at the time of loss, less the
value of its physical depreciation.
Actual cash value (ACV) is the cost to replace a building, a building item, or a personal
property item, that includes all charges related to material, labor, and equipment. The
unit price may include charges such as delivery, assembly, sales tax, and any applicable
overhead and profit, and the like, less applicable depreciation on all components of
such price.
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II. Definitions
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3. Application
The statement made and signed by you or your agent in applying for this
policy. The application gives information we use to determine the eligibility of
the risk, the kind of policy to be issued, and the correct premium payment.
The application is part of this flood insurance policy. For us to issue you a
policy, the correct premium payment must accompany the application.
The statement made and signed by the prospective policyholder or the agent when
applying for a policy. The application contains information including the property
description, information to determine eligibility, the policy form chosen, selected
coverage and limits, deductible, and the premium amount.
4. Base Flood
A flood having a one percent chance of being equaled or exceeded in
any given year.
Refer to policy language.
5. Basement
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.
The SFIP definition for a basement means the floor level of a room, or any area of a
floor level in a building is below the ground level on all sides. This definition may differ
from what policyholders may consider as their “basement”. The SFIP considers a
sunken room or sunken portion of a room to be a basement if the floor level is below
the ground level on all sides. The entire below-ground-floor-level area, including walls
and ceiling that may extend above grade, is subject to basement coverage limitations.
Figure 29. Sunken Room
Photograph credit Amber Flooring
Ground level is the surface of the ground immediately along the perimeter of the
building. If an exterior area of egress into the building is below the ground level on all
sides, installed over a subgrade, the area of egress is below ground level.
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Figure 30. Ground Level vs. Below Ground Level
Figure 31. Egress
A subgrade is a surface of earth leveled off to receive a foundation such as a concrete
slab of a building. Subgrade does not mean “below the ground level”.
The insurer may need to engage a qualified, licensed professional (e.g., surveyor) to
measure the floor level in question. See Section 2
of this manual.
Sump wells and elevator pits are not basements because they are not a floor level.
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II. Definitions
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6. Building
a. A structure with two or more outside rigid walls and a fully
secured roof, that is affixed to a permanent site;
b. A manufactured home ("a manufactured home," also known as
a mobile home, is a structure: built on a permanent chassis,
transported to its site in one or more sections, and affixed to a
permanent foundation); or
A travel trailer without wheels, built on a chassis and affixed to a
permanent foundation, that is regulated under the community's
floodplain management and building ordinances or laws.
c. Building does not mean a gas or liquid storage tank or a
recreational vehicle, park trailer or other similar vehicle, except
as described in B.6.c., above.
• The SFIP covers a building, manufactured home (mobile home), or travel
trailer, if located at the described location as shown on the Declaration
Page. The policy insures only one building.
• The SFIP requires a building to be affixed to a permanent site, whereas it
requires a manufactured home and a travel trailer to be affixed to a
permanent foundation.
• A travel trailer (recreational vehicle) with attached wheels is not a
building.
• Apply the same rules to determine building and contents coverage with a
storage or shipping container, if it is used as a shed, storage building, or
residence, as you would a manufactured home or travel trailer.
7. Cancellation
The ending of the insurance coverage provided by this policy before
the expiration date.
• The NFIP Flood Insurance Manual
provides an exhaustive list for all valid policy
cancellation reasons.
• The expiration date is the ending of the policy term, the period of coverage
provided by the insurance policy.
• The policy term for the SFIP is one year, after any applicable waiting period.
8. Condominium
That form of ownership of real property in which each unit owner has
an undivided interest in common elements.
Refer to policy language.
9. Condominium Association
The entity made up of the unit owners responsible for the maintenance
and operation of:
a. Common elements owned in undivided shares by unit owners; and
b. Other real property in which the unit owners have use rights;
where membership in the entity is a required condition of unit
ownership.
A Condominium Association is an entity recognized by a state.
Homeowners’ associations, townhome associations, and cooperatives, and the like,
are not condominium associations.
10. Declarations Page Refer to policy language.
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A computer-generated summary of information you provided in the
application for insurance. The Declarations Page also describes the term of
the policy, limits of coverage, and displays the premium and our name. The
Declarations Page is a part of this flood insurance policy.
11. Described Location
The location where the insured building(s) or personal property are found. The
described location is shown on the Declarations Page.
Refer to policy language.
12. Direct Physical Loss By or From Flood
Loss or damage to insured property, directly caused by a flood. There must
be evidence of physical changes to the property.
The SFIP only pays for damage caused by direct physical loss by or from flood, as
defined by the SFIP. Direct physical loss means flood must physically contact the
insured property and there must be evidence of physical change by or from flood to
the insured building or to insured personal property.
Several SFIP provisions, each with its own criteria, address specific situations where
the condition of direct physical loss by or from flood occurs despite an exclusion that
would suggest otherwise. In these specific situations, listed below, the insurer must
thoroughly document the presence of the relevant criteria in the claim file for
coverage and payment:
• Losses from mudflow and collapse or subsidence of land as a result of erosion
specifically covered under the SFIP definition of flood (see SFIP Section V.C., as
well as II.A.1.c and II.A.2)
• Back up of water and water-borne material through sewers or drains, where a
flood is the proximate cause of the sewer or drain backup (see SFIP Section
V.D.5.a.)
• Discharge or overflow from a sump, sump pump, or related equipment, where
a flood is the proximate cause of the sump pump discharge or overflow (see
SFIP Section V.D.5.b.)
• Seepage or leakage on or through the insured building, where a flood is the
proximate cause of the seepage of water (see SFIP Section V.D.5.c.)
• Pressure or weight of water, where a flood is the proximate cause of the
damage from the pressure or weight of water (see SFIP Section V.D.6.)
13. Elevated Building
For more information about elevated buildings, see Section 2 of this manual, Lowest
Floor Elevation.
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A building that has no basement and that has its lowest elevated floor
raised above ground level by foundation walls, shear walls, posts, piers,
pilings, or columns.
14. Emergency Program
The initial phase of a community’s participation in the National Flood
Insurance
Program. During this phase, only limited amounts of insurance are available
under the Act.
Refer to policy language.
15. Expense Constant
A flat charge you must pay on each new or renewal policy to defray
the expenses of the Federal Government related to flood insurance.
There is no longer an Expense Constant charge.
16. Federal Policy Fee
A flat charge you must pay on each new or renewal policy to defray certain
administrative expenses incurred in carrying out the National Flood
Insurance Program. This fee covers expenses not covered by the Expense
Constant.
Refer to policy language.
17. Improvements
Fixtures, alterations, installations, or additions comprising a part of the
insured dwelling or the apartment in which you reside.
Refer to policy language.
18. 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. Other earth movements, such
as landslide, slope failure, or a saturated soil mass moving by liquidity down
a slope, are not mudflows.
A mudflow is liquid mud flowing in a manner akin to water flowing, which causes
damage in a manner similar to moving water.
19. National Flood Insurance Program (NFIP)
The program of flood insurance coverage and floodplain management
administered under the Act and applicable Federal regulations in Title 44
of the Code of Federal Regulations, Subchapter B.
Refer to policy language.
20. Policy
The entire written contract between you and us. It includes:
Refer to policy language.
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a.
This printed form;
b. The application and Declarations Page;
c. Any endorsement(s) that may be issued; and
d. Any renewal certificate indicating that coverage has been
instituted for a new policy and new policy term.
b. Only one dwelling, which you specifically described in the application,
may be insured under this policy.
21. Pollutants
Substances that include, but are not limited to, any solid, liquid, gaseous, or
thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids,
alkalis, chemicals, and waste. “Waste” includes, but is not limited to,
materials to be recycled, reconditioned, or reclaimed.
Testing for or monitoring of pollutants is not covered unless required by law. See
Section V.F. of the SFIP.
22. Post-FIRM Building
A building for which construction or substantial improvement occurred
after December 31, 1974, or on or after the effective date of an initial
Flood Insurance Rate Map (FIRM), whichever is later.
Start of construction or substantial improvement after December 31, 1974, or on or
after the issuance of the community’s initial Flood Insurance Rate Map (FIRM),
whichever is later. Note: A pre-FIRM building is a building constructed or substantially
improved on or before December 31, 1974, or prior to the effective date of the
community’s initial FIRM, whichever is later.
23. Probation Premium
A flat charge you must pay on each new or renewal policy issued covering
property in a community the NFIP has placed on probation under the
provisions of 44 CFR 59.24.
Refer to policy language.
24. Regular Program
The final phase of a community’s participation in the National Flood Insurance
Program. In this phase, a Flood Insurance Rate Map is in effect and full limits
of coverage are available under the Act.
Refer to policy language.
25. Residential Condominium Building
A building, owned and administered as a condominium, containing one or
more family units and in which at least 75% of the floor area is residential.
Refer to policy language.
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26. Special Flood Hazard Area
An area having special flood or mudflow, and/or flood-related erosion
hazards, and shown on a Flood Hazard Boundary Map or Flood Insurance
Rate Map as Zone A, AO, A1–A30, AE, A99, AH, AR, AR/A, AR/AE, AR/AH,
AR/AO, AR/A1– A30, V1– V30, VE, or V.
All zones listed are SFHAs. However, the post-FIRM elevated building coverage
limitations apply only to Zones A1–A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1–A30,
V1–V30, and VE, at SFIP Section III.A.8.
27. Unit
A single-family unit you own in a condominium building.
Refer to policy language.
28. Valued Policy
A policy in which the insured and the insurer agree on the value of the
property insured, that value being payable in the event of a total loss.
The Standard Flood Insurance Policy is not a valued policy.
The SFIP is not a valued policy. A valued policy is a policy where the policyholder and
insurer agree on the dollar value of the property at the time a policy is placed. In the
event of a total loss, a valued policy pays the agreed dollar value of coverage, without
the policyholder proving the value of the loss.
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III. Property Covered
Policy Language Additional Explanation
A.
Coverage A—Building Property
We insure against direct physical loss by or from flood to:
1. The residential condominium building described on the Declarations Page at the
described location, including all units within the building and the improvements
within the units.
Refer to policy language.
2. We also insure such building property for a
period of 45 days at another location,
as set forth in III.C.2.b., Property Removed to Safety.
Refer to policy language.
3. Additions and extensions attached to and in contact with the dwelling by means
of a rigid exterior wall, a solid load-bearing interior wall, a stairway, an elevated
walkway, or a roof. At your option, additions and extensions connected by any of
these methods may be separately insured. Additions and extensions attached to
and in contact with the building by means of a common interior wall that is not a
solid load-bearing wall are always considered part of the dwelling and cannot be
separately insured.
A property owner has the option to separately insure an addition under its
own SFIP if the addition, considered by itself, meets the definition of a
building. Otherwise, an addition or extension is covered under the RCBAP as
part of the building.
Figure 32. Examples of Additions and Extensions and the Five Means of
Connection
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Policy Language Additional Explanation
4. The following fixtures, machinery and equipment, including its units, which are
covered under Coverage A only:
a. Awnings and canopies;
b. Blinds;
c. Carpet permanently installed over unfinished flooring;
d. Central air conditioners;
e. Elevator equipment;
f. Fire extinguishing apparatus;
g. Fire sprinkler systems;
h. Walk-in freezers;
i. Furnaces;
• Blinds include vertical and horizontal types.
• Central air conditioners include related built-in equipment
for dehumidification, air filtering, and ventilation.
• Walk-in freezers and coolers must be permanently installed or built-
in. Furnaces and radiators include heat pumps, boilers, and related
installed equipment for humidification, air filtering, and ventilation.
• Ranges, cooking stoves, ovens include cooktops, range hoods, and
built- in cooking exhaust apparatuses.
• Refrigerators include beverage coolers, and other major
appliances that refrigerate.
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j.
Light fixtures;
k. Outdoor antennas and aerials fastened to buildings;
l. Permanently installed cupboards, bookcases, paneling, and wallpaper;
m. Pumps and machinery for operating pumps;
n. Ventilating equipment;
o. Wall mirrors, permanently installed; and
p. In the units within the building, installed:
(1) Built-in dishwashers;
(2) Built-in microwave ovens;
(3) Garbage disposal units;
(4) Hot water heaters, including solar water heaters;
(5) Kitchen cabinets;
(6) Plumbing fixtures;
(7) Radiators;
(8) Ranges;
(9) Refrigerators; and
(10) Stoves.
5. Materials and supplies to be used for construction, alteration or repair of the
insured building while the materials and supplies are stored in a fully enclosed
building at the described location or on an adjacent property.
Refer to policy language.
6. A building under construction, alteration or repair at the described location.
a. If the structure is not yet walled or roofed as described in the definition
for building (see II.B.6.a.), then coverage applies:
(1) Only while such work is in progress; or
(2) If such work is halted, only for a period of up to 90 continuous
days thereafter.
The SFIP only covers buildings under construction affixed to a permanent site.
For example, NFIP does not cover a building elevated on temporary cribbing
and not affixed to a permanent site.
The SFIP covers building materials and supplies for the insured building under
construction stored in a fully enclosed building up to building policy limits per
RCBAP Section III.A.5.
When a building under construction, alteration, or repair does not
have at least two rigid exterior walls and a fully secured roof at the
time of loss, your deductible amount will be two times the deductible
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b.
However, coverage does not apply until the building is walled and roofed if
the lowest floor, including the basement floor, of a non-elevated building
or the lowest elevated floor of an elevated building is:
(1) Below the base flood elevation in Zones AH, AE, A1–30, AR, AR/AE,
AR/AH, AR/A1–30, AR/A, AR/AO; or
Below the base flood elevation adjusted to include the effect of wave
action in Zones VE or V1–30.
(2)
The lowest floor levels are based on the bottom of the lowest horizontal
structural member of the floor in Zones VE or V1–V30 and the top of
the floor in Zones AH, AE, A1–A30, AR, AR/AE, AR/AH, AR/ A1–A30,
AR/A, AR/AO.
that would otherwise apply to a completed building. See RCBAP –
Section VI.A.
The SFIP does not cover a building under construction if work stops for
more than 90 continuous days. Coverage will resume when work resumes.
The SFIP does not cover tools for construction, such as forms, cribbing,
power tools, etc.
7. A manufactured home or a travel trailer as described in the Definitions Section
(See II.B.b. and c.).
If the manufactured home is in a special flood hazard area, it must be
anchored in the following manner at the time of the loss:
a. By over-the-top or frame ties to ground anchors; or
b. In accordance with the manufacturer’s specifications; or
c. In compliance with the community’s floodplain management
requirements unless it has been continuously insured by the NFIP at the
same described location since September 30, 1982.
A manufactured (mobile) home is a structure built on a permanent chassis,
transported to its site in one or more sections, and affixed to a permanent
foundation. It can be a travel trailer without wheels, built on a chassis, affixed
to a permanent foundation that a community regulates under its floodplain
management and building ordinances. The term “manufactured home” does
not include a recreational vehicle.
For the SFIP to insure a manufactured home, the owner must affix it to a
permanent foundation. A permanent foundation for a manufactured home
may be a poured masonry slab, foundation walls, piers, or block supports. The
foundation, not the wheels and or the axles, must support all of the weight of
the manufactured (mobile) home.
If the mobile home is in an SFHA, the owner must anchor it to a permanent
foundation to resist flotation, collapse, or lateral movement by:
• Providing over-the-top or frame ties to ground anchors. Following the
manufacturer’s specification for anchoring.
• Complying with the community’s floodplain management requirements.
8. Items of property in a building enclosure below the lowest elevated floor of an
elevated post-FIRM building located in zones A1-A30, AE, AH, AR, AR/A, AR/AE,
AR/AH, AR/ A1-A30, V1-V30, or VE, or in a basement, regardless of the zone.
Coverage is limited to the following:
When the Declarations Page reflects two zones, a current zone and a rating
zone (or FIRM zone), the rating zone represents the zone in force at the time of
the policy’s inception, which is applicable to the claim during the policy term
period. This zone may be a grandfathered zone that remains in effect for
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a. Any of the following items, if installed in their functioning locations and,
if necessary for operation, connected to a power source:
coverage unless or until the home is substantially damaged, substantially
improved, or there is a lapse in coverage.
The current zone may be a different zone that reflects the zone designation in
the current flood map. This zone is intended only for non-claim related
purposes such as underwriting premiums and ICC applicability.
This post-FIRM elevated building limitation does not apply to SFHA Zones A, AO,
A99, AR/AO, V, and VO. Basement limitations apply in all zones.
The SFIP does not cover items of property that are not listed under this
provision when installed or located in a basement, even if the item of property
is installed or located above an equal point with the ground level. The policy
limitation applies to the complete area defined as a basement--floors, walls,
and ceilings.
For a post-FIRM elevated building enclosure subject to this policy limitation, the
SFIP does not cover items of property that are not listed under this provision
when installed or located at a level below the level of the lowest elevated floor,
whether or not the item is on an exterior part of the building or part of the
enclosure, in, on, or within. Subject to all other terms and conditions of the
SFIP, all items of property installed or located at or above the level of the lowest
elevated floor are covered, exterior or interior.
For items of property that originate or straddle the line level with the lowest
elevated floor, the item(s) is subject to the coverage limitation. For example, a
cabinet, door, window, or refrigerator that originates below, or straddles the
line level equal with the lowest elevated floor is not covered, even that portion
or value at or above the lowest elevated floor.
However, coverage can be provided for building materials and finishes
installed above the line level with the lowest elevated floor, even if the
items originate or straddle the line level with the lowest elevated floor,
when the function of the building material or finish is not reduced by
cutting or removing the damaged and otherwise excluded building material
physically located at or below the line level equal with the lowest elevated
floor. Examples include exterior siding, wood trim, drywall, paint, or
insulation, even if the same item extends below the level of the lowest
elevated floor. The building materials and finishes below the line level with
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the lowest elevated floor are still excluded. This coverage interpretation is
in sync with new FEMA-approved building codes for new construction and
substantially improved buildings.
(1) Central air conditioners; Central air conditioners include related built-in equipment for
dehumidification, air filtering, and ventilation.
(2) Cisterns and the water in them; See Section 2 Claims Processes and Guidance in this manual.
(3) Drywall for walls and ceilings in a basement and the cost of labor to nail
it, unfinished and unfloated and not taped, to the framing;
Unfinished, unfloated, and not taped drywall installed anywhere in a
basement. The SFIP will also pay for unfinished, unfloated, and not taped
drywall in lieu of paneling or any finished wall treatment.
The SFIP does not cover interior framed walls or interior partition walls.
For an elevated building located in an SFHA, full coverage begins at the lowest
elevated floor. This is the lowest floor raised above ground, even if the pilings
extend beyond it (see Lowest Elevated Floor Determination,
in Section 2 this
manual). Items of property that include but not limited to, garage doors,
exterior doors, windows, and drywall that originate below the lowest elevated
floor are subject to the post-FIRM limitations and excluded.
The SFIP does not cover items, interior or exterior, located below the lowest
elevated floor of a post-FIRM elevated building.
(4) Electrical junction and circuit breaker boxes;
(5) Electrical outlets and switches;
Electrical junction and circuit breaker boxes include a junction box, which
serves as an unfinished basic light fixture. See Figure 33
below. NFIP does not
cover finished lighting, which is an improvement ad defined in Section II.B.17,
of the SFIP.
Figure 33 Unfinished Light Fixture
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(6) Elevators, dumbwaiters, and related equipment, except for related
equipment installed below the base flood elevation after September 30,
1987;
An elevator or dumbwaiter is covered if within the covered building enclosure
or attached to and in contact with the insured building, or directly attached to
the 16 square foot landing area used for egress if unattached.
For elevators and dumbwaiters installed below the BFE after September 30,
1987, coverage is limited to the cab and the included controls installed on or
in the cab. Related equipment is everything except the cab and the included
controls and is not covered unless the damaged part of the equipment is
installed above the level at or above the BFE.
A chair lift is covered if within the covered building enclosure or attached to
an in contact with the insured building or attached directly to the 16 square
foot landing area used for egress (See Figures 34 and 35
).
Figure 34. Example of a Covered Chair Lift Attached to the Building
Photograph credit BFA, LLC
Figure 35. Example of a Non-covered Chair Lift.
(7) Fuel tanks and the fuel in them; Fuel tanks and the fuel in them include a connected fuel gauge or fuel filter.
(8) Furnaces and hot water heaters;
Furnaces and hot water heaters include boilers and permanently installed
equipment for humidification, air filtering, and ventilation. This includes those
portions of the central HVAC in a building enclosure below the LFE or
basement, including boilers and connected radiators and hot water
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baseboards. This does not include electric baseboard heaters whether
hardwired to the electrical system or not.
(9) Heat pumps Heat pumps and other central HVAC units permanently installed equipment
related to humidification, dehumidification, air filtering, and ventilation.
(10) Nonflammable insulation in a basement; Nonflammable insulation in walls and ceilings of a basement includes:
• Nonflammable insulation in walls and
ceilings.
• Nonflammable insulation installed between joists within the lowest
elevated floor and unfinished protective weather barriers affixed to
floor joists.
The SFIP covers unattached protective barriers located in a crawlspace as
personal property provided the area is not subject to basement or post-FIRM
coverage limitations and the policyholder purchased contents coverage.
When installed underneath a building in a crawlspace the barrier must be
physically attached to the building’s foundation or floor framing.
(11) Pumps and tanks used in solar energy systems; Refer to policy language.
(12) Stairways and staircases attached to the building, not separated from it
by elevated walkways;
The SFIP covers unfinished base support material for staircases and stairways
(underneath the finished treads and risers) attached to the building, not
separated from it by elevated walkways, includes an exterior staircase into a
basement that is part of the building and enclosed by an addition defined
under SFIP Section III.A.2. This also includes interior basement or post-FIRM
elevated building staircases.
The SFIP does not pay to treat, paint, or stain the base support material in a
basement, or below the lowest elevated floor of a post-FIRM elevated
building in an SFHA.
The SFIP does not cover damage to finish materials used for a tread, riser, or
stringer, if such material is installed onto unfinished base support material for
stairways and staircases. If finish material is the base support material, such as
with a floating staircase or step, the finish material is covered but not the cost
to apply a finish coating, or paint.
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Figure 36. Unfinished base stairs (left) are covered in basement or below post-FIRM
elevated building; however, improvements added to finish treads, risers, and
stringers (right) are not:
Figure 37. Covered Stairs Where the Finish Material is the Base Material; However,
no Coverage to Paint, Stain, or Coat
The SFIP does not cover the basement exterior egress staircase located
outside of the perimeter building walls, even if covered by a roof or door. See
SFIP Section IV.9.
(13) Sump pumps;
(14) Water softeners and the chemicals in them, water filters, and faucets
installed as an integral part of the plumbing system;
Refer to policy language.
The SFIP allows for a faucet that is affixed directly to the plumbing line, as
opposed to a faucet that is connected to plumbing lines but mounted onto a
sink as a finished fixture.
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(15) Well water tanks and pumps; Well water tanks and pumps include the pressure switch, pressure valve, and
gauge.
(16) Required utility connections for any item in this list; and Refer to policy language.
(17) Footings, foundations, posts, pilings, piers, or other foundation walls
and anchorage systems required to support a building.
Footings, foundations, posts, pilings, piers, or other foundation walls and
anchorage systems required to support a building:
• Include windows and doors installed in the perimeter foundation walls
of an SFIP-defined basement area such as a perimeter wall basement
garage door or sliding glass door.
• Include vents installed in and considered part of the covered
foundation walls of a post-FIRM elevated building. However, there is
no coverage for breakaway walls or for vents in breakaway walls.
• Does not include screen or storm doors, or a door covering or
enclosing an exterior egress in a basement, such as a Bilco™ door.
• Does not include doors and windows of any type in an enclosure
subject to post-FIRM limitations when located below the lowest
elevated floor.
b. Clean-up. Clean-up includes:
• Pumping out trapped floodwater
• Labor to remove or extract spent cleaning
solutions Treatment for mold and mildew
• Structural drying of salvageable interior foundation elements
The SFIP does not cover clean-up of an item or property located in areas
subject to basement and post-FIRM coverage limitations – that is, the property
must itself be covered under SFIP Section III(A)(8) –or for items or loss
otherwise excluded under this policy.
Clean-up is not debris removal. See SFIP Section III.C.1 for Debris Removal.
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B.
Coverage B—Personal Property
1. If you have purchased personal property coverage, we insure, subject to B.2. and
B.3. below, against direct physical loss by or from flood to personal property that
is inside the fully enclosed insured building and is:
a. Owned by the unit owners of the condominium association in common,
meaning property in which each unit owner has an undivided ownership
interest; or
b. Owned solely by the condominium association and used exclusively in
the conduct of the business affairs of the condominium association.
We also insure such personal property for 45 days while stored at a temporary
location, as set forth in III.C.2.b., Property Removed to Safety.
• The SFIP does not cover personal property items not within the fully
enclosed insured building at the described location. This differs from the
Dwelling Form in that the Dwelling Form covers persona
l property within
any SFIP-defined building at the described location.
• Property leased under a “capital lease”, a contract that entitles a renter
the temporary use of an item and to account for the financial effect of
ownership on their balance sheet, qualifies as an insurable interest and
can be claimed even if the property is not solely owned by the
policyholder.
• In contrast, an “operating lease” is a contract that entitles a renter the
temporary use of an item but does not convey ownership rights.
According to Generally Accepted Accounting Principles (GAAP), property
in the possession of a policyholder obtained through an operating lease,
cannot be represented in balancing sheet financials. Therefore, it is not
covered under the SFIP Coverage B-Personal Property.
2. Coverage for personal property includes the following property, subject to B.1.
above, which is covered under Coverage B only:
a. Air conditioning units-portable or window type;
b. Carpet, not permanently installed, over unfinished flooring;
c. Carpets over finished flooring;
d. Clothes washers and dryers;
e. "Cook-out" grills;
f. Food freezers, other than walk-in, and the food in any freezer;
g. Outdoor equipment and furniture stored inside the insured building;
h. Ovens and the like; and
i. Portable microwave ovens and portable dishwashers
• Coverage A – Building Property covers through-the-wall air
conditioning units that are permanently installed.
• Clothes washers and dryers including the dryer exhaust vent kit The
connectors and plumbing line for a gas dryer are covered under
building coverage only.
• Coverage B applies to food freezers only. NFIP considers an appliance
that both refrigerates and freezes as a refrigerator and covers it
under Coverage A – Building Property.
3. Coverage for items of property in a building enclosure below the lowest elevated
floor of an elevated post-FIRM building located in Zones A1–A30, AE, AH, AR,
AR/A, AR/AE, AR/AH, AR/A1–A30, V1–V30, or VE, or in a basement, regardless of
• Coverage A – Building Property covers through-the-wall air
conditioning units that are permanently installed.
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the zone, is limited to the following items, if installed in their functioning
locations and, if necessary for operation, connected to a power source:
a. Air conditioning units-portable or window type;
b. Clothes washers and dryers; and
c. Food freezers, other than walk-in, and food in any freezer.
•
Clothes washers and dryers including the dryer exhaust vent kit.
• Coverage B applies to food freezers only. NFIP considers an
appliance that both refrigerates and freezes, a refrigerator and
covers it under Coverage A – Building Property.
This provision does not apply to Zones A, AO, A99, AR/AO, V, and VO.
4. Special Limits. We will pay no more than $2,500 for any one loss to one or more
of the following kinds of personal property:
a. Artwork, photographs, collectibles, or memorabilia, including but not limited
to, porcelain or other figures, and sports cards;
b. Rare books or autographed items;
c. Jewelry, watches, precious and semi-precious stones, or articles of gold,
silver, or platinum;
d. Furs or any article containing fur which represents its principal value.
Payments for these items may not exceed $2,500.00 in aggregate.
5. We will pay only for the functional value of antiques.
The SFIP does not value an antique based on the rarity of the item, nor does it
apply depreciation based solely on age or its physical condition. The SFIP bases
the value of an antique item on its functional value considering its quality. The
adjuster should apply depreciation based on its restored condition at the time
of the loss.
SFIP-covered Functional value for an antique = Agreed appraised value –
Intangible value – Depreciation
As an example, a 400-year-old fully restored chair formerly owned by a
historical figure is appraised by a certified industry professionally at $25,000.
The chair has seen general usage for 3-years after its restoration date.
Applying judgment, a new chair with the same or similar functional design,
material quality, and craftsmanship is comparably worth $3,500. Less 3 percent
depreciation, the SFIP would pay the functional value of $3,395, as functional
value must also consider depreciation.
C.
Coverage C—Other Coverages
1. Debris Removal Insured property means the insured dwelling and covered personal property.
The SFIP does not pay for removal of:
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a.
We will pay the expense to remove non-owned debris that is on or
in insured property and debris of insured property anywhere.
b. If you or a member of your household perform the removal work, the
value of your work will be based on the Federal minimum wage.
c. This coverage does not increase the Coverage A or Coverage B limit
of liability.
•
Non-covered debris anywhere, such as a non-covered damaged
property or debris located in the yard, driveway, or on another parcel
of land.
• Non-covered items of property even if the removal of the item
facilitates cleanup or covered building repairs, such as the removal
of carpet installed inside a basement, or the removal plants, shrubs
or trees along the perimeter of the building to access foundation or
siding repairs.
2. Loss Avoidance Measures
a. Sandbags, Supplies, and Labor
(1) We will pay up to $1,000 for costs you incur to protect the insured
building from a flood or imminent danger of flood, for the
following:
(a) Your reasonable expenses to buy:
(i)
Sandbags, including sand to fill them;
(ii)
Fill for temporary levees;
(iii)
Pumps; and
(iv)
Plastic sheeting and lumber used in connection with
these items; and
(b) The value of work, at the Federal minimum wage, that
you perform.
(2) This coverage for Sandbags, Supplies, and Labor applies only if
damage to insured property by or from flood is imminent and the
threat of flood damage is apparent enough to lead a person of
common prudence to anticipate flood damage. One of the following
must also occur:
(a) A general and temporary condition of flooding in the area near the
described location must occur, even if the flood does not reach the
insured building; or
(b) A legally authorized official must issue an evacuation order or
other civil order for the community in which the insured building
The SFIP only covers those items specifically noted. The policyholder must
provide receipts for covered materials they purchased. Additionally, the NFIP
reimburses the policyholder and members of the policyholder’s household
labor at the Federal minimum wage at the time of the loss.
Water-filled bladders, as shown in Figure 38,
are considered a temporary levee
for the purposes of loss avoidance coverage. However, because these are
reusable, the SFIP will pay the cost to purchase the bladder once, but only
when the initial purchase is in connection to the claimed flood event. After
that event, any future claim for loss avoidance here is limited to the labor and
fill material.
Figure 38. Water-filled Bladder
Photograph credit Randy Wagner
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is located calling for measures to preserve life and property from
the peril of flood. This coverage does not increase the Coverage A
or Coverage B limit of liability.
b. Property Removed to Safety
(1) We will pay up to $1,000 for the reasonable expenses you incur to
move insured property to a place other than the described
location that contains the property in order to protect it from
flood or the imminent danger of flood.
Reasonable expenses include the value of work, at the Federal
minimum wage, that you perform.
(2) If you move insured property to a location other than the described
location that contains the property, in order to protect it from flood or
the imminent danger of flood, we will cover such property while at
that location for a period of 45 consecutive days from the date you
begin to move it there. The personal property that is moved must be
placed in a fully enclosed building, or otherwise reasonably protected
from the elements.
Any property removed, including a moveable home described in
II.6.b. and c., must be placed above ground level or outside of the
special flood hazard area.
This coverage does not increase the Coverage A or Coverage B limit
of liability.
• The SFIP coverage of “reasonable expenses” under this provision is
limited to the policyholder’s removal, storage, and return of covered
building and personal property to the location described on the
declarations page. The insurer may reimburse the policyholder for
related expenses for labor of the policyholder and family members at
Federal minimum wage, and incurred transportation and storage costs.
The policyholder must itemize and support these expenses with valid
proof of payment. Coverage here is limited only to the length of time
that a flood or the imminent danger of flood exists. Payment under this
provision does not increase Coverage A – Building Property or Coverage
B – Personal Property limits of liability.
• The SFIP will cover from the peril of flood, the property relocated to
another location for a period of 45 consecutive days from the date the
policyholder began to move the property. If the policyholder does not
place the property in a fully enclosed building, the property must be
secured to prevent flotation out of the building. If the property floats
out or away from the structure used to reasonably protect the property
from the elements, it will be conclusively presumed that the
policyholder did not reasonably secure the property. In that case there
is no coverage for the property.
• Regarding the provision “must be placed above ground level or outside
of the SFHA”, the relocated site of the property must be a reasonable
location to prevent loss compared to the described location. For
example, where surrounding terrain is sloped, the site of the relocated
property must be on a higher elevation than the floor level of the
building at described location where the property was originally
located; the policyholder may not relocate the property to a basement.
Where the surrounding terrain is level and the site of the relocated
property is considered within the same flood hazard area, the property
must be placed on a floor level in the relocated building that is a higher
elevation compared to the floor level in the building at the described
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location where the property was originally located. The property may
not be relocated into a lower enclosure below an elevated floor within
a post-FIRM building located in a SFHA.
D.
Coverage D—Increased Cost of Compliance
1. General
This policy pays you to comply with a State or local floodplain management law or
ordinance affecting repair or reconstruction of a structure suffering flood damage.
Compliance activities eligible for payment are: elevation, floodproofing, relocation,
or demolition (or any combination of these activities) of your structure. Eligible
floodproofing activities are limited to:
a. Non-residential structures.
b. Residential structures with basements that satisfy FEMA's
standards published in the Code of Federal Regulations [44 CFR
60.6 (b) or (c)].
Refer to policy language.
2. Limit of Liability
We will pay you up to $30,000 under this Coverage D—Increased Cost of
Compliance, which only applies to policies with building coverage (Coverage A). Our
payment of claims under Coverage D is in addition to the amount of coverage which
you selected on the application and which appears on the Declarations Page. But the
maximum you can collect under this policy for both Coverage A— Building Property
and Coverage D—Increased Cost of Compliance cannot exceed the maximum
permitted under the Act. We do not charge a separate deductible for a claim under
Coverage D.
All three SFIP forms provide Increased Cost of Compliance (ICC) benefits as
Coverage D. Increased Cost of Compliance. ICC provides up to $30,000 toward
the cost of bringing a flood-damaged structure into compliance with state or
community floodplain management laws or ordinances governing repair or
reconstruction following a flood.
3. Eligibility
a. A structure covered under Coverage A—Building Property sustaining a
loss caused by a flood as defined by this policy must:
(1) Be a “repetitive loss structure.” A repetitive loss structure is one
that meets the following conditions:
(a) The structure is covered by a contract of flood insurance
issued under the NFIP.
To be eligible for ICC, the community must declare the building substantially
damaged. The amount paid for Coverage D – ICC and Coverage A – Building
Property combined cannot exceed the maximum program limits $250,000 x
the number of units under the RCBAP Form.
ICC is not available in Emergency Program communities.
ICC is not available for:
• Contents-only policies.
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(b)
The structure has suffered flood damage on two occasions
during a 10-year period which ends on the date of the second
loss.
(c) The cost to repair the flood damage, on average, equaled or
exceeded 25% of the market value of the structure at the time
of each flood loss.
(d) In addition to the current claim, the NFIP must have paid the
previous qualifying claim, and the State or community must have
a cumulative, substantial damage provision or repetitive loss
provision in its floodplain management law or ordinance being
enforced against the structure; or
(2) Be a structure that has had flood damage in which the cost to repair
equals or exceeds 50% of the market value of the structure at the
time of the flood. The State or community must have a substantial
damage provision in its floodplain management law or ordinance
being enforced against the structure.
b. This Coverage D pays you to comply with State or local floodplain
management laws or ordinances that meet the minimum standards of the
National Flood Insurance Program found in the Code of Federal Regulations
at 44 CFR 60.3. We pay for compliance activities that exceed those
standards under these conditions:
(1) 3.a.(1) above.
(2) Elevation or floodproofing in any risk zone to preliminary or advisory
base flood elevations provided by FEMA which the State or local
government has adopted and is enforcing for flood-damaged
structures in such areas. (This includes compliance activities in B, C, X,
or D zones which are being changed to zones with base flood
elevations. This also includes compliance activities in zones where
base flood elevations are being increased, and a flood-damaged
structure must comply with the higher advisory base flood elevation.)
Increased Cost of Compliance coverage does not apply to situations in
B, C, X, or D zones where the community has derived its own
elevations and is enforcing elevation or floodproofing requirements
•
Group Flood Insurance policies.
• Dwelling Form policies on individual condominium units in a multi-unit
building.
In a multi-unit condominium building, ICC coverage is available through the
condominium association’s flood policy. No separate deductible applies.
ICC Claims
The date of loss of the ICC claim is the date of loss of the underlying flood
claim that triggers the requirement to comply with a community law or
ordinance.
Policyholders have up to six years from the date of the underlying flood loss to
complete the eligible mitigation activity. Policyholders should know that
initiating a mitigation project before receiving a substantial damage
declaration from the community may jeopardize their eligibility to receive an
ICC payment.
For buildings in Zones B, C, X, D, unnumbered A and V, and A99, the adjuster
must document why a building must undergo mitigation and obtain a written
statement from the community to substantiate the ICC claim.
ICC does not pay for testing, monitoring, clean up, removal, containment,
treatment, detoxification, or neutralization of pollutants even if required by
community ordinance.
Repetitive Loss Properties
ICC is also available for repetitive loss properties for communities with a
cumulative damage provision in their ordinance. The NFIP defines a Repetitive
Loss Structure as a building covered by an NFIP policy that has incurred flood-
related damages on two occasions during a 10-
year period ending on the date of
the event for which the policyholder makes a second claim. The cost of repairing
the flood damage, on the average, must equal or exceed 25 percent of the
market value of the building at the time of each flood. The adjuster must verify
that the community ordinance has such cumulative damage language and that
the NFIP paid a claim for both qualifying losses.
Substantial Damage
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for flood-damaged structures to elevations derived solely by the
community.
(3) Elevation or floodproofing above the base flood elevation to meet
State or local “freeboard” requirements, i.e., that a structure must be
elevated above the base flood elevation.
c. Under the minimum NFIP criteria at 44 CFR 60.3 (b)(4), States and
communities must require the elevation or floodproofing of structures in
unnumbered A zones to the base flood elevation where elevation data is
obtained from a Federal, State, or other source. Such compliance
activities are also eligible for Coverage D.
d. This coverage will also pay for the incremental cost, after demolition or
relocation, of elevating or floodproofing a structure during its rebuilding at
the same or another site to meet State or local floodplain management
laws or ordinances, subject to Exclusion D.5.g. below relating to
improvements.
e. This coverage will also pay to bring a flood-damaged structure into
compliance with State or local floodplain management laws or ordinances
even if the structure had received a variance before the present loss from
the applicable floodplain management requirements
Insurers may only open an ICC claim when the community declares a
building substantially damaged in writing. Neither FEMA nor the insurer can
determine substantial damage or issue a substantial damage declaration.
The community has the sole authority to determine substantial damage.
Note that in some cases a community may declare a building substantially
damaged, based in whole or in part on non-flood-related damage. While
having more than 50 percent damage may trigger a requirement to comply
with the local floodplain management ordinances, the SFIP requires the
percentage of damage to be by or from flood, whether covered by the SFIP
or not.
See Section 3
Increased Cost of Compliance, of this manual for more detail.
4. Conditions
a. When a structure covered under Coverage A-Building Property sustains a
loss caused by a flood, our payment for the loss under this Coverage D will
be for the increased cost to elevate, floodproof, relocate, or demolish (or
any combination of these activities) caused by the enforcement of current
State or local floodplain management ordinances or laws. Our payment for
eligible demolition activities will be for the cost to demolish and clear the
site of the building debris or a portion thereof caused by the enforcement
of current State or local floodplain management ordinances or laws. Eligible
activities for the cost of clearing the site will include those necessary to
discontinue utility service to the site and ensure proper abandonment of
on- site utilities.
ICC pays for the following mitigation activities or combination thereof:
• Floodproofing to reduce the potential for flood damage by
keeping floodwater out of a building.
• Elevation to raise a building to or above the BFE plus freeboard adopted
by a community, adopted Advisory Base Flood Elevations (ABFE), or the
best available data provided by FEMA.
• Demolition when a building is in such poor condition that elevation and
relocation are not technically feasible or cost effective.
• Relocation to move a building outside of the floodplain.
See Section 3
Increased Cost of Compliance, of this manual for more detail.
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b.
When the building is repaired or rebuilt, it must be intended for the same
occupancy as the present building unless otherwise required by current
floodplain management ordinances or laws.
5. Exclusions
Under this Coverage D—Increased Cost of Compliance, we will not pay for:
a. The cost to comply with any floodplain management law or ordinance
in communities participating in the Emergency Program.
b. The cost associated with enforcement of any ordinance or law that
requires any insured or others to test for, monitor, clean up, remove,
contain, treat, detoxify or neutralize, or in any way respond to, or assess
the effects of pollutants.
c. The loss in value to any insured building or other structure due to
the requirements of any ordinance or law.
d. The loss in residual value of the undamaged portion of a building
demolished as a consequence of enforcement of any State or local
floodplain management law or ordinance.
e. Any ?Increased Cost of Compliance under this Coverage D:
(1) Until the building is elevated, floodproofed, demolished, or
relocated on the same or to another premises; and
(2) Unless the building is elevated, floodproofed, demolished, or
relocated as soon as reasonably possible after the loss, not to exceed
two years.
f. Any code upgrade requirements, e.g., plumbing or electrical wiring,
not specifically related to the State or local floodplain management
law or ordinance.
g. Any compliance activities needed to bring additions or improvements
made after the loss occurred into compliance with State or local floodplain
management laws or ordinances.
h. Loss due to any ordinance or law that you were required to comply
with before the current loss.
i. Any rebuilding activity to standards that do not meet the NFIP's minimum
Refer to policy language.
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Policy Language Additional Explanation
requirements. This includes any situation where the insured has received
from the State or community a variance in connection with the current
flood loss to rebuild the property to an elevation below the base flood
elevation.
j. Increased Cost of Compliance for a garage or carport.
k. Any structure insured under an NFIP Group Flood Insurance Policy.
Assessments made
by a condominium association on individual condominium
unit owners to pay increased costs of repairing commonly owned buildings
after a flood in compliance with State or local floodplain management
ordinances or laws.
6. Other Provisions
a. Increased Cost of Compliance coverage will not be included in the
calculation to determine whether coverage meets the coinsurance
requirement for replacement cost coverage under VIII. General
Conditions,
V. Loss Settlement.
b. All other conditions and provisions of the policy apply.
Refer to policy language.
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IV. Property Not Covered
Policy Language
Additional Explanation
We do not cover any of the following property:
1. Personal property not inside the fully enclosed building; Refer to policy language.
2. A building, and personal property in it, located entirely in, on, or over
water or seaward of mean high tide, if constructed or substantially
improved after September 30, 1982;
• The SFIP allows coverage for a building not entirely over water, i.e., when
part of the exterior perimeter wall and foundation of the building is on land
or on the landward side of mean high tide (mean high water).
• When the exterior perimeter walls of the building are completely over
water and the support system or foundation underneath the insured
building extends onto land, or the extension of any mechanism for access
into a building (including, but not limited to, stairs, decks, walkways, piers,
posts, pilings, docks, or driveways), even if the mechanism is on or partially
on land, the building or the access will not be eligible for coverage.
• If the exterior perimeter walls of a building are completely over water, but
connected to another eligible building by means of an elevated walkway,
stairway, roof, and/or rigid exterior wall, or there is an appurtenant
structure on the same slab, foundation, or other continuous support system
that is on land (such as a shed or garage), the presence of the connected
building or appurtenant structure on land does not allow coverage to be
afforded to the building that has its exterior perimeter walls entirely over
water.
3. Open structures, including a building used as a boathouse or any structure
or building into which boats are floated, and personal property located in,
on, or over water;
The SFIP does not cover boathouses or buildings into which boats can float and
personal property located within buildings used solely as boathouses.
The SFIP does not cover a building and personal property in it, located in, on, or over
water or seaward of mean high tide if the building was constructed or substantially
improved after September 30, 1982.
4. Recreational vehicles other than travel trailers described in the Definitions
Section (see II.B.6.c.) whether affixed to a permanent foundation or on
wheels;
A recreational vehicle is a self-propelled vehicle (see Figure 39). A travel trailer is not
self-propelled and is towed behind a road vehicle (see Figure 40).
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IV. Property Not Covered
Policy Language
Additional Explanation
We do not cover any of the following property:
Figure 39. Recreational Vehicle
Photograph credit Fleetwood RV
Figure 40. Travel Trailer
5. Self-propelled vehicles or machines, including their parts and equipment.
However, we do cover self-propelled vehicles or machines, provided they
are not licensed for use on public roads and are:
a. Used mainly to service the described location; or
b. Designed and used to assist handicapped persons, while the vehicles
or machines are inside a building at the described location;
The SFIP covers a self-propelled vehicle as described here located inside a building at
the location described on the declarations page. The vehicle type and design must be
consistent with the services provided at the location described on the declarations
page and used primarily for that purpose. For example, an all-terrain vehicle (ATV)
designed mainly for off-road recreation or sport would not be eligible under this
provision, even if the policyholder uses it to pull a trailer to collect litter at the
described location.
Under 5.b, the vehicle is covered if it is designed as a mobility vehicle for a
handicapped person. The vehicle must be inside a building at the location described
on the declarations page for coverage to apply. However, vehicles not designed for
handicapped persons, including but not limited to golf carts, ATVs, Segways® or the
like, and hoverboards/balance boards are never covered by the SFIP under 5.b., even
if
repurposed to provide mobility to a handicapped person.
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IV. Property Not Covered
Policy Language
Additional Explanation
We do not cover any of the following property:
6. Land, land values, lawns, trees, shrubs, plants, growing crops, or animals; The SFIP does not cover animals and live bait, such as worms or minnows, sold in
fishing tackle shops. The SFIP covers artificial plants inside an SFIP-defined building at
the described location.
7. Accounts, bills, coins, currency, deeds, evidences of debt, medals, money,
scrip, stored value cards, postage stamps, securities, bullion, manuscripts,
or other valuable papers;
• Scrip is a form of money issued by a local government or private
organization, such as gift cards, coupons, or any substitute for legal tender.
• The SFIP does not cover financial loss from damage or destruction of
electronic data or the cost of restoring that data.
• Other valuable papers include stocks, certificates, and bonds.
8. Underground structures and equipment, including wells, septic tanks, and
septic systems;
• Underground structures and equipment include, but is not limited to, wires,
conduits, pipes, sewers, tanks, tunnels, sprinkler systems, similar property,
and any apparatus connected beneath the surface of the ground. The SFIP
provides coverage if other SFIP requirements are met for equipment
installed used in the operation of underground structures and equipment
installed above ground and within a building, for example sprinkler timer.
• When installed, a sewage grinder pump is an integral part of the building’s
septic system. The grinder pump pulverizes waste for discharge into the
septic drainage field. This item of property is not covered. However, the
SFIP covers the sewage grinder pump’s alarm service panel if installed above
ground level and affixed to the building or its foundation. The SFIP does not
cover alarm service panels installed to an item of property that is not
covered, such as a support post to a deck.
9. Those portions of walks, walkways, decks, driveways, patios, and other
surfaces, all whether protected by a roof or not, located outside the
perimeter, exterior walls of the insured building;
The SFIP pays to repair or replace damage to any existing egress on the sides of a
building, including underneath an elevated building. For each existing egress, the
SFIP covers one 16 square foot (SF) landing and a single set of stairs; one landing per
staircase. The SFIP covers materials of a like kind and quality, such as concrete, wood
or composite wood material. Covered items include any existing hand or support rail,
support posts, and hardware. The SFIP does not cover improvements such as lighting
or finishing (paint or preservative stains).
The SFIP does not cover the cost to comply with Americans with Disabilities Act of
1990 (ADA) regulations; however, the SFIP will repair and/or replace an existing flood
damaged handicap ramp for egress, in lieu of the 16 SF of landing and steps.
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IV. Property Not Covered
Policy Language
Additional Explanation
We do not cover any of the following property:
10. Containers including related equipment, such as, but not limited to, tanks
containing gases or liquids;
The SFIP does not cover fuel tanks, pressure tanks, and well water tanks located
outside a basement or elevated building enclosure. The SFIP does not cover tanks
containing other liquids or gases. The SFIP does not cover containers, including
shipping containers used for storage or residential purposes, unless they meet the
definition of a building.
11. Buildings or un
its and all their contents if more than 49% of the actual cash
value of the building or unit is below ground, unless the lowest level is at or
above the base flood elevation and is below ground by reason of earth
having been used as insulation material in conjunction with energy
efficient building techniques;
A building must have over 51 percent of its actual cash value above ground level. This
calculation relies solely upon the ACV, not on concepts like square footage, volume,
or otherwise.
12. Fences, retaining walls, seawalls, bulkheads, wharves, piers, bridges, and
docks;
The SFIP considers a structure physically connected to a building that directly
supports and is integral to the building’s foundation, even if it has a secondary
purpose such as a retaining wall.
13. Aircraft or watercraft, or their furnishings and equipment;
• The SFIP covers remote controlled boats, aircraft, and drones or UAVs
(Unmanned Aerial Vehicles) designed and intended for recreational use only
and not used to carry people or cargo, or commercial use. The same policy
provisions that apply to other personal property apply to these items.
• The SFIP does not cover drones or UAVs registered with the Federal
Aviation Administration for purposes other than recreational model
aircraft.
• The SFIP does not cover furnishings and equipment for non-covered
watercraft and aircraft including parts and other items identified for use with
watercraft and aircraft.
14. Hot tubs and spas that are not bathroom fixtures, and swimming pools,
and their equipment such as, but not limited to, heaters, filters, pumps,
and pipes, wherever located;
Refer to policy language.
15. Property not eligible for flood insurance pursuant to the provisions of the
Coastal Barrier Resources Act and the Coastal Barrier Improvement Act of
1990 and amendments to these Acts;
The SFIP cannot provide flood insurance coverage for a structure built or substantially
improved after the U.S. Department of Interior’s Fish and Wildlife Service designates
it as within Coastal Barrier Resources System (CBRS) boundaries or as Otherwise
Protected Areas (OPAs). See FWS website
for more details.
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IV. Property Not Covered
Policy Language
Additional Explanation
We do not cover any of the following property:
16. Personal property owned by or in the care, custody or control of a unit
owner, except for property of the type and under the circumstances set
forth under III. Coverage B-Personal Property of this policy;
Refer to policy language.
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V. Exclusions
Policy Language Additional Explanation
A.
We only pay for direct physical loss by or from flood, which means that we do not pay you for:
1. Loss of revenue or profits;
2. Loss of access to the insured property or described location;
3. Loss of use of the insured property or described location;
4. Loss from interruption of business or production;
5. Any additional living expenses incurred while the insured building is being
repaired or is unable to be occupied for any reason;
The SFIP does not cover the costs to pack, move, or store personal property from the
insured building or return it to the building when an owner repairs the building or
cannot occupy it.
6.
The cost of complying with any ordinance or law requiring or regulating the
construction, demolition, remodeling, renovation, or repair of property,
including removal of any resulting debris. This exclusion does not apply to
any eligible activities we describe in Coverage D—Increased Cost of
Compliance; or
7. Any other economic loss you suffer.
The SFIP does not cover replacing non-flood damaged property required to comply
with government codes, ordinances, or regulations. For example, the SFIP does not
cover the cost of replacing an undamaged interior HVAC unit to match a replaced
exterior HVAC unit because of a change in size, SEER-rating, refrigerant, or any other
reason even if local, state, or federal code required the upgrade.
B.
We do not insure a loss directly or indirectly caused by a flood that is already in progress at the time and date:
1. The policy term begins; or
2. Coverage is added at your request.
NFIP adjusts flood insurance losses individually. Flood insurance benefits are available
if an insured property suffers a covered loss caused by a general condition of
flooding, as defined by the SFIP.
See Flood in Progress
in Section 2 of this manual.
C.
We do not insure for loss to property caused directly by earth movement even if the earth movement is caused by flood. Some examples of earth movement that
we do not cover are:
1. Earthquake;
2. Landslide;
3. Land subsidence;
4. Sinkholes;
5. Destabilization or movement of land that results from accumulation of
water in subsurface land areas; or
6. Gradual erosion
The SFIP is a single-peril policy that only pays for covered damage due to direct
physical loss by or from flood, defined in the policy at Section II. The SFIP does not
cover damage resulting from an intervening cause of loss, even if the resulting cause
is due to flood. The SFIP does not cover damage that results when saturated soils
cause the soil below ground level to sink, expand, compact, destabilize, or otherwise
lose its load bearing capacity such as from voids or rotten organic matter when the
soil dries. The SFIP does not cover earth movement; each form of earth movement is
an intervening cause of loss and a separate peril.
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V. Exclusions
Policy Language Additional Explanation
We do, however, pay for losses from mudflow and land subsidence as a result
of erosion that are specifically covered under our definition of flood (see A.1.c.
and II.A.2.).
The SFIP’s exclusion for other perils, such as fire, exemplifies the exclusion of earth
movement as a cause of loss. When a flood causes a fire, which damages the building
during inundation or after floodwaters recede, the SFIP does not cover the resulting
fire and smoke damage to the building even if flood directly caused the fire.
The SFIP covers damage to a building’s structure if the damage results from the
collapse or subsidence of land that is the direct result of erosion or undermining to
the building’s support soil underneath or directly along the perimeter foundation of
the building from waves or currents of floodwater (velocity flow) during a flood from
the overflow of inland or tidal waters. This includes damage to the foundation of the
building and any resulting damage to interior and exterior finishes. The SFIP does not
cover gradual erosion.
D
. We do not insure for direct physical loss caused directly or indirectly by:
1. The pressure or weight of ice;
2. Freezing or thawing;
3. Rain, snow, sleet, hail, or water spray;
4. Water, moisture, mildew, or mold damage that results primarily from any
condition:
a. Substantially confined to the insured building; or
b. That is within your control including, but not limited to:
(1) Design, structural, or mechanical defects;
(2) Failures, stoppages, or breakage of water or sewer lines, drains,
pumps, fixtures, or equipment; or
(3) Failure to inspect and maintain the property after a flood
recedes;
When the policyholder is prevented access to promptly remove wetted building and
personal property items, and this delay directly results in water, moisture, mildew or
mold damage to other building and personal property items not in physical contact
with surface floodwater, this damage could be covered. As examples, local authorities
may restrict access by order or prolonged inundation of floodwater may prevent
access. The claim file must include the proper documentation, such as but not limited
to photographs, an acceptable explanation provided by the adjuster, or a signed
statement from the policyholder or community official, that supports the payment for
property damages above the waterline. For instances when coverage and payment is
not recommended, the claim file should include the proper documentation which
clearly points to the policyholder’s failure to inspect and maintain their insured
property or take reasonable measures to reduce damage when it is feasible to do so.
The SFIP does not cover damage caused by long-term exposure to moisture, water,
rot, and insect infestation. This includes damage from the lack of climate control
inside the building when the approach to repair does not include the timely repair
to the building HVAC.
The SFIP does not cover pre-existing damage to structural building components, such
as damage due to rot, or for any resulting damage to non-structural finished building
material.
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V. Exclusions
Policy Language Additional Explanation
5. Water or water-borne material that:
a. Backs up through sewers or drains;
b. Discharges or overflows from a sump, sump pump, or related
equipment; or
c. Seeps or leaks on or through insured property; unless there is a flood
in the area and the flood is the proximate cause of the sewer, drain,
or sump pump discharge or overflow, or the seepage of water;
The adjuster must document that a flood occurred in the area, and that the flood was
the proximate cause of the back-up of the sewer or drain, overflow of the sump
pump, pump failure, seepage of water, or damage due to the pressure or weight of
water (hydrostatic pressure), in the claim file. See SFIP Section II.A and related
discussion for the definition of flood.
When paying a loss due to a flood in the area proximately causing discharge or
overflow of water or water-borne material from a sump, sump pump, or related
equipment, the insurer must document the claim file to show that a homeowner’s
policy endorsement or policy rider did not pay for the loss. If the homeowner’s policy
covers the same loss, the SFIP payment must apply a proportional loss distribution, as
stated under Section VIII.C. Other Insurance.
The adjuster must document a flood occurred in the area, and that the flood was the
proximate cause of the back-up of the sewer or drain, overflow of the sump pump,
pump failure, seepage of water, or damage due to the pressure or weight of water
(hydrostatic pressure). A flood is two or more parcels of partial or complete
inundation of normally dry land, or of two or more continuous acres of normally dry
land. For coverage under this provision the condition of flood does not have to be on
the parcel of land described at the location; it may be within the proximate area.
6. The pressure or weight of water unless there is a flood in the area and the
flood is the proximate cause of the damage from the pressure or weight of
water;
Refer to SFIP Section V.D.5. above.
7. Power, heating, or cooling failure unless the failure results from direct
physical loss by or from flood to power, heating, or cooling equipment
situated on the described location;
The SFIP does not cover damage to insured property when caused by a power surge or
power outage that originates from the failure or shutting down of equipment that is
not located at the described location, even if the reason is a direct result of a flood. For
example, the local utility operator may shut down a section of the electrical grid to
avoid system damage from a flood. When the power returns to the electrical grid, the
initial surge of electricity can damage insured property. Under this loss description the
damage is not covered.
The SFIP covers damage to any covered building electrical system, such as the
building’s main service or home security system, or to the HVAC system, when a flood
physically damages equipment installed at the described location. For example, if the
flood damage creates an electrical short within the building system affecting a second
piece of equipment, the second piece of equipment is also covered, even though it
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V. Exclusions
Policy Language Additional Explanation
was not physically touched by water. Under this loss description, the damage is
considered a direct physical loss by or from flood. To cover the loss described, the
adjuster must document the cause of loss in the claim file to rule out the possibility of
a non-covered cause, such as described in the previous paragraph.
8. Theft, fire, explosion, wind, or windstorm;
9. Anything that you or your agents do or conspire to do to cause loss by
flood deliberately; or
10. Alteration of the insured property that significantly increases the risk of
flooding.
Refer to policy language.
E.
We do not insure for loss to any building or personal property
located on land leased from the Federal Government, arising from
or incident to the flooding of the land by the Federal Government,
where the lease expressly holds the Federal Government harmless
under flood insurance issued under any Federal Government
program.
Refer to policy language.
F.
We do not pay for the testing for or monitoring of pollutants unless
required by law or ordinance.
The SFIP only pays to test or monitor the removal of a pollutant when a law or
ordinance requires it. Insurers must have a copy of the law or ordinance for the file to
support their decision to pay for the testing for or monitoring of pollutants.
The law or ordinance must be in effect at the date of loss to apply.
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VI. Deductibles
Policy Language Additional Explanation
A.
When a loss is covered under this policy, we will pay only that part of the loss that exceeds the applicable deductible amount, subject to the limit of insurance that
applies. The deductible amount is shown on the Declarations Page.
However, when a building under construction, alteration, or repair does not have at least two rigid exterior walls and a fully secured roof at the time of loss, your
deductible amount will be two times the deductible that would otherwise apply to a completed building.
B.
In each loss from flood, separate deductibles apply to the building and personal property insured by this policy.
C.
No deductible applies to:
1. III.C.2. Loss Avoidance Measures;
2. III.D. Increased Cost of Compliance.
The SFIP applies a separate deductible to both building and personal property
losses. The SFIP will only pay that portion of the loss that exceeds the
applicable deductibles.
For building and personal property losses, the insurer should take the
deductible from the gross loss before applying policy limits. For example, if
the covered loss is $110,000, the policy limit is $100,000, and the deductible
is $5,000, the insurer should apply the deductible to the $110,000 loss, which
leaves $105,000, meaning the insurer should pay the $100,000 policy limit
unless coinsurance applies (see SFIP Section VII Coinsurance).
The SFIP does not apply excess loss to items subject to Special Limits to reduce the
personal property deductible.
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VII. Coinsurance
Policy Language Additional Explanation
A.
This Coinsurance Section applies only to coverage on the building.
B.
We will impose a penalty on loss payment unless the amount of insurance applicable to the damaged building is:
1. At least 80% of its replacement cost; or
2. The maximum amount of insurance available for that building under the
NFIP, whichever is less.
Refer to policy definition.
C.
If the actual amount of insurance on the building is less than the required amount in accordance with the terms of VII.B. above, then loss payment is determined
as follows (subject to all other relevant conditions in this policy, including those pertaining to valuation, adjustment, settlement, and payment of loss):
1. Divide the actual amount of insurance carried on the building by the
required amount of insurance.
2. Multiply the amount of loss, before application of the deductible, by the
figure determined in C.1. above.
3. Subtract the deductible from the figure determined in C.2. above.
Do not use the formula on the RCBAP form to determine the proportional loss
amount. Use the formula below.
Proportional loss amount
= ((insurance purchased ÷ required insurance) x (ACV
plus recoverable depreciation)) – deductible
IMPORTANT – Use the order of operations as shown, starting within the innermost
parentheses, for accurate calculation.
We will pay the amount determined in C.3. above, or the amount of insurance
carried, whichever is less. The amount of insurance carried, whichever is less.
The amount of insurance carried, if in excess of the applicable maximum
amount of insurance available under the NFIP, is reduced accordingly.
Example #1 (Inadequate Insurance)
Replacement value of the building $250,000
Required amount of insurance $200,000
(80% of replacement value of $250,000)
Actual amount of insurance carried $180,000
Amount of the loss $150,000
Deductible $500
Step 1:
180,000 ÷ 200,000 = .90 (90% of what should be carried.)
Step 2:
150,000 X .90 = 135,000
Step 3:
135,000 - 500 = 134,500
We will pay no more than $134,500. The remaining $15,500 is not covered due
to the coinsurance penalty ($15,000) and application of the deductible ($500).
Table 8: Example of Inadequate Insurance
Item
Value
RC Value $2,499,872.60
Required Insurance $1,999,898.08
Insurance Purchased $1,800,000.00
ACV plus Recoverable Depreciation $46,132.16
• (($1,800,000.00 ÷ $1,999,898.08) x 46,132.16) = $41,521.06 - $5,000 deductible
= $36,521.06 Amount Owed.
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VII. Coinsurance
Policy Language Additional Explanation
Example #2 (Adequate Insurance)
Replacement value of the building $500,000
Required amount of insurance $400,000
(80% of replacement value of $500,000)
Actual amount of insurance carried $400,000
Amount of the loss $200,000
Deductible $500
In this example, there is no coinsurance penalty, because the actual amount of
insurance carried meets the required amount. We will pay no more than
$199,500 ($200,000 amount of loss minus the $500 deductible).
Table 9: Example of Adequate Insurance
Item
Value
RC Value $2,500,000
Required Insurance $2,000,000
Insurance Purchased $2,000,000
ACV plus Recoverable Depreciation $46,132.16
Deductible $5,000
Amount Owed $41,132.16
D.
In calculating the full replacement cost of a building:
1. The replacement cost value of any covered building property will be
included;
2. The replacement cost value of any building property not covered under
this policy will not be included; and
3. Only the replacement cost value of improvements installed by the
condominium association will be included.
Refer to policy definition.
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VIII. General Conditions
Policy Language Additional Explanation
A.
Pair and Set Clause
In case of loss to an article that is part of a pair or set, we will have the option
of paying you:
1. An amount equal to the cost of replacing the lost, damaged, or destroyed
article, less depreciation; or
2. An amount which represents the fair proportion of the total value of the
pair or set that the lost, damaged, or destroyed article bears to the pair or
set.
If the damaged property item is ruined, and cannot be replaced individually as a
single item, and this renders the other item in the pair or the set unusable or
worthless, then the SFIP pays for the pair or set.
Examples
: Left shoe ruined by flood, and the right shoe undamaged. The left shoe
cannot be purchased without the right, rendering the undamaged right shoe
unusable. The SFIP covers a new pair of shoes. Other similar examples include a
ruined china base cabinet and undamaged matching china base top; half the seats
ruined in a sectional sofa; a ruined left window curtain and an undamaged right
window curtain.
If the damaged property item is ruined and can be replaced individually as a single
item with like kind and quality, and this renders the other item or the set usable, the
SFIP will only cover the damaged/ruined item along with reasonable cost for like kind
and quality, except in the case of the Section V. Exclusion (A)(6) for ordinance or law,
and the like.
Examples
: Base cabinets ruined by flood with the upper cabinets undamaged. The
upper cabinets remain usable. The SFIP allows to replace the base cabinets with like
kind and quality, including reasonable costs to match the new base cabinets with
existing undamaged cabinets. Other similar examples include a damaged dresser and
undamaged or repairable matching armoire and night stands; a ruined dining table
leaf and undamaged or repairable dining table; a ruined granite cabinet countertop
and salvageable granite island countertop.
Example
: An outdoor heating ventilation, and air conditioning (HVAC) unit is ruined
by flood, interior HVAC unit is undamaged. Due to Department of Energy code
requirements regarding energy efficiency, or an Environmental Protection Agency
(EPA)-mandate regarding refrigerant type, a replacement outdoor HVAC unit that
works with the existing interior HVAC unit is unavailable, rendering the undamaged
interior unit unusable. Section VII (A) Pair and Set clause is superseded by Section V
Exclusions (A)(6) and the SFIP only allows to replace the outdoor HVAC unit with like
kind and quality; and does not cover replacement of the undamaged interior HVAC
unit.
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VIII. General Conditions
Policy Language Additional Explanation
B.
Concealment or Fraud and Policy Voidance
1. With respect to all insureds under this policy, this policy:
a. Is void;
b. Has no legal force or effect;
c. Cannot be renewed; and
d. Cannot be replaced by a new NFIP policy, if, before or after a loss, you
or any other insured or your agent have at any time:
(1) Intentionally concealed or misrepresented any material fact or
circumstance;
(2) Engaged in fraudulent conduct; or
(3) Made false statements; relating to this policy or any other NFIP
insurance.
When claims professionals suspect wrongful acts or misrepresentations on a claim by
a policyholder or their representatives:
• The adjuster should promptly submit written notification with supporting
documentation to the insurer. The adjuster should not draw any conclusions
regarding the suspected fraud and should only present facts in written reports.
• The examiner should engage management to determine if the insurer should
refer the matter to the FEMA Fraud Unit (email:
StopFEMAFraud@fema.dhs.gov) and to the insurer’s investigative unit for a
Reservation of Rights.
2. This policy will be void as of the date wrongful acts described in B.1. above
were committed.
3. Fines, civil penalties, and imprisonment under applicable Federal laws may
also apply to the acts of fraud or concealment described above.
The SFIP will be void if the proper authorities determine any part of a claim was
fraudulent.
4. This policy is also void for reasons other than fraud, misrepresentation, or
wrongful act. This policy is void from its inception and has no legal force
under the following conditions:
a. If the property is located in a community that was not participating in
the NFIP on the policy’s inception date and did not join or reenter
the program during the policy term and before the loss occurred; or
b. If the property listed on the application is otherwise not eligible for
coverage under the NFIP.
When a community no longer participates in the NFIP, an active SFIP will remain in
force up to the day before the policy renewal date. Refer to the Flood Insurance
Manual for other reasons why a building may be ineligible for coverage.
C.
Other Insurance
1. If a loss covered by this policy is also covered by other insurance that
includes flood coverage not issued under the Act, we will not pay more
than the amount of insurance that you are entitled to for lost, damaged or
destroyed property insured under this policy subject to the following:
The RCBAP is primary and the SFIP Dwelling Form provides excess coverage for the
same loss. The total amount of insurance available for the Dwelling Form and the
RCBAP is $250,000 combined; the total claim payment may not exceed this amount.
Other insurance includes primary flood coverage provided by a private carrier, an
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a.
We will pay only the proportion of the loss that the amount of
insurance that applies under this policy bears to the total amount of
insurance covering the loss, unless C.1.b. or c. immediately below
applies.
b. If the other policy has a provision stating that it is excess insurance,
this policy will be primary.
2. This policy will be primary (but subject to its own deductible) up to the
deductible in the other flood policy (except another policy as described in
C.1.b. above). When the other deductible amount is reached, this policy
will participate in the same proportion that the amount of insura
nce under
this policy bears to the total amount of both policies, for the remainder of
the loss.
endorsement for sewer, sumps or drains backup, or any other insurance that
duplicates SFIP coverage.
• Use the following formula to determine the NFIP’s share of the loss:
NFIP share
= ((SFIP policy limit ÷ total insurance) x loss) - other insurance
deductible
• Use the following formula to determine the other insurance’s share of the loss:
Other insurance share
= ((other insurance policy limit ÷ total insurance) x loss) -
other insurance deductible
• Use the following formula to determine the NFIP payment:
NFIP payment
= NFIP share + other insurance deductible – SFIP deductible
Below is an example of how to apply the formulas to compute the insurer’s shares
and NFIP payment for a $480,000 loss.
Table 10: Insurance Coverage and Deductibles
Insurance Coverage Deductible
NFIP $250,000 $5,000
Other $500,000 $15,000
Total $750,000
•
NFIP share:
(($250,000 ÷ $750,000) x $480,000) - $15,000 = $145,000
•
Other insurance share:
(($500,000 ÷ $750,000) x $480,000) - $15,000 =
$305,000.00
•
NFIP payment:
$145,000.00 + $15,000 - $5,000 = $155,000.00
IMPORTANT – Use the order of operations as shown, starting within the innermost
parentheses, for accurate calculation.
3. If there is other insurance in the name of your condominium association
covering the same property covered by this policy, then this policy will be
in excess over the other insurance.
The Biggert-Waters Flood Insurance Reform Act of 2012, Section 100214, does not
allow the NFIP to deny a unit owner’s claim based on flood insurance coverage
purchased by a condominium association.
The SFIP allows unit owner building payments for loss assessments when a
condominium association did not purchase insurance to at least 80 percent of the full
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replacement cost of the condominium building. The provision does not allow insurers
to pay for a building item more than once.
The SFIP cannot pay more than the maximum amount of insurance available for a
single-family residence, currently $250,000, for a single condominium even if the unit
has additional insurance available under other NFIP policies.
The legislation did not change the coverage provided under the Residential
Condominium Building Association Policy (RCBAP).
See the Biggert-Waters Flood Insurance Reform Act of 2012
for more information.
D.
Amendments, Waivers, Assignment
This policy cannot be changed nor can any of its provisions be waived without
the express written consent of the Federal Insurance Administrator. No action
we take under the terms of this policy constitutes a waiver of any of our rights.
You may assign this policy in writing when you transfer title of your property to
someone else except under these conditions:
1. When this policy covers only personal property; or
2. When this policy covers a structure during the course of construction.
The SFIP allows assignment of the policy when the title to the property transfers to a
new owner.
The SFIP does not allow assignment of a claim. The only exception to this is a
Coverage D – Increased Cost of Compliance (ICC) claim that can transfer in
conjunction with a FEMA project, such as a Hazard Mitigation Grant Program (HMGP)
grant. Typically, the policyholder assigns the claim to a community, which typically
uses the payment for the community’s non-Federal match for the project. The
policyholder may only assign the part of the ICC benefit used to meet the project
requirements.
E.
Cancellation of the Policy by You
1. You may cancel this policy in accordance with the applicable rules and
regulations of the NFIP.
2. If you cancel this policy, you may be entitled to a full or partial refund of
premium also under the applicable rules and regulations of the NFIP.
Policyholders must have a valid reason to cancel their flood insurance coverage
during a policy term.
See the Flood Insurance Manual
for detailed information.
F.
Non-Renewal of the Policy by Us
Your policy will not be renewed:
1. If the community where your covered property is located stops
participating in the NFIP, or
2. If your building has been declared ineligible under Section 1316 of the Act.
When a community no longer participates in the NFIP, an active SFIP will remain in
force up to the day before the policy renewal date.
Coverage may not be available for a building constructed or altered in violation of
state or local floodplain management laws, regulations, or ordinances. Section 1316
of the Act allows a state or community to declare a building in violation of its
floodplain management rules. When a state or community declares that a building is
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in violation of Section 1316, the building and any contents in it are not eligible for
SFIP coverage. Insurers have a list of buildings with Section 1316 violations that are
ineligible for NFIP coverage. When the owner corrects the violation, the building
becomes eligible for coverage again. The examiner should verify the building’s
eligibility.
G.
Reduction and Reformation of Coverage
1. If the premium we received from you was not enough to buy the kind and
amount of coverage you requested, we will provide only the amount of
coverage that can be purchased for the premium payment we received.
2. The policy can be reformed to increase the amount of coverage resulting
from the reduction described in G.1. above to the amount you requested
as follows:
a. Discovery of Insufficient Premium or Incomplete Rating Information
Before a Loss:
(1) If we discover before you have a flood loss that your premium
payment was not enough to buy the requested amount of
coverage, we will send you and any mortgagee or trustee
known to us a bill for the required additional premium for the
current policy term (or that portion of the current policy term
following any endorsement changing the amount of coverage).
If you or the mortgagee or trustee pay the additional premium
within 30 days from the date of our bill, we will reform the
policy to increase the amount of coverage to the originally
requested amount effective to the beginning of the current
policy term (or subsequent date of any endorsement changing
the amount of coverage).
(2) If we determine before you have a flood loss that the rating
information we have is incomplete and prevents us from
calculating the additional premium, we will ask you to send the
required information. You must submit the information within
60 days of our request. Once we determine the amount of
additional premium for the current policy term, we will follow
If the policyholder gives the insurer a premium that will not purchase the amounts of
insurance requested, the insurer must issue the policy for the insurance coverage
amount the premium will purchase for a one-year policy term.
After a Loss:
• The insurer will send a bill for the required additional premium for the
current policy term only. This is an exception to the SFIP Provisions requiring
the current and the prior policy terms.
• If the insurer receives the premium within 30 days from the date of the bill,
the insurer should increase the policy limits to the originally requested
amount effective as of the beginning of the current policy term.
• If the insurer does not receive the additional premium by the due date, the
insurer must settle the claim based on the previously submitted premium and
results in reduced policy limits.
Exceptions for Incorrect Flood Zone or BFE After a Loss. When the insurer discovers
that an incorrect flood zone or BFE resulted in insufficient premium, the following
exceptions apply:
• The insurer should calculate any additional premium due prospectively from
the date of discovery.
• The insurer should apply the automatic reduction in policy limits effective on
the date of discovery.
Incorrect Policy Form. The insurer must use the correct policy form before making a
loss payment. When the insurer issues coverage using an incorrect SFIP form, the
policy is void and the insurer must rewrite the coverage under the correct form. The
provisions of the correct SFIP form apply.
•
The insurer must reform the coverage limits according to the provisions of
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the procedure in G.2.a.(1) above.
(3) If we do not receive the additional premium (or additional
information) by the date it is due, the amount of coverage can
only be increased by endorsement subject to any appropriate
waiting period.
b. Discovery of insufficient premium or incomplete rating information
after a loss.
(1) If we discover after you have a flood loss that your premium
payment was not enough to buy the requested amount of
coverage, we will send you and any mortgagee or trustee known
to us a bill for the required additional premium for the current
and the prior policy terms. If you or the mortgagee or trustee
pay the additional premium within 30 days of the date of our
bill, we will reform the policy to increase the amount of
coverage to the originally requested amount effective to the
beginning of the prior policy term.
(2) If we discover after you have a flood loss that the rating
information we have is incomplete and prevents us from
calculating the additional premium, we will ask you to send the
required information. You must submit the information before
your claim can be paid. Once we determine the amount of
additional premium for the current and prior policy terms, we
will follow the procedure in G.2.b.(1) above.
(3) If we do not receive the additional premium by the date it is
due, your flood insurance claim will be settled based on the
reduced amount of coverage. The amount of coverage can only
be increased by endorsement subject to any appropriate waiting
period.
3. However, if we find that you or your agent intentionally did not tell us, or
falsified, any important fact or circumstance or did anything fraudulent
relating to this insurance, the provisions of Condition B. Concealment or
Fraud and Policy Voidance apply.
the correct SFIP form.
• Coverage cannot exceed the coverage issued under the incorrect policy form.
See the Flood Insurance Manual
for detailed information.
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H.
Policy Renewal
1. This policy will expire at 12:01 a.m. on the last day of the policy term.
2. We must receive the payment of the appropriate renewal premium within
30 days of the expiration date.
3. If we find, however, that we did not place your renewal notice into the
U.S.
Postal Service, or if we did mail it, we made a mistake, e.g., we used an
incorrect, incomplete, or illegible address, which delayed its delivery to you
before the due date for the renewal premium, then we will follow these
procedures:
a. If you or your agent notified us, not later than 1 year after the date on
which the payment of the renewal premium was due, of non-receipt
of a renewal notice before the due date for the renewal premium,
and we determine that the circumstances in the preceding paragraph
apply, we will mail a second bill providing a revised due date, which
will be 30 days after the date on which the bill is mailed.
b. If we do not receive the premium requested in the second bill by the
revised due date, then we will not renew the policy. In that case,
the policy will remain an expired policy as of the expiration date
shown on the Declarations Page.
4. In connection with the renewal of this policy, we may ask you during the
policy term to recertify, on a Recertification Questionnaire we will provide
to you, the rating information used to rate your most recent application for
or renewal of insurance.
The SFIP is not a continuous policy. It is a contract for a one-year term. Every policy
contract expires at 12:01 a.m. on the last day of the policy term. Renewal of an
expiring policy establishes a new policy term and new contractual agreement. See
the Flood Insurance Manual
for detailed information.
The adjuster should investigate the claim under a signed non-waiver agreement or
a reservation of rights by the insurer when a policyholder reports a loss and there
is uncertainty as to whether a policy is active.
I.
Conditions Suspending or Restricting Insurance
We are not liable for loss that occurs while there is a hazard that is increased
by any means within your control or knowledge.
The SFIP will not cover a flood loss or increased flood damage to insured
property that the policyholder purposely or inadvertently causes. For
example, a policyholder constructs a flood barrier to prevent floodwater from
a river from reaching the building. However, the improvement now causes
runoff during heavy rainfall events to collect behind the barrier and flood the
building and a neighboring parcel.
When the investigation of a loss reveals this provision might apply, the adjuster should
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notify the insurer at once and request immediate guidance.
J.
Requirements in Case of Loss
In case of a flood loss to insured property, you must:
1. Give prompt written notice to us;
The policyholder’s claim begins with the written notice of loss.
The policyholder must report the loss to the insurer immediately; failure to provide a
notice of loss to the insurer could prejudice the ability of the insurer to inspect the
loss, identify the cause and extent of damage, and determine applicable coverage
under the SFIP. If the policyholder delays reporting a loss, the adjuster cannot help
the policyholder protect the property and avoid further damage.
A policyholder’s failure to provide timely notice of loss can be a basis for denial of a
claim.
• The adjuster should document the reason for a delay in the
policyholder reporting a loss to the insurer.
• If the WYO elects, the adjuster should execute a non-waiver agreement when
there is a delay in reporting the loss. The non-waiver agreement should
include the reason for the non-waiver and the policyholder’s explanation for
the delay. The adjuster should have the policyholder sign the non-waiver
agreement immediately. If the policyholder refuses to sign the non-waiver
agreement, the insurer may decide to send a Reservation of Rights. The
adjuster should continue the inspection and review. The insurer cannot
waive FEMA’s rights.
2. As soon as reasonably possible, separate the damaged and undamaged
property, putting it in the best possible order so that we may examine it;
3. Prepare an inventory of damaged property showing the quantity,
description, actual cash value, and amount of loss. Attach all bills, receipts,
and related documents;
The SFIP requires that the policyholder separate damaged from undamaged property
putting it in the best possible order, so the adjuster may examine it. It is the
policyholder’s duty to perform the separation described above and prepare an
inventory of damaged property including quantity, description, and the total amount
of loss claimed. Any bills, receipts, photographs of damages, and related documents
should be attached to the inventory.
If building or contents flood-damaged property is removed before the adjuster can
examine it, the policyholder must photograph the items in their damaged location
prior to moving the property and prepare the inventory. To minimize potential
documentation issues, if possible, the policyholder should retain for the adjuster,
samples or swatches of carpeting, wallpaper, furniture upholstery, window
treatments, and other items of exceptional value where the type and quality of
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material will influence the amount payable on the claim. Photographs should also
include groups of items such as clothing, kitchen items, furniture, etc. The insurer will
evaluate and consider these items and the policyholder’s written inventory of
damaged items.
4. Within 60 days after the loss, send us a proof of loss, which is your
statement of the amount you are claiming under the policy signed and
sworn to by you, and which furnishes us with the following information:
a. The date and time of loss;
b. A brief explanation of how the loss happened;
c. Your interest (for example, “owner”) and the interest, if any, of others
in the damaged property;
d. Details of any other insurance that may cover the loss;
e. Changes in title or occupancy of the covered property during the
term of the policy;
f. Specifications of damaged buildings and detailed repair estimates;
g. Names of mortgagees or anyone else having a lien, charge, or claim
against the insured property;
h. Details about who occupied any insured building at the time of loss
and for what purpose; and
i. The inventory of damaged personal property described in J.3. above.
5. In completing the proof of loss, you must use your own judgment
concerning the amount of loss and justify that amount.
The proof of loss is the policyholder’s statement of the amount of money they are
requesting. The policyholder must sign and swear to the proof of loss and provide
documentation to support the amount requested for the insurer to consider it
completed. The policyholder (or legal representative with a signed Power of Attorney
or Executor in the case of a deceased policyholder) is the only person who can sign
the proof of losses or legally appointed representative.
SIGNED AND SWORN:
FEMA encourages the use of electronic signatures on proof of loss and other NFIP-
related submissions. FEMA will not deny the legal effect, validity, or enforceability of
a signature solely because it is in electronic form. Insurers should accept electronic
signatures in accordance with their general business practices and applicable laws.
MULTIPLE PROOFS OF LOSS ALLOWED:
Policyholders must submit a completed proof of loss and documentation to support
the amount requested initially and completed proofs of loss for any additional
payment requests to the insurer within 60 days after the date of loss or within any
extension of that deadline granted by FEMA.
ONE CLAIM PER LOSS:
The proof of loss is not the claim. The claim is the policyholder’s assertion that they
are entitled to payment for a covered loss under the terms of the SFIP. A policyholder
has only one claim from a flood event regardless of the number of proofs of loss and
documentation the policyholder may submit in support of that claim.
6. You must cooperate with the adjuster or representative in the
investigation of the claim.
7. The in
surance adjuster whom we hire to investigate your claim may furnish
you with a proof of loss form, and she or he may help you complete it.
However, this is a matter of courtesy only, and you must still send us a
proof of loss within 60 days after the loss even if the adjuster does not
furnish the form or help you complete it.
Refer to policy language.
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8.
We have not authorized the adjuster to approve or disapprove claims or to
tell you whether we will approve your claim.
Only the NFIP insurer has the authority to approve or deny a claim, to tell the
policyholder if they will approve or deny a claim, or to provide payment details.
The insurer must rely only upon the terms and conditions established by
Federal statute, NFIP regulations, the Federal Insurance Administrator’s
interpretations, and the express terms of the SFIP. See 44 C.F.R. § 61.5(e)
(2018).
9. At our option, we may accept the adjuster’s report of the loss instead of
your proof of loss. The adjuster’s report will include information about
your loss and the damages you sustained. You must sign the adjuster’s
report. At our option, we may require you to swear to the report.
The insurer, not the policyholder or their representative, determines whether to
accept the adjuster’s report signed and sworn to by the policyholder instead of a
proof of loss.
K.
Our Options After a Loss
Options we may, in our sole discretion, exercise after loss include the
following:
This section sets forth the steps that insurers may take to require action on the part
of the policyholder. If the policyholder fails to comply with the insurer’s request, the
policyholder is in breach of the insuring agreement, which may affect the payment of
the claim.
1. At such reasonable times and places that we may designate, you must:
a. Show us or our representative the damaged property;
The policyholder must make the flood damaged property available for examination as
often as needed to verify the loss and claim. Insurer representatives will give the
policyholder advance notice of the specific time and meeting place to inspect the
damaged property.
The policyholder should document their loss with photographs before removing or
disposing of damaged items that pose a health hazard, such as perishable food.
b. Submit to examination under oath, while not in the presence of
another insured, and sign the same; and
The insurer can require the policyholder to submit to an examination under oath but
not in the presence of another insured when there are questions concerning the
claim. An examination under oath is a formal proceeding, typically conducted prior to
a lawsuit, during which the insurer’s representative questions an insured under oath
in the presence of a court reporter. The insurer should ask the policyholder to
present information and documentation necessary to evaluate their claim when
requiring an examination under oath. This can include books of accounts, financial
records, receipts, income tax records, property settlement records, invoices,
purchase orders, affidavits, and other materials to verify the loss.
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c. Permit us to examine and make extracts and copies of:
(1) Any policies of property insurance insuring you against loss and
the deed establishing your ownership of the insured real
property;
The SFIP will not pay more than the amount of insurance that the policyholder is
entitled to for the damaged, lost, or destroyed property insured under this policy if
non-NFIP insurance covers a loss covered by the SFIP.
The policyholder must confirm the availability of other insurance to determine what
the NFIP will pay. Examples include a homeowner’s policy water damage or sump
overflow endorsement, mobile-homeowner’s policy, scheduled property policy,
renter’s policy, builder’s risk policy, etc.
See SFIP Section VIII.C. for Other Insurance.
(2) Condominium association documents including the Declarations
of the condominium, its Articles of Association or Incorporation,
Bylaws, rules and regulations, and other relevant documents if
you are a unit owner in a condominium building; and
A claim involving a unit in a condominium building requires the declarations of the
condominium, bylaws, etc. to determine the policyholder’s insurable interest in the
building. Adjusters may have to determine if the RCBAP paid for any damages. NFIP
will not pay for the same damaged item twice nor pay a claim for a residential unit
that exceeds the statutory limits. Adjusters must provide documentation that a
condominium association owns the insured building, not a homeowners’ association
or a building cooperative.
(3) All books of accounts, bills, invoices and other vouchers, or
certified copies pertaining to the damaged property if the
originals are lost.
Insurers may require the policyholder to provide information that documents the
extent of the loss and the amount of the claim. Examples include books of accounts,
bills, invoices, vouchers, and items showing the actual amounts paid to stores,
contractors, or others for repair or replacement of items. This may also include
photographs of the flood-damaged property that sufficiently and reasonably
document the damage, quality of the item, and describe the damaged property. The
policyholder can provide certified copies when the originals are lost or destroyed.
2. We may request, in writing, that you furnish us with a complete inventory
of the lost, damaged or destroyed property, including:
a. Quantities and costs;
“Costs” is the amount to replace a personal property item with like kind and quality at
current pricing, including the price for sales tax plus any applicable shipping and
product assembly.
b. Actual cash values or replacement cost (whichever is appropriate);
• Replacement cost is the cost to replace a building, a building item, or a
personal property item that includes all charges related to material, labor,
equipment, any charges, if applicable, for design, delivery, assembly, sales tax,
and applicable overhead and profit.
• Actual cash value is replacement cost, less applicable depreciation of all
components of the price.
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c. Amounts of loss claimed; The amounts of loss claimed is the amount of payment the policyholder asks to
receive for the damaged and covered property.
d. Any written plans and specifications for repair of the damaged
property that you can reasonably make available to us; and
Written plans and specifications for repair of the damaged property include
contractor estimates, subcontractor bids, invoices, architectural reports and
drawings, engineering reports, etc. This also includes water restoration or structural
drying invoices and supporting documentation.
NFIP will not accept a non-itemized, lump sum, or single line estimate or invoice in
support of a claim.
e. Evidence that prior flood damage has been repaired. Policyholders must provide evidence that previous flood damage was repaired
whether or not they owned or insured the property. This includes any flood damages
unrepaired by a previous owner.
NFIP expects policyholders to maintain proof of repairs such as receipts, cancelled
checks, etc. in a safe location away from the threat of flood.
When policyholders do not have proof of repairs, adjusters should request other
forms of documentation such as:
• Pre-flood photographs (social media or other family members) to compare
old and replaced items.
• Credit card or bank statements showing dates and dollar amount of
payments to contractors.
• Itemized statements and paid invoices from contractors.
3. If we give you written notice within 30 days after we receive your signed,
sworn proof of loss, we may:
a. Repair, rebuild, or replace any part of the lost, damaged, or destroyed
property with material or property of like kind and quality or its
functional equivalent; and
b. Take all or any part of the damaged property at the value that we
agree upon or its appraised value.
3.a. Refer to policy language.
3.b. Refer to Section VII.O. and other guidance including Salvage
in Section 2 of this
manual.
L.
No Benefit to Bailee
No person or organization, other than you, having custody of covered property Bailment is the delivery of personal property by one person (the bailor) to another
(the bailee) who holds the property for a certain purpose, such as a service, under
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will benefit from this insurance. an expressed or implied-in-fact contract.
The SFIP does not cover the bailee because bailment is a change of possession, not a
change of ownership or title. An example is when a customer (bailor) takes personal
clothing to the drycleaner (bailee). A bailment exists when the bailee has the clothing.
The articles of clothing in the possession of the bailee are bailee goods and are not
covered.
Consignment is a written agreement where a consignor provides owned personal
property to a consignee for sale and gives the consignee a percentage of the sale
price when sold. The SFIP does not cover property on consignment.
M.
Loss Payment
1. We will adjust all losses with you. We will pay you unless some other
person or entity is named in the policy or is legally entitled to receive
payment. Loss will be payable 60 days after we receive your proof of loss
(or within 90 days after the insurance adjuster files the adjuster’s report
signed and sworn to by you in lieu of a proof of loss) and:
a. We reach an agreement with you;
b. There is an entry of a final judgment; or
c. There is a filing of an appraisal award with us, as provided in VIII.P.
Adjusters and examiners should work with a policyholder and/or their authorized
representative to understand the loss, prepare the estimate, and reach an agreed
value for the loss.
The insurer’s obligation to pay and the 60-day timeframe to pay begin once the
policyholder meets the requirements in Paragraph J, a proof of loss that meets all
NFIP requirements, or after the signed and sworn to adjuster’s report is received,
and,
• Insurer and the policyholder agree on the payment amount, or
• There is an entry of final judgment or an appraisal award by a court
of competent jurisdiction.
The insurer should promptly process all claims and payment requests. The insurer
should communicate to policyholders any unforeseen delays in the claim examination
process and advance undisputed claimed amounts at the earliest opportunity.
When the insurer cannot pay a completed proof of Loss, the examiner and the
adjuster should promptly communicate the necessary adjustments or
documentation required to the policyholder. Insurers should work with
policyholders to settle the loss without resorting to a denial of the claim by the
insurer.
See Section 4
Appeals of this manual for information on denial letters.
2. If we reject your proof of loss in whole or in part you may: Courts have not accepted the language “reject your proof of loss” as sufficient to
communicate to the policyholder that the insurer has denied their claim in whole or
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a.
Accept our denial of your claim;
b. Exercise your rights under this policy; or
c. File an amended proof of loss as long as it is filed within 60 days of
the date of the loss.
in part. Hence, insurers should not use this language to deny all or part of a claim.
When the insurer issues a written denial, the policyholder has certain rights, which
include filing an appeal directly to FEMA (see Section 4
Appeals), filing suit against the
insurer, or submitting an amended proof of loss with the documentation to support
the requested loss and payment amount.
The one year statute of limitations for filing suit begins when the insurer issues the
first denial letter (42 U.S.C. § 4072; 44 C.F.R. § 62.22(a)). Submitting subsequent
additional or amended proofs of loss does not reset the one-year statute of
limitations. Adjusters and examiners must assist policyholders in identifying all
opportunities for payment. This helps the policyholder recover, ensures customer
satisfaction, and prevents unnecessary appeals and lawsuits.
N.
Abandonment
You may not abandon to us damaged or undamaged property insured under
this policy.
Refer to policy language.
O.
Salvage
We may permit you to keep damaged property insured under this policy after
a loss, and we will reduce the amount of the loss proceeds payable to you
under the policy by the value of the salvage.
The insurer always has the right to seek salvage or to take possession of damaged
property. Insurers should pursue opportunities for a financial recovery when
available.
See Salvage
in Section 2 of this manual.
P.
Appraisal
If you and we fail to agree on the actual cash value or, if applicable,
replacement cost of your damaged property to settle upon the amount of loss,
then either may demand an appraisal of the loss. In this event, you and we will
each choose a competent and impartial appraiser within 20 days after
receiving a written request from the other. The two appraisers will choose an
umpire. If they cannot agree upon an umpire within 15 days, you or we may
request that the choice be made by a judge of a court of record in the State
where the covered property is located. The appraisers will separately state the
actual cash value, the replacement cost, and the amount of loss to each item.
If the appraisers submit a written report of an agreement to us, the amount
agreed upon will be the amount of loss. If they fail to agree, they will submit
See Appraisal in Section 2 of this manual.
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their differences to the umpire. A decision agreed to by any two will set the
amount of actual cash value and loss, or if it applies, the replacement cost and
loss.
Each party will:
1. Pay its own appraiser; and
Bear the other expenses of the appraisal and umpire equally.
Q.
Mortgage Clause
The word “mortgagee” includes trustee.
Any loss payable under Coverage A—Building Property will be paid to any
mortgagee of whom we have actual notice, as well as any other mortgagee or
loss payee determined to exist at the time of loss, and you, as interests appear.
If more than one mortgagee is named, the order of payment will be the same
as the order of precedence of the mortgages.
If we deny your claim, the denial will not apply to a valid claim of the
mortgagee, if the mortgagee:
1. Notifies us of any change in the ownership or occupancy, or substantial
change in risk of which the mortgagee is aware;
2. Pays any premium due under this policy on demand if you have neglected
to pay the premium; and
3. Submits a signed, sworn proof of loss within 60 days after receiving notice
from us of your failure to do so.
All of the terms of this policy apply to the mortgagee.
The mortgagee has the right to receive loss payment even if the mortgagee
has started foreclosure or similar action on the building.
If we decide to cancel or not renew this policy, it will continue in effect for the
benefit of the mortgagee only for 30 days after we notify the mortgagee of the
cancellation or non-renewal.
If we pay the mortgagee for any loss and deny payment to you, we are
subrogated to all the rights of the mortgagee granted under the mortgage on
the property. Subrogation will not impair the right of the mortgagee to recover
The SFIP pays claims for building property to the named policyholder, mortgage
holders, lienholders, other loss payees for whom we have actual notice, and any loss
payee determined to exist at the time of loss. The mortgage clause is a contract
within a contract. It is a contract between the mortgagee and the insurer within the
contract between the policyholder and the insurer. Including the name of the
mortgagee on each building claim payment is the surest way to keep this promise to
the mortgagee. For all building payments, except Coverage C – Other Coverages and
Coverage D – ICC, include all known mortgagees, as they are additional insureds.
The insurer may potentially include a loss payee or lienholder on Coverage B –
Personal Property of whom the insurer received actual notice such as from the U.S.
Small Business Administration (SBA). If the insurer receives a letter of an SBA-
approved loan, the SBA must be included on the building check(s) and the contents
check(s) if the loan is for both real estate and personal or business property.
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the full amount of the mortgagee’s claim.
R.
Suit Against Us
You may not sue us to recover money under this policy unless you have
complied with all the requirements of the policy. If you do sue, you must start
the suit within 1 year after the date of the written denial of all or part of the
claim, and you must file the suit in the United States District Court of the
district in which the covered property was located at the time of loss. This
requirement applies to any claim that you may have under this policy and to
any dispute that you may have arising out of the handling of any claim under
the policy.
The statute of limitations begins with the insurer’s first written denial of the claim.
Subsequent denial letters do not re-start the statute of limitations. Policyholders
must file suit in a U.S. District Court in the district where the loss occurred within one
year after the insurer’s first written denial. Neither the Federal Insurance
Administrator nor the insurer may extend the one year statute of limitation to file
suit.
S.
Subrogation
Whenever we make a payment for a loss under this policy, we are subrogated
to your right to recover for that loss from any other person. That means that
your right to recover for a loss that was partly or totally caused by someone
else is automatically transferred to us, to the extent that we have paid you for
the loss. We may require you to acknowledge this transfer in writing. After the
loss, you may not give up our right to recover this money or do anything that
would prevent us from recovering it. If you make any claim against any person
who caused your loss and recover any money, you must pay us back first
before you may keep any of that money.
When the adjuster believes there may be potential for subrogation, the adjuster
should complete FEMA Form 086-0-16 – Cause of Loss and Subrogation Report,
to
identify a potentially responsible third party; and characterize how their actions may
have caused or worsened flood damage. When the adjuster believes the cause of loss
may be completely or in part due to an intentional or human cause, the adjuster
should complete the NFIP Subrogation Form. Claim handling, review, and payment
should proceed as normal. The insurer should make sure the subrogation form Cause
of Loss and Subrogation Report is complete and escalate the matter for a subrogation
review.
See Subrogation
in Section 2 of this manual.
T.
Continuous Lake Flooding
1. If an insured building has been flooded by rising lake waters continuously
for 90 days or more and it appears reasonably certain that a continuation
of this flooding will result in a covered loss to the insured building equal to
or greater than the building policy limits plus the deductible or the
maximum payable under the policy for any one building loss, we will pay
you the lesser of these two amounts without waiting for the further
damage to occur if you sign a release agreeing:
a. To make no further claim under this policy;
Refer to policy language.
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b.
Not to seek renewal of this policy;
c. Not to apply for any flood insurance under the Act for property at the
described location; and
d. Not to seek a premium refund for current or prior terms.
If the policy term ends before the insured building has been flooded continuously
for 90 days, the provisions of this paragraph T.1. will apply when the insured
building suffers a covered loss before the policy term ends.
2.
If your insured building is subject to continuous lake flooding from a closed
basin lake, you may elect to file a claim under either paragraph T.1. above
or T.2. (A “closed basin lake” is a natural lake from which water leaves
primarily through evaporation and whose surface area now exceeds or has
exceeded 1 square mile at any time in the recorded past. Most of the
nation’s closed basin lakes are in the western half of the United States
where annual evaporation exceeds annual precipitation and where lake
le
vels and surface areas are subject to considerable fluctuation due to wide
variations in the climate. These lakes may overtop their basins on rare
occasions.) Under this paragraph T.2. we will pay your claim as if the
building is a total loss even though it has not been continuously inundated
for 90 days, subject to the following conditions:
The only Closed Basin Lake recognized by FEMA at this time is Devils Lake, North
Dakota.
Subject to all other provisions of the SFIP, if an insured building is subject to
continuous lake flooding from Devils Lake, the following requirements must be met
to be eligible for coverage under the terms of all SFIP forms:
• The building must be in a participating community eligible for this
coverage; and,
• The subject building must have had NFIP flood insurance coverage
continuously beginning on November 30, 1999, and any subsequent owner on
or after November 30, 1999, must have an NFIP policy in effect within 60 days
of the transfer of title (see: T. 2. g.); and,
a. Lake flood waters must damage or imminently threaten to damage
your building.
b. Before approval of your claim, you must:
(1) Agree to a claim payment that reflects your buying back the
salvage on a negotiated basis; and
(2) Grant the conservation easement described in FEMA’s “Policy
Guidance for Closed Basin Lakes” to be recorded in the office of
the local recorder of deeds. FEMA, in consultation with the
community in which the property is located, will identify on a
map an area or areas of special consideration (ASC) in which
there is a potential for flood damage from continuous lake
flooding. FEMA will give the community the agreed-upon map
showing the ASC. This easement will only apply to that portion
• The policyholder must grant a conservation easement (see: T. 2. b. (2),
and the community must have adopted a permanent land-use ordinance
on or before July 15, 2001 (see: T. 2. e. (1), (2), and (3).
FEMA will not recognize any increases in coverage limits with effective dates on or
after November 30, 1999 (see: T. 2. g.), except when offered by the insurer as a
routine inflation-guard increase and purchased by the policyholder. Insured buildings
not eligible for the provisions of T. 2. described above, but damaged by continuous
lake flooding, will be eligible for those provisions described at T. 1. of the SFIP, subject
to the terms and conditions of the T. 1. and the SFIP.
Buildings in eligible communities that are subject to damage from the effects of
the Closed Basin Lake, Devils Lake, North Dakota, may file claims if any portion of
the insured building, as defined in the SFIP, is at the still-water level derived by
official National Weather Service (NWS) still-water levels.
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of the property in the ASC. It will allow certain agricultural and
recreational uses of the land. The only structures it will allow on
any portion of the property within the ASC are certain simple
agricultural and recreational structures. If any of these allowable
structures are insurable buildings under the NFIP and are
insured under the NFIP, they will not be eligible for the benefits
of this paragraph T.2. If a U.S. Army Corps of Engineers certified
flood control project or otherwise certified flood control project
later protects the property, FEMA will, upon request, amend the
ASC to remove areas protected by those projects. The
restrictions of the easement will then no longer apply to any
portion of the property removed from the ASC; and
(3) Comply with paragraphs T.1.a. through T.1.d. above.
c. Within 90 days of approval of your claim, you must move your
building to a new location outside the ASC. FEMA will give you an
additional 30 days to move if you show there is sufficient reason to
extend the time.
d. Before the final payment of your claim, you must acquire an elevation
certificate and a floodplain development permit from the local
floodplain administrator for the new location of your building.
e. Before the approval of your claim, the community having jurisdiction
over your building must:
(1) Adopt a permanent land use ordinance, or a temporary
moratorium for a period not to exceed 6 months to be
followed immediately by a permanent land use ordinance that
is consistent with the provisions specified in the easement
required in paragraph T.2.b. above.
(2) Agree to declare and report any violations of this ordinance to
FEMA so that under Section 1316 of the National Flood
Insurance Act of 1968, as amended, flood insurance to the
building can be denied; and
(3) (3) Agree to maintain as deed-restricted, for purposes
compatible with open space or agricultural or recreational use
See Appendix C in this manual for FEMA’s “Policy Guidance for Closed Basin Lakes”.
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only, any affected property the community acquires an interest
in. These deed restrictions must be consistent with the
provisions of paragraph T.2.b. above, except that, even if a
certified project protects the property, the land use restrictions
continue to apply if the property was acquired under the Hazard
Mitigation Grant Program or the Flood Mitigation Assistance
Program. If a non-profit land trust organization receives the
property as a donation, that organization must maintain the
property as deed-restricted, consistent with the provisions of
paragraph T.2.b. above.
f. Before the approval of your claim, the affected State must take all
action set forth in FEMA’s “Policy Guidance for Closed Basin Lakes.”
You must have NFIP flood insurance coverage continuously in effect
from a date established by FEMA until you file a claim under
paragraph T.2. If a subsequent owner buys NFIP insurance that goes
into effect within 60 days of the date of transfer of title, any gap in
coverage during that 60-day period will not be a violation of this
continuous coverage requirement. For the purpose of honoring a
claim under this paragraph T.2., we will not consider to be in effect
any increased coverage that became effective after the date
established by FEMA. The exception to this is any increased coverage
in the amount suggested by your insurer as an inflation adjustment.
h. This paragraph T.2. will be in effect for a community when the FEMA
Regional Administrator for the affected region provides to the
community, in writing, the following:
(1) Confirmation that the community and the State are in
compliance with the conditions in paragraphs T.2.e. and T.2.f.
above, and
g. The date by which you must have flood insurance in effect
U.
Duplicate Policies Not Allowed
1. We will not insure your property under more than one NFIP policy.
If we find that the duplication was not knowingly created, we will give you written
The policyholder cannot benefit from the duplicate flood insurance coverage if a
policyholder has two NFIP policies insuring the same property. The first policy
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notice. The notice will advise you that you may choose one of several options under
the following procedures:
a. If you choose to keep in effect the policy with the earlier effective
date, you may also choose to add the coverage limits of the later
policy to the limits of the earlier policy. The change will become
effective as of the effective date of the later policy.
b. If you choose to keep in effect the policy with the later effective date,
you may also choose to add the coverage limits of the earlier policy to
the limits of the later policy. The change will be effective as of the
effective date of the later policy.
In either case, you must pay the pro rata premium for the increased coverage
limits within 30 days of the written notice. In no event will the resulting coverage
limits exceed the permissible limits of coverage under the Act or your insurable
interest, whichever is less.
We will make a refund to you, according to applicable NFIP rules, of the premium
for the policy not being kept in effect.
2. Your option under Condition U. Duplicate Policies Not Allowed to elect
which NFIP policy to keep in effect does not apply when duplicates have
been knowingly created. Losses occurring under such circumstances will
be
adjusted according to the terms and conditions of the earlier policy. The
policy with the later effective date must be canceled.
purchased is the policy in force at the time of loss.
When there is no loss involved, the policyholder may choose to keep either policy.
The effective date of the increased coverage begins on the renewal date of the
second policy purchased if the policyholder chooses to combine the coverage
amounts purchased, and the combined coverage does not exceed the statutory
limits.
V.
Loss Settlement
1. Introduction
This policy provides three methods of settling losses: Replacement Cost,
Special Loss Settlement, and Actual Cash Value. Each method is used for a
different type of property, as explained in a–c. below.
a. Replacement Cost Loss settlement described in V.2. below applies to
buildings other than manufactured homes or travel trailers.
b. Special Loss Settlement described in V.3. below applies to a
residential condominium building that is a travel trailer or a
manufactured home.
c. Actual Cash Value loss settlement applies to all other property
Refer to policy language.
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covered under this policy, as outlined in V.4. below.
2. Replacement Cost Loss Settlement
a. We will pay to repair or replace a damaged or destroyed building,
after application of the deductible and without deduction for
depreciation, but not more than the least of the following amounts:
(1) The amount of insurance in this policy that applies to the
building;
(2) The replacement cost of that part of the building damaged, with
materials of like kind and quality, and for like occupancy and
use; or
(3) The necessary amount actually spent to repair or replace the
damaged part of the building for like occupancy and use.
b. We will not be liable for any loss on a Replacement Cost Coverage
basis unless and until actual repair or replacement of the damaged
building or parts thereof, is completed.
c. If a building is rebuilt at a location other than the described location,
we will pay no more than it would have cost to repair or rebuild at the
described location, subject to all other terms of Replaceme
nt Cost Loss
Settlement.
The insurer does not have to withhold the recoverable depreciation until the owner
makes the building repairs as required in SFIP Section VIII.V.2.b. and c. when the
structure is eligible for replacement cost loss settlement.
3. Special Loss Settlement
a. The following loss settlement conditions apply to a residential
condominium building that is:
(1) a manufactured home or a travel trailer, as defined in II.B.6.b.
And c., and
(2) at least 16 feet wide when fully assembled and has at least 600
square feet within its perimeter walls when fully assembled.
b. If such a building is totally destroyed or damaged to such an extent
that, in our judgment, it is not economically feasible to repair, at least
to its pre- damaged condition, we will, at our discretion, pay the least
of the following amounts:
(1) The lesser of the replacement cost of the manufactured home
There are two ways to settle a loss on a manufactured or mobile home or a travel
trailer.
Total loss is a property that is either not repairable (i.e. destroyed) or the cost to
repair exceeds the value of the property:
• If the dwelling is 16 feet wide, at least 600 total square feet, and the principal
residence, the loss adjustment is the lesser of the following:
− Replacement cost, i.e. the value of a new manufactured or mobile home,
or travel trailer of like kind and quality, delivered to and installed at the
described location.
− 1.5 times the actual cash value, i.e. 1.5 times the documented book
value for the year of the existing manufactured or mobile home, or travel
trailer, delivered to and installed at the described location.
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or travel trailer or 1.5 times the actual cash value; or
(2) The Building Limit of liability shown on your Declarations Page.
c. If such a manufactured home or travel trailer is partially damaged
and, in our judgment, it is economically feasible to repair it to its pre-
damaged condition, we will settle the loss according to the
Replacement Cost Loss Settlement conditions in V.2. above.
−
Amount of coverage purchased under Coverage A - Building.
Repairable loss or a loss not considered a total loss:
• If the manufactured or mobile home or a travel trailer is 16 feet wide, at least
600 total square feet, and the principal residence, settle the loss under
Replacement Cost Loss Settlement. (See Section VII.V.2.)
• If the manufactured or mobile home or a travel trailer is not 16 feet wide, or
not at least 600 total square feet, or not the principal residence, settle the
loss under Actual Cash Value Loss Settlement. (See Section VII.V.4.)
The requirement for a policyholder to purchase building coverage to at least 80
percent of the manufactured or mobile home or a travel trailer’s replacement cost
value does not apply under Special Loss Settlement.
4. Actual Cash Value Loss Settlement
a. The types of property noted below are subject to actual cash value
loss settlement:
(1) Personal property;
(2) Insured property abandoned after a loss and that remains as
debris at the described location;
(3) Outside antennas and aerials, awnings, and other outdoor
equipment;
(4) Carpeting and pads;
(5) Appliances; and
(6) A manufactured home or mobile home or a travel trailer as
defined in II.B.6.b. or c. that does not meet the conditions
for Special Loss Settlement in V.3. above.
b. We will pay the least of the following amounts:
(1) The applicable amount of insurance under this policy;
(2) The actual cash value (as defined in II.B.2.); or
(3) The amount it would cost to repair or replace the property with
material of like kind and quality within a reasonable time after
the loss.
An actual cash value loss settlement is the cost to repair or replace insured building
items at the time of the loss, less the building deductible and less its physical
depreciation.
Appliances include refrigerators, stoves, ovens, ranges, trash compactors, garbage
disposals, and the like.
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IX. Liberalization Clause
Policy Language Additional Explanation
If we make a change that broadens your coverage under this edition of our
policy, but does not require any additional premium, then that change will
automatically apply to your insurance as of the date we implement the
change, provided that this implementation date falls within 60 days before or
during the policy term stated on the Declarations Page.
Insurers cannot apply additional coverages provided through the liberalization clause
retroactively to losses that have occurred; insurers can apply it prospectively. The
clause permits FEMA to give existing, active policyholders beneficial amendments
without needing to separately endorse their policies but does not provide any
retroactive effect.
X. What Law Governs
Policy Language Additional Explanation
This policy and all disputes arising from the handling of any Insurance Act of
1968, as amended (42 U.S.C. 4001, et seq.), claim under the policy are
governed exclusively by the flood and Federal common law insurance
regulations issued by FEMA, the National Flood Insurance Act of 1968, as
amended (42 U.S.C. 4001, et seq.), and Federal common law.
Refer to policy language.
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Section 2: Claims Processes and Guidance
Section 2: Claims Processes and Guidance
This section provides FEMA guidance and claims processes. The primary audience is claims
adjusters with call out boxes denoting the claims examiners’ roles/responsibilities.
1 Adjuster Preliminary Damage Assessment
The adjuster completes the Adjuster Preliminary Damage Assessment (APDA) form when there is
potential of “substantial damage” to the insured building due directly from flood, including non-
covered flood damage. All adjusters should adhere to the following:
Substantial damage is damage from any origin where the cost to repair generally equals or
exceeds 50 percent of the market value of the building at the time of the flood.
13
The adjuster
should know that some communities have adopted a percentage threshold less than 50 percent.
For the purpose of claim handling, the adjuster should complete and submit an APDA when the
estimated cost to repair flood damage approaches or exceeds 50 percent of the RCV of building.
As of this writing, the APDA form contains space for two separate claims. However, the adjuster
should submit the form after completing the assessment of the first claim. Adjusters should not
wait to submit the form after a second assessment is added to the form. One claim per form also
helps to avoid confusion during the review process at the community level.
The timeliness of an APDA’s submission is important. FEMA requests that APDAs are completed
and submitted at the time the adjuster completes the Preliminary Report. Community officials
can efficiently direct resources for substantial damage inspection when APDAs are received early
in the flood disaster recovery process.
Submit ADPA forms to the NFIP by email at [email protected]. The subject line
should read “APDA Enclosed.”
The adjuster should send a copy of the APDA to the insurer as an attachment with the
Preliminary Report. It should also be resubmitted along with the Preliminary Report, when the
closing report is completed and submitted to the insurer.
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44 C.F.R. § 59.1 (2018).
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Claims Examiners
The examiner should confirm the adjuster timely submits an APDA on applicable claims by checking for a copy of
the APDA with the Preliminary Report. When an APDA is not included with the Preliminary Report the examiner
should assume the adjuster did not submit an APDA. The examiner should contact the adjusting firm to ensure the
APDA is submitted to the NFIP BSA and to request a copy for the claim file. Note the local building official is the
authority who determines a building as substantially damaged, and the requirement for compliance with the local
floodplain management ordinance.
2 Advance Payments
FEMA encourages advance payments to policyholders whenever it is warranted. The adjuster
should notify the policyholder that they may be requesting an advance payment on their behalf,
and to expect the payment through their local U.S. mail carrier or express mail service.
Therefore, the adjuster must verify the mailing address. FEMA recommends two advance
payment opportunity types for insurers to use as they find suitable:
2.1 Advance Payment Opportunity One: Pre-Inspection
$5,000 pre-inspection advance
. To accommodate the needs of its policyholders during major flood
event, NFIP insurers may offer policyholders an advance payment before an adjuster inspects the
loss.
FEMA allows a payment of this type up to $5,000 on building and contents losses combined less
deductibles. The insurer must obtain and verify the following information before the payment is
issued:
1.
The policyholder provides the insurer with a notice of loss in accordance with the SFIP.
2.
The insurer verifies that the subject property is covered by an active flood insurance policy
and confirms current coverage terms, amounts, and deductibles.
3.
The policyholder gives verbal or written statements to the adjuster or examiner. The
adjuster or examiner documents these statements and provides additional information to
the insurer confirming the following:
a.
Relating to the flood:
i.
A flood, as defined by SFIP, affected the insured property.
ii.
Names the source of the flood.
iii.
Briefly describes how the flood occurred; when in doubt obtain supporting
documentation available from an official weather bureau or reputable news media.
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iv.
Explains other affects from the flood event to support the loss is in excess of the
advanced amount: Was the street flooded? Are neighboring properties and
buildings also flooded?
b.
Relating to flood depth and damage:
i.
Provides the approximate depth of floodwater on the exterior of the building and
the approximate depth inside the interior floor level.
ii.
Details whether the extent of damage is limited to an area subject to coverage
limitations such as a basement or lower enclosure, or the extent of damage is in a
ground level floor or elevated floor level.
iii.
Briefly describes damage to the building and to personal property content items.
iv.
Addresses any prior loss to avoid a duplication of payment of non-repaired property
items.
$20,000 pre-inspection advance
. An NFIP insurer may issue a larger advance payment amount
before the loss is inspected by an adjuster when it obtains more substantive documentation. The
NFIP allows a payment of this type up to $20,000 on building and contents losses combined less
deductibles. For this type of pre-inspection advance payment, in addition to obtaining and
verifying the above items 1 to 3, the insurer should also obtain the following:
1.
Photographs. Obtain the proper number of photographs depicting floodwater depths and
damage to building and personal property items.
2.
Documentation of cost. Verify out-of-pocket expenses related to the repair or replacement
of covered property, such as with paid receipts, invoices, or estimates with canceled
checks; or an estimate signed by the contractor on letterhead that itemizes the repair or
the facilitation of repairs, to covered property.
2.2 Advance Payment Opportunity Two: Post-Inspection
25 percent advance
. NFIP insurers may issue an advance payment amount once the adjuster
inspects the property and after providing the insurer with the Preliminary Report and any other
applicable documentation that is normally submitted or required with the Preliminary Report,
including but not limited to the proper number of photographs, policyholder-signed Advance
Payment Request form, and any underwriting memorandum, APDA, adjuster narrative
addressing a prior NFIP paid loss. The NFIP allows a payment of this type up to 25 percent of the
reserve amount indicated on the Preliminary Report for each coverage type, building or contents
less deductible(s).
50 percent advance.
The insurer may issue a larger advance payment amount when it obtains
more substantive documentation. The NFIP allows a payment of this type up to 50 percent of the
reserve amount indicated on the Preliminary Report for building coverage less deductible. For
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this type of post- inspection advance payment, in addition to obtaining and verifying the above
in the preceding paragraph, the insurer should also obtain a signed contract between the
policyholder and the contractor along with the estimate of repair. The estimate should itemize
the repair and cost to covered property.
Building Valuation Loss Assessment.
The insurer may issue a post-inspection advance payment
based on the FEMA-authorized Building Valuation Loss Assessment (BVLA) advance payment
method. In addition to the Preliminary Report and any other applicable documentation that is
normally submitted or required with the Preliminary Report, including but not limited to the
proper photographs, policyholder-signed Advance Payment Request form, any underwriting
memorandum, APDA or adjuster narrative addressing a prior NFIP paid loss. The adjuster must
also submit a properly completed BVLA worksheet to the insurer. See Appendix J in this manual
for the BVLA method and frequently asked questions.
WYO’s proprietary approach.
The insurer may issue a post-inspection advance payment based on
the WYO Company’s own proprietary estimation approach. This approach and payment method
may not broaden or change any coverage term with the SFIP. The insurer must document any
deviations from normal FEMA processes and include a reference to the proprietary process in
the claim file. As with the BVLA advance payment method, a claim payment under the insurer’s
own proprietary estimation approach is subject to all standard FEMA claim documentation and
payment standards.
2.3 Procedures for Issuing Advance Payment
Claims Examiners
An NFIP insurer may offer an advance payment upon written, verbal, or electronic request by the policyholder.
With any advance payment, the insurer must include a written notice conditioning the advance payment on the
policyholder’s acknowledgment that:
1. The NFIP advance payment is not intended to provide reimbursement to the policyholder for non-SFIP insured
expenses, such as costs related to evacuation, temporary housing while the home is non-inhabitable, a rental
car to cover the loss of a personal vehicle, or any other expense not covered by the SFIP.
2. The issuance and acceptance of an advance payment does not prejudice or waive any claim or defense
available to either the policyholder or insurer.
3. The issuance and acceptance of an advance payment does not constitute an admission of coverage under the
policy.
4. The policyholder must assert the insured property has suffered a covered loss.
5. If the insurer determines the claim is not a covered loss, or if the advance payment exceeds the amount of the
covered loss, the policyholder is ineligible for the payment and agrees to repay the advanced payment in
excess of the covered loss.
6. Acceptance of an advance payment will not affect the policyholder’s right to seek additional payment under
the terms and conditions of the SFIP.
7. After the claim is settled, the insurer will reduce the final payment by the amount of any advance(s) payment
made to the policyholder.
8. Building only: The insurer must include as co-payee any mortgagee shown on the Declaration Page of the
policy or any known mortgagee on any advance payment for building coverage.
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Claims Examiners
9. To finalize the claim, the policyholder must execute a proof of loss meeting the requirements of the SFIP for all
amounts received, including the amount of the advance payment, except as may otherwise be authorized by
the Administrator under any applicable waiver.
2.4 Advance Payments Exceeding the Covered Loss
Adjusters and examiners must make sure they avoid recommending and issuing advance
payments that exceed the final total claim payment. Adjusters and examiners should account for
the following factors when determining the amount of an advance payment in order to avoid
issuing an advance payment in excess of the covered loss:
1.
Amount of deductible;
2.
Interior water depth;
3.
Other non-flood related damage such as wind, water, etc.;
4.
Pre-loss condition and ACV of damaged property, especially if a previous flood
payment was issued;
5.
Scope of damage such as when limited to a basement or lower enclosure with a
post-FIRM elevated building subject to coverage limitations; and
6.
Use of flood avoidance measures, such as sandbags or property removed to safety.
Claims Examiners
If an NFIP insurer issues an advance payment to the policyholder in excess of the covered loss, the NFIP insurer
must attempt to recoup the funds. The following are the minimum steps the NFIP insurer must perform under
such circumstances:
1. The insurer must send a letter via certified mail or equivalent trackable delivery service to the policyholder
containing the following information:
a. The amount due.
b. A description of the charges.
c. A description of the remedies available to the NFIP upon failure to repay the amount due by the
deadline, including but not limited to Federal Debt Collection pursuant to 44 CFR Part 11, Subpart A.
d. The deadline for either submitting payment or disputing the validity of the overpayment, which must be
at least 30 days from the date of the letter.
e. Contact information for an individual representing the insurer that the policyholder can contact directly
to dispute the validity of the overpayment or seek more information.
2. If the policyholder does not pay the amount due by the stated deadline, the insurer must attempt to contact
the policyholder via phone and then send a follow-up letter via certified mail or equivalent trackable delivery
service to the policyholder's last known address.
If an NFIP insurer is not able to recoup the ov
erpayment after making its best efforts, the NFIP insurer must provide
FEMA with the following documentation:
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Claims Examiners
1. A narrative explaining the basis of the overpa
yment determination and identifying the insurer's efforts to recoup
the funds.
2. Copies of all written correspondence with the policyholder regarding the overpayment.
3. A copy of the claim file.
See Claim Overpayment Recovery in this section of the manual.
3 Appraisal
Claims professionals should only use appraisal to resolve disputes involving the amount to pay
for flood damages. Appraisal is not appropriate for determining the scope, coverage, or
causation of damage.
Appraisal is an option of last resort and it should not supplant the claims adjustment process.
Filing a lawsuit is the last resort for settling a disputed claim.
FEMA encourages the policyholder and the insurer to exhaust all other avenues available to
determine the fair price for an agreed-to loss. This includes the policyholder providing
contractors’ estimates, receipts, invoices, photographs, and any other relevant documentation
or a written explanation to support their claim of a fair price for the agreed-to loss.
The SFIP allows appraisal under the following conditions:
• The policyholder and the insurer must agree on the scope of loss (damage). There must
be an agreed list of covered items damaged by flood. Appraisal is not available if the
policyholder and insurer cannot agree on the scope of loss. Insurers cannot use
appraisal if the policyholder submits an appeal to FEMA or initiates litigation. Appraisal
must result in complete resolution of the entire claim.
• The policyholder must submit a timely and completed proof of loss with supporting
documentation for the items the policyholder seeks appraisal. If the policyholder
submitted a signed and sworn proof of loss and the insurer paid the amount in full,
there is no dispute regarding pricing and no need for appraisal.
• The policyholder must provide documentation with the proof of loss that explains,
supports or otherwise justifies the increased cost. The insurer should not accept the
request for appraisal simply from an estimate with increased unit pricing and no
justification included. This is not a complete proof of loss.
• Appraisal is available only when the insurer and the policyholder agree on eligibility,
causation, coverage, and scope of loss, except they do not agree on the value of the
covered loss. Appraisal is only available under the SFIP for differences with unit pricing,
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which also includes differences with the scope to repair the agreed covered scope of
loss.
Appraisers and umpires must be competent and impartial. Appraisers and umpires cannot profit
from a higher claims payment made to a policyholder. If the policyholder hires a public adjuster
or attorney, and the basis of their fee is securing a higher claims payment for the policyholder,
no one employed, affiliated with, or related to the public adjuster or attorney can serve as the
appraiser or the umpire. The same rule applies to the insurer. No one employed, affiliated with,
or related to the adjuster or owner of the adjusting company who receives a fee based upon the
policyholder receiving a higher payment can serve as an appraiser or umpire.
If the insurer agrees and invokes the policyholder’s request for appraisal, the policyholder may
not subsequently file an appeal to FEMA on the same items or the same dispute reason.
Similarly, if the policyholder submits an appeal to FEMA, the insurer may not invoke the appraisal
provision at their policyholder’s request.
4 Cisterns
Cisterns, their components, and the water in them, are covered when installed or located within
the building, an eligible detached garage, or an enclosed porch, including within an enclosure or
basement.
The SFIP does not cover cisterns, components, or water, that are installed or located outside of
the areas defined above, including cisterns installed underground.
Figure 41. Example of a Covered Cistern in a Basement
Photograph credit Port City Daily
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Figure 42. Example of a Non-covered Cistern Outside
Figure 43. Example of a Non-covered Cistern Below Ground
Photograph credit well-water-report.com
5 Claims Adjustment
The adjuster should use judgment and justification when determining the covered scope of loss
and dollar amount of the claim. The adjuster must have an understanding of what factors may
be involved with the claim that may or may not affect the covered scope of loss and the dollar
amount to repair or replace an item. The adjuster should always justify their recommendation
and obtain the documentation and explanations that supports this judgment and the dollar
amount recommended for the claim.
During the claim process, the adjuster should consider utilizing information provided by FEMA
(e.g., GIS products), from state or county government websites (e.g., online community building
property assessor pages), from publicly available information (e.g., online real estate listings), or
from open-source map products that show the property in its pre-disaster condition.
The adjuster must confirm that the flood caused the direct physical loss. This can require
canvassing the neighborhood to identify if other properties flooded, interviewing neighbors,
reviewing news articles or videos documenting the flood. For some events, contacting the
nearest police department or fire department, etc. may be beneficial in confirming a
questionable condition of flood.
5.1 Building Scope and Estimate
Before adjusting losses, the adjuster should ensure software is properly calibrated for the
geographic area where the loss occurred, and accounts for post-disaster pricing factors and
property-specific issues. In the claim file, the adjuster should document the most accurate scope
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of loss, provide notations for exceptional scope, quantity and quality, and the adjuster must take
or obtain meaningful photographs of the loss. The adjuster should consistently document all
state and local sales tax on applicable goods or services, subject to applicable depreciation.
The adjuster should identify covered flood-damaged building components and estimate the
reasonable and necessary cost of repair or replacement of the damaged property. The scope of
damage includes room measurements, preliminary damage findings, and photographs that
document and describe the quantity, quality, and extent of damage to covered property. The
adjuster may translate the adjustment of the scope of loss into an adjusted estimate of repair.
The adjuster should determine if damaged items are salvageable requiring cleaning, refinishing,
repair, or if the damages are non-salvageable requiring replacement. In the estimate of loss, the
adjuster should include the itemized listing of all of the damaged property items, organized room
by room, in the unit-cost style of estimating. The unit pricing should include all costs related to
labor, material, and equipment usage, and only include the expense, which restores the property
with like kind and quality material and labor. The pricing should be reasonable and customary to
the loss and location.
Once the policyholder obtains a signed agreement with the contractor and if differences exist
with the insurance estimate, it may be necessary for the adjuster, supervising adjuster, or the
claim examiner to communicate with the policyholder and the contractor to understand the
pricing differences or explain coverage issues in order to reach a claim settlement.
Claims Examiners
The examiner should conduct a timely review of the estimate to confirm:
• The photographs reasonably document the estimate scope. Timely request additional photographs
or a re- inspection when there is a question; and provide status to the policyholder.
• No manual entry errors, i.e. ensure the quantity matches what is in the risk.
• Contents manipulation estimated under building coverage is limited to covered undamaged personal items
and the policyholder must have purchased personal property coverage. See Contents Manipulation in
Section 2 of this manual, for more information.
• The estimate appropriately addresses necessary structural drying and makes allowances for it.
• The estimate written for covered items, i.e. bids used to substantiate value/repair cost do not include
undamaged items or matching equipment. An example: replacing undamaged air handlers to match
external HVAC units due to change in SEER ratings or refrigerant.
• The estimate is written on a room-by-room, line item, unit cost basis with reasonable recoverable
and non-recoverable depreciation applied based on age and condition.
• The adjuster has identified the proper quantity, measurements, and unit costs for items.
• Building, or applicable line items, qualifies for replacement cost or actual cash value settlement.
• Proper deductible applied.
• No non-covered structures, e.g., sheds, garages with living quarters, carports, decks (over 16 square
feet), etc., are considered in the estimate.
• Applicable coverage limitations applied for basements and elevated buildings in SFHA.
• The adjuster’s quantity and unit cost calculations are accurate based on item, area, and room.
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5.2 Contents (Personal Property)
Adjusters should always assist the policyholder in understanding how to prepare a properly
documented contents claim. In some instances, the adjuster may be expected to list,
document, and value the entire contents loss and provide it to the policyholder for review.
For a contents loss, the adjuster should always include documentation to support the claimed
loss in terms of photographing the extent of damages, quantities, qualities, and value. The
adjuster must ensure coverage and depreciation are appropriately applied. Adjusters must also
explain their judgment regarding recommending repair vs. replacement, when it may not be
apparent to the policyholder or the examiner. Where necessary the contents insurance listing
should include notations specific to the applicable line item on the contents list regarding
descriptions of quality, quantity, special limit item, and the like. This may be necessary from a
customer’s point of view, or from the examiner’s perspective.
The adjuster should list damages room-by-room, priced individually with like kind and quality,
and include all costs related to applicable tax, removal, shipping, assembly, and the like. Each
replaced item must individually include a fair and reasonable rate of depreciation representing
the age and/or physical condition of the item at the time of loss.
The adjuster should address any salvage or financial buy-back opportunity with the
policyholder or with a third-party, promptly, and report on that status in an interim status or
the closing narrative report. When the policyholder agrees to buy-back ruined property items,
this should be fully disclosed in the contents loss as a credit under the applicable property line
item.
5.3 Special Limits
The adjuster should apply the $2,500 special limit to the aggregate ACV of all applicable
contents described at SFIP, Section B.6., such as jewelry, furs, contents used in business, etc.
The adjuster should add documentation to the claim file to support the payment
recommended under this provision. The aggregate ACV is subject to the policy deductible and
any excess loss to items subject to the $2,500 special limits cannot be applied to the contents
deductible.
5.4 Depreciation
The adjuster should apply depreciation for the age and physical condition to each line item in the
building estimate and the personal property inventory that is claimed at replacement cost. The
adjuster should apply depreciation to the material, labor, and equipment usage, including
overhead and profit and sales tax. All estimates must reflect depreciation regardless of whether
the loss in general or in particular to a specific item qualifies for replacement cost or ACV loss
settlement. The adjuster should document the claim file to support the rate of depreciation or
the lack of depreciation. A bottom-line lump sum depreciation rate or dollar amount applied to
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the adjustment or estimate total is not acceptable. Applying the same rate of depreciation to all
building and personal property items throughout the adjustment or estimate, despite the many
differences in material type, age, and usage, is also not acceptable with NFIP claim handling.
5.5 Progress Notes in File
The adjuster should note information that adequately reflects the progress of the claim and
communications with the policyholder in the file. The adjuster should also include the scope of
damage, calculations of replacement cost and actual cash value, and a diagram of the insured
building with measurements and acknowledgement or confirmation of receipt of documents or
information provided by the policyholder in the file.
Claims Examiners
The examiner should conduct a timely review of the estimate to confirm:
• The contents inventory includes description, age, and cost to replace with like, kind, and quality at current
year pricing.
• The photographs reasonably document the damage to support repairing or replacing an item. Timely
request additional photographs or a re-inspection when there is a question and provide a status to the
policyholder. Photographs should document contents items of exceptional value and quality.
• The adjuster considered a reasonable repair allowance, or the policyholder provided a repair estimate to
supplement the settlement amount.
• The adjuster determined or verified local replacement costs of damaged property based on like kind and
quality.
• $2,500.00 special limits applied to the aggregate of applicable contents (jewelry, furs, contents used in
business, etc.).
• The adjuster applied reasonable non-recoverable physical depreciation based on age and condition of the
item at the time of loss.
• The adjuster added appropriate sales tax. The adjuster applied the proper deductible.
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6 Claim Closed Without Payment Reasons
Claims Examiners
The examiner should carefully review the adjuster’s report for claims that are to be closed without payment, and
use the correct Closed Without Payment (CWOP) reason code in accordance with the NFIP Transaction Record
Reporting and Processing (TRRP) Plan. Proper coding is necessary to ensure the appropriate expense payment is
issued. Use the erroneous assignment code when the adjuster receives an assignment in error prior to inspection.
Table 11. CWOP Reasons
Code
Reason
01 Claim denied that was less than deductible
02 Seepage
03 Backup drains
04 Shrubs not covered
05 Sea wall
06 Not actual flood
07 Loss in progress
08 Failure to pursue claim
09 Debris removal only
10 Fire
11 Fence damage
12 Hydrostatic pressure
13 Drainage clogged
14 Boat piers
15 Not insured, damage before inception of policy
16 Not insured, wind damage
17 Type of erosion not included in definition of flood or flooding
18 Landslide
19 Type of mudflow not included in definition of flood or
flooding
20 No demonstrable damage
97 Other
98 Error delete claim (no assignment)
99 Erroneous assignment
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7 Communications from Attorneys, Public Adjusters, and Other
Policyholder Representatives
Adjusters should notify the insurer promptly when they become aware a policyholder is
represented. This notification should be forwarded with the Preliminary Report or as an interim
status report and include any documents received related to this representation. Adjusters and
examiners should always put forth a courteous effort with policyholder representatives during
the entire flood claim process. As a Federal program, all stakeholders, including FEMA, must
adhere to the Privacy Act. The relevant DHS regulation (applicable to FEMA) regarding Privacy
appears at 6 CFR 5.21.
Letter of Representation.
Whenever the policyholder authorizes a party to speak with an NFIP
stakeholder about their claim, including FEMA, the policyholder will need to do so in writing.
By law, the NFIP stakeholder must obtain this authorization to protect the policyholder’s
privacy.
Privacy Release.
To authorize another individual to represent the policyholder, the policyholder
must also submit documentation that includes all named policyholders full name, address, date
and place of birth, the name(s) of the representative(s), and the policyholder(s) signature. The
policyholder must have this document notarized or include the following statement: “I declare
under penalty of perjury that the foregoing is true and correct. Executed on <DATE>.
<SIGNATURE>.”
Attorney representation.
When the policyholder becomes represented by an attorney, and the
proper letter of presentation and privacy release signed by the policyholder is obtained,
adjusters and examiners must ensure all verbal and written communications are held directly
with the attorney, unless approved by the attorney.
Public adjusters
. A public adjuster is an individual who negotiates coverage, scope, and price on
behalf of the policyholder. When the policyholder is represented by a public adjuster, FEMA
recommends that the adjuster and examiner send all written communications, including the
insurer-adjuster-prepared proof of loss, to both the public adjuster and the policyholder. A
best practice after verbally communicating with the public adjuster during an inspection or
over the telephone is to follow up with a written correspondence or email to the public
adjuster copying the policyholder. Keep in mind that a public adjuster must be licensed and in
good standing in the state and have a signed contract with the policyholder before they may
communicate with NFIP representatives regarding the claim.
Other types of representatives.
Whether given the permission to speak with the NFIP
stakeholder or not, only attorneys and public adjusters are legally permitted to negotiate
coverage, scope, and price on behalf of the policyholder. Neighbors, other adjusters,
estimators, or contractors are not allowed to practice “public adjusting” on the claim; that is
negotiate coverage, scope, and price with the insurer or one of its representatives. With the
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proper documentation provided, a policyholder’s representative may be the spouse or an
immediate family member acting on the policyholder’s behalf. This is often the case when the
policyholder is ill, in the hospital, out-of-the country, or otherwise incapacitated.
Claims Examiners
When an insurer receives a communication that contains a time demand (a specific action by a specific date), a
request to reopen the claim, seeks additional payment, or a proof of loss submission, the examiner should
promptly review the request and determine the appropriate action.
When a policyholder, or representative, submits a proof of loss, the examiner should review to determine if the
proof of loss supports payment of the claim in part or in whole and issue the appropriate payment. If the proof of
loss is received after the 60 days (or after any extension granted by the Administrator), a proof of loss Waiver may
be required. See Proof of Loss Waiver in Section 2 of this manual.
When the information provided does not support the request for payment outlined in the proof of loss, the
examiner should reject the proof of loss, in whole, or in part, and communicate the decision to the policyholder
or representative along with a partial denial letter when appropriate. The claims examiner should include in the
communication what the policyholder or their representative needs to provide to consider an additional
payment under the existing claim.
8 Condominium Claims Handling
Section 1312 of the National Flood Insurance Act (42 U.S.C. § 4019), as amended by section
100214 of the Biggert-Waters Flood Insurance Reform Act of 2012 (BW12), prohibits the NFIP
insurer from denying a payment requested by the condominium unit owner, who has building
coverage under the Dwelling Form, when covered damages under the Dwelling Form are not
payable under the association’s RCBAP due to policy limits or the application of coinsurance. In
general, BW12 here allows for the unit owner’s building coverage under the Dwelling Form, to
act as a type of excess flood insurance coverage after the RCBAP addresses the building loss
and the condominium association’s claim is settled.
The RCBAP Coinsurance provision at Section VII, applies a penalty when the building
insurance coverage purchased by the condominium association is less than 80 percent of the
full replacement cost of the RCBAP-insured condominium building, or less than the maximum
amount of insurance available. When determining the coinsurance penalty, the adjuster
should follow the recommended formula provided in Section 1 of this manual in SFIP RCBAP,
Section VII. Coinsurance.
Section III.C.3.b(4) of the Dwelling Form precludes payment for a loss assessment if the reason
for the deficiency is application of the RCBAP’s coinsurance penalty provision. Section VII.C.2
states that the RCBAP provides primary flood insurance coverage and the Dwelling Form
provides excess coverage if the Dwelling Form covers a unit in a condominium building where
the condominium association has purchased an RCBAP or other coverage for the
condominium structure. Section 100214 of BW12 prohibits the NFIP from enforcing Section
III.C.3.b(4) and that provision is hereby waived. Under certain circumstances, application of
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Section VII.C.2 also prevents implementation of section 100214 and that provision is hereby
waived in part where application of the provision would deny payment due to the coinsurance
penalty in the RCBAP. This will allow the Dwelling Form to respond as if the RCBAP coverage is
exhausted. In all other cases, the RCBAP will continue to be primary, and the Dwelling Form
will act as an excess flood insurance policy.
Section 100214 of BW12 does not alter, amend, or supersede the limits of coverage established
under 42 U.S.C. § 4013 or allow more than one payment for the same damaged item.
Accordingly, the combined building coverage of the RCBAP and the Dwelling Forms for units
within the building covered by the RCBAP cannot exceed $250,000 times the number of units,
nor can the payment for any one unit exceed $250,000 respectively.
9 Contents Manipulation
When a building or room in a building suffers damage, and the contents items stored within
the building or area require movement to facilitate buildings repairs, the task is known as
“contents manipulation”. To be eligible for coverage for contents manipulation, the
policyholder must have purchased both Coverage A – Building Property (building) coverage
and Coverage B – Personal Property (contents) coverage.
FEMA recognizes that the policyholder may need to manipulate undamaged insured contents
to repair covered building damage. These charges are often included in the contractor’s unit
cost(s) for items repaired or replaced and are not a separate charge to the policyholder. When
contractors present an itemized breakdown of their charges and contents manipulation is a
separate line item, the adjuster may separately allow for contents manipulation. Adjusters
may not make lump sum allowances or room- by-room contents manipulation allowances in
the estimate without providing supporting documentation of those costs. Coverage for
contents manipulation is subject to the following:
•
Only reasonable and necessary charges for contents manipulation.
•
Contents manipulation does not extend to items already included in the contents
claim as a repair or as a replacement.
•
If a contents item is non-covered property, is in an area of the building that is subject to
coverage limitations such as in a basement or certain lower enclosures, or exceeds special
limit coverage, the cost to manipulate the item(s) is not covered.
•
Manipulation of tenant’s personal property is not covered under the owner’s building
policy, even when the tenant has purchased contents coverage. In such cases when a
tenant has contents coverage and incurs reasonable costs to move contents to
facilitate flood damage repairs, the charge is covered only under the tenant’s contents
policy.
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•
Coverage for contents manipulation does not include the additional labor or cost to
remove or store contents outside of the insured building, or another appurtenant
building at the described location (Dwelling Form only), such as a portable storage
container placed at the described location, or personal property moved to storage at a
building at another location. The SFIP will only consider reasonable costs to move
personal property items within the insured building or within an appurtenant structure
(Dwelling Form only), to facilitate flood repairs to the building.
•
Contents manipulation is not “property removed to safety” as described in Section III.C.(b).
•
Documented contents manipulation expenses may be charged against the building
coverage when they are a function of the covered building repair.
10 Cooperative Buildings
Buildings in a cooperative form of ownership (referred to by FEMA as “cooperative buildings”)
are typically owned and managed by a corporation, and their ownership is different from the
condominium form of ownership. Residents within cooperative buildings typically buy shares
of the corporation, rather than the real estate (building, land, or both building and land) itself.
Shareholders of the cooperative corporation are provided a preferential lease agreement
from the corporation, which affords them the right to occupy a specific space or “unit” within
the cooperative building. Under the rules of the NFIP, cooperative-owned buildings where at
least 75 percent of the area is used for residential purposes are considered residential
occupancies. These buildings in a Regular Program community can be insured for the
maximum building coverage of $500,000 under the General Property Form in the cooperative
corporation’s name. Because they are not in the condominium form of ownership, these
cooperative buildings are not eligible for insurance under the RCBAP Form.
A shareholder in a cooperative building typically does not receive a real estate interest in the
building or unit, but rather shares of stock in the cooperative corporation with the right to
occupy a particular “unit” under a lease or rental agreement. Similar to tenants of non-
condominium apartment buildings, the shareholders of a cooperative building cannot purchase
building coverage under an SFIP Dwelling Form to cover their individual units. Shareholders of a
residential cooperative building can only access the maximum $100,000 contents coverage in
Regular Program communities under the Dwelling Form. Under certain circumstances, at the
policyholder’s option, 10 percent of the contents coverage may be applied to betterments or
improvements to the unit made at the insured shareholder’s expense.
FEMA is aware that there may be unusual forms of cooperative ownership. In some
cooperatives, a large number of the structures are owned by the individual shareholders
through an arrangement whereby the shareholders lease the buildings to the cooperative, and
the cooperative leases the buildings back to the shareholders, and the land on which the
buildings are located is owned by the cooperative corporation. At the termination of a lease,
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the owner of the building may remove the structure from the land owned by the cooperative.
Under this arrangement, the shareholders have an ownership interest in the buildings. Based
on this information, such owner-shareholders are eligible to purchase building coverage under
the appropriate SFIP.
In this situation, the cooperative corporation should be named as an additional loss payee, as
its interest may appear, and any mortgagee should also be named as an additional payee.
Claims on SFIPs issued to individuals or businesses owning buildings in such cooperatives are
payable, subject to all other requirements and limitations.
Claims Examiners
FEMA encourages insurers to review underlying cooperative documents to determine how cooperative buildings
are owned, as it may be that other cooperative arrangements exist that allow an individual to actually own the
building, and therefore be able to purchase building coverage.
11 Countertops
11.1 Common Countertop Types and their Repair or Replacement
When questions arise regarding the removal and resetting of countertop materials or
replacing the material following a flood, the adjuster’s judgment and obtained documentation
is important. FEMA has developed the following guidance to enhance the adjuster’s
knowledge of the various types of materials and precautions regarding removal and resetting
countertops:
•
Post-form, roll-top laminated countertops are manufactured prior to installation. The
plastic resin laminated surface is sometimes referred to as Formica®. The common
identifier for this type is that the laminated surface is molded over and around the front
edge and backsplash. The front edge of this type may have a more ornate style other than
the common bull-nose or rounded edge. Removal of single straight length roll-top
countertops can be performed without damage. However, if a single section of the
countertop has a mitered corner joint creating an “L-shape”, the removal process may
cause delamination of the top finish surface or separation of the mitered corner joint,
exposing the seam, requiring replacement.
•
Job-built, laid flat or self-edge laminated countertops are similar in material to the above
described “roll-top,” but are built at the job site to exact specifications. Its common
identifier is that the front edge and sides are always squared. When removal is necessary
to facilitate repairs replacement is often required, as the finish surface may partially
delaminate, resulting in damage to the substrate base material or to the backsplash.
When a job-built laminate countertop layout design is curved or L-shaped, damage during
removal is likely requiring replacement.
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•
Formed concrete and ceramic tile countertops are built on the job site to exact
specifications. They are constructed over a wood or rock-board type substrate material
that may be screwed or glued to the cabinet framing, or both. When removal is possible,
handling may cause twisting or bending of the countertop, which will crack mortar or
separate the finish material from the substrate. Replacing the top may be necessary.
•
Natural or man-made stone material such as granite and Silestone® can typically be
removed and reinstalled without damage. If the top is joined by two or more individual
pieces, a chemical is applied to the seam to dissolve the polymer which bonds the
material together prior to removal. If two or more slabs of stone countertop are
installed over a wooden substrate, typically 2cm thick type, then successful removal
may not be likely. If a backsplash is made of the same material and set over top of the
countertop’s rear edge, it is also possible to remove it without damage. However, if the
backsplash is a material such as ceramic tile, its removal is necessary to prevent damage
to the countertop and replacement of the backsplash may be required. Only supervised
labor experienced in handling this material should attempt to remove this type of
countertop, as the SFIP does not cover avoidable damage resulting from poor handling.
•
Corian® and other solid-surface (acrylic polymer) countertops can typically be
removed and reinstalled without damage. If the material cracks or breaks off during
removal or handling, the countertop material can be successfully repaired with the
application of an epoxy applied to the surface of each crack creating an invisible or
near invisible bond.
FEMA is aware of unique instances when a countertop can be damaged beyond repair directly
by or from flood. Cases in which an adjuster recommends replacement of the countertop, the
claim file must include documentation which explains and supports the judgment to replace,
rather than remove and reset.
11.2 Countertop Adjustment Concerns
A. Adjuster Documentation
At the initial loss inspection, the adjuster should examine, photograph, and document the
condition of the surface, edge, and underside of the countertop in a narrative report. The
adjuster should note the number adjoining seams of the countertop, as well as the material
thickness. Typically, the thickness of granite is in centimeters. The adjuster should note
substrate material covering any cabinet framing located underneath the countertop. This
documentation process applies to any countertop, sink, toilet, vanity top, bathtub, shower
stall, or other such fixture.
B. Discussion with Policyholder
The adjuster should discuss removal/re-installation with the policyholder and contractor (if
present) at the initial loss inspection. The adjuster should set the expectation that the
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policyholder and contractor salvage any countertop, sink, toilet, vanity top, bathtub, shower
stall or other similar items for re-use. The adjuster should inform the policyholder to notify the
adjuster immediately if damage occurs during removal including providing photographs when
necessary. The policyholder must retain and not discard items damaged during removal.
C. Determining Unavoidable Damage
Policyholders and contractors repairing or replacing damaged items must use reasonable care
when removing undamaged items. When the removal process irreparably damages a
previously undamaged item, the removal effort must support a finding that the damage was
unavoidable. The SFIP covers direct physical loss by or from a flood. The SFIP will not cover
avoidable damage.
D. Policyholder Documentation
The policyholder can best support a request for payment when unavoidable damage occurs
during the removal and replacement process with the following:
1.
Clear photographs of the damage at the time of occurrence.
2.
A signed detailed statement from the removal or repair contractor.
3.
The signed detailed statement must:
a.
Explain the action taken to remove the item.
b.
State how the damage occurred.
c.
Address salvage.
E. Completing the Adjustment
Once the policyholder provides the documentation noted above, the adjuster should adjust the
claim accordingly. Adjusters should factor in the additional time and labor to safely remove and
reset salvageable items. The adjustment should also apply the appropriate credit reflecting any
previously estimated allowance to reinstall. If the adjuster recommends no payment, the
adjuster should include an explanation in the estimate and narrative report.
12 Electronic Signatures
FEMA expects insurers to handle NFIP claims in a customer-centric manner as part of their
normal business practices. To improve the policyholder’s experience and to reduce
administrative burden, FEMA is approving and encouraging the use of electronic signatures on
proofs of loss and other NFIP-related submissions. FEMA will not deny the legal effect, validity,
or enforceability of a signature solely because it is in electronic form.
14
Insurers should accept
14
See Government Paperwork Elimination Act (GPEA), Pub. L. 105-277 § 1707 (44 U.S.C. 3504 note); Electronic Signatures in
Global and National Commerce Act (E-SIGN), Pub. L. 106-229 § 101(a) (15 U.S.C. 7001(a)).
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electronic signatures in accordance with their general business practices and applicable laws.
The General Services Administration (GSA) and the Federal Chief Information Officers
Council have provided joint comprehensive guidance on the best practices for accepting
electronic signatures.
15
Insurers may find this guidance helpful.
13 Expense Payments
13.1 Adjuster Fees
FEMA uses the current NFIP Adjuster Fee Schedule to make payment to insurers; the
insurers, in turn, make payment to the adjusters.
Current Adjuster Fee Schedule effective August 24, 2017 (See Appendix A)
For ICC claims, use the ICC fee schedule effective September 1, 2004 (See Appendix B)
Claims Examiners
Important
: FEMA expects examiners to take appropriate action when the adjuster’s work performance is
deficient:
1. Does not comply with NFIP standards,
2. Is improperly prepared, thereby requiring the claim to be substantially readjusted, or
3. When the claim handling is not timely or responsive to expectation with customer service and requires
reassignment.
14 Flood-In-Progress
SFIP Section V. B. excludes from coverage a loss caused by a flood that is already in progress at
the time and date the policy’s first term begins. In other words, a “loss-in-progress”, damage
from a flood that occurred before the policy’s inception date is not covered, even if the flood
event is still in progress after the policy’s first term begins.
When coverage is added at the request of the policyholder and a flood is already in progress,
coverage for damage that occurs to insured property after the policy’s inception date from that
same flood event, may not be covered. The exclusion of a “flood-in-progress” under this
provision is triggered by the earlier of the following situations:
1.
The date the community where the insured building is located experiences the flood, or
2.
The date and time of an event initiating a flood that causes damage, including but not
limited to:
15
Use of Electronic Signatures in Federal Organization Transaction, Version 2 (January 25, 2013), at https://cio.gov/wp-
content/uploads/downloads/2013/09/Use_of_ESignatures_in_Federal_Agency_Transactions_v20_20130125.pdf
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a.
A spillway is opened,
b.
A levee is breached
c.
Water is released from a dam, or
d.
Water escapes from the banks of a waterway (stream, river, creek, etc.)
These situations are provided for illustrative purposes only and do not encompass all instances
in which the Section V. B. exclusion is triggered. Individual losses will be evaluated on an
individual basis.
The Section V. B. exclusion is not limited to individual property, city, county, or parish
boundaries. FEMA will apply the Section V. B. exclusion regardless of individual property, city,
county, or parish boundaries if causation of the flood is clear.
FEMA does not interpret the Section V. B. exclusion as triggered only when floodwaters
physically touch the insured building.
The applicability of the Section V. B. exclusion is separate from the applicability of the 30-day
waiting period provisions found at 44 C.F.R. § 61.11. An insurance policy may be purchased
without the 30-day waiting period, but that does not mean that Section V. B. of the SFIP is
inapplicable.
The following questions and answers may be useful when communicating with policyholders:
What is flood-in-progress and how does it differ from the date of loss?
The date of loss is the date a flood, as defined in the SFIP, actually touches and damages NFIP-
insured property. A loss caused by a flood-in-progress at the time an SFIP comes into effect
may be subject to the flood-in-progress exclusion. If the SFIP was effective prior to the date the
flood in progress began, coverage will be effective. A flood is in progress on the earlier of either
the date the community in which the NFIP-insured property is located first experiences a flood
as defined in the SFIP, or on the date of an event initiating a flood that directly or indirectly
affects areas downstream or in a floodway.
Is damage caused by a flood-in-progress covered?
If a policy is in effect on the date the flood-in-progress begins, damage caused by the flood in
progress is covered, subject to the terms of the SFIP. If a policy is effective after the date the
flood is in progress, damage caused by the flood in progress most likely will not be covered.
However, each NFIP claim is adjusted individually and the cause of any loss, and any applicable
limitations or exclusion in the SFIP, is determined during the claims adjustment process.
15 GFIP Claims Handling
Group Flood Insurance Policies (GFIP) are handled solely by the NFIP Direct. They are
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assigned to adjusters and are handled the same as the SFIP with the following
exceptions:
•
Maximum GFIP coverage limit is the equivalent to the maximum grant amount
established under section 408 of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. § 5174) which FEMA updates at the start of each fiscal year
through publication in the Federal Register, 83 Fed. Reg. 53,281 .
•
The homeowner policyholder has the choice of whether to use the funds solely for
owned building damages, solely for owned contents damages, or for a combination of
owned building and contents; but the total cannot exceed the maximum GFIP limits. A
separate $200.00 deductible is applied to each coverage.
•
Adjuster must verify the policyholder is the owner of the home to qualify for building
coverage. The adjuster may request a copy of the deed or obtain information from
the local property assessor’s office or assessor’s website.
•
For renter policyholders, the GFIP is only for damaged contents owned by the
policyholder.
•
There is no underwriting review performed on a new GFIP, as it is awarded directly
from FEMA’s Individual and Housing Program. A GFIP policy does not include building
rating information, and among other items, the ownership, property address, and loss
payee may be inaccurate. The adjuster should obtain a fully completed questionnaire
from the policyholder, which helps to verify this required policy information, before
executing a proof of loss for the policyholder’s signature.
•
GFIP does not provide Coverage D – Increased Cost of Compliance Coverage.
16 Guidance on the Use of Outside Professional Services
16.1 When to request a Building Structural Evaluation
•
Cause of damage is uncertain
•
Extent of the damage is unknown
•
Discern the cost-effective method of repair
•
Policyholder contests the recommended loss settlement due to structural issues or
due to issues of causation with certain building items.
Adjusters should submit a request to the insurer to have the building’s structure evaluated as
soon as the need is identified. Table 12 details the issues that may require the assistance from
a qualified outside professional service.
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Table 12. Issues pointing towards a Building Structural Evaluation
Type
Qualifications
Exterior
• Any signs of foundation cracking or foundation movement.
• Any piers/pilings that are out of plumb or showing displaced connections.
• Any areas showing scour (washout) or erosion under or alongside the
foundation.
• Any evidence of vertical or lateral displacement of the brick veneer or siding.
• Any displacement of an exterior wall.
Interior
• Any floors that are cracked, separated, uneven, or out of level.
• Any structural elements that show movement including bowed or bulged walls.
• Any evidence of significant cracks in the interior finishes, such as cracks above
doors and windows or at the corners in wall covering material.
• Any evidence of moisture, leaks, or hydrostatic pressure present in floors or walls.
•
Any lower level configuration where precise elevations cannot be determined.
General
• To resolve questions concerning causation or repair methodology.
• Other types of experts can also be helpful when handling large commercial losses
involving damage to inventory including salvors, accountants, etc.
Note
: Each building loss is different so there will be instances where certa
in elements or
circumstances fall outside of the ordinary, therefore adjuster discretion is needed. The
above items are a non-exhaustive list to look for to aid the decision to involve a
qualified outsider professional service.
16.2 Outside Financial Accounting Professionals
A commercial loss involving damage to a significant quantity, value, or specialized type of
business contents loss may require the involvement of the services of a CPA to provide a
detailed report of findings. Here the role of the expert is to help promptly document and
certify the quantity and value of damaged inventory, goods in process, or raw materials. The
question of a financial recovery through a buy-back by the policyholder, or salvage through the
involvement of a third party, can also be addressed. The CPA’s involvement can also help
inform the policyholder what documentation is needed and how it can be presented to best
support their commercial contents loss quickly. A detailed report of findings is required when
a financial accounting professional is engaged.
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16.3 Insurers must comply with the following requirements regarding the use of
outside professional services
Claims Examiners
The licensure and rules regarding professional services vary by state. The NFIP insurer is responsible to make sure
the professional services it hires is familiar and compliant with state licensing requirements and the rules which
regulate the profession. When a report from a professional service is used to support the decision of the NFIP
insurer, the report must disclose it complies with state rules regulating licensure and professional conduct. If a
report does not meet the state’s requirement, the claim decision may become invalid, and FEMA will not approve
the insurer’s Special Allocated Loss Adjustment Expense (SALAE) Type 1 -Expert Expense, request for
reimbursement.
A.
Ensuring Compliance with Applicable Laws and Use of Reports
Insurers may only rely upon the use of outside professional service who perform work in accordance with all
applicable laws regarding professional licensure and conduct. For the purposes of this requirement, insurers and
their retained service providers may not assert that they are exempt from state licensing laws because they are
Federal employees, Federal contractors, or performing work for the Federal Government unless FEMA expressly
authorizes an exemption in writing.
FEMA will not pre-authorize an assignment to an expert, or expert fees. Insurers must obtain FEMA approval to
pay a SALAE 1 expense regardless of dollar amount.
Only an insurer, or vendor if authorized by the insurer, can request outside professional services.
When making an assignment, insurers should verify the entity and the individual from whom services are sought, is
qualified and licensed in good standing with the state where the insured property is located, before authorizing an
inspection.
When making an assignment for a professional service:
• Specify the type of service needed including the covered property to be inspected. The assignment
should be clear that non-covered property is not part of the assignment, unless the assignment involves
such determination. FEMA will not authorize expenses incurred to inspect or evaluate non-covered
property e.g. pools, pool decks, sidewalks, retaining walls that are not an integral part of the foundation,
bulkheads, non-covered buildings, etc.
• Secure a pre-inspection expense cost estimate to confirm expenses are fair and responsible before
authorizing the inspection. FEMA will not authorize payment for any expense that exceeds the original
quoted fee unless the engineer can document pre-approval from the insurer or authorized vendor prior
to the expense being incurred.
• FEMA will not pay for multiple engineers to conduct an inspection unless pre-approval was received from
the insurer with a detailed explanation that the inspection requires different expertise or disciplines to
evaluate the damage, for example a structural and electrical engineer.
• Engineers’ invoices must be itemized by time and expense (no lump sums). Inspection and travel time
should be reported separately and applicable receipts for air
travel, vehicle rental, hotel, tolls, parking etc.
provided. Exceptions should be clearly explained and documented.
• Insurers may not request changes to final reports, however insurers may request that experts prepare an
addendum to the final report.
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•
Insurers must keep the entire expert report in the claim file and provide a copy of the final expert report
and any addendums to the policyholder.
• Insurers must rely on the professional service to prepare requested reports in accordance with all
applicable state laws regarding professional licensure and conduct. To be reimbursed for engineering
expenses, documentation must validate that the engineer of record is qualified and licensed to work in
the state of the property inspected. Insurers and their retained experts may not assert that they are
exempt from state licensing laws because they are Federal employees, Federal contractors, or performing
work for the Federal government unless FEMA expressly authorizes an exemption in writing.
B.
Exclusive Reliance on Final Reports from Professional Services
When making claim decisions, insurers should only rely upon final reports that meet the proper disclosures and
reporting standard for the report type involved. Insurers must use such reports in context with all other relevant
information and data gathered throughout the claim investigation process when making a claim determination.
When a report involves a structural evaluation of the building, the professional service should disclose and report
at least the following:
• Date of inspection
• Individual who performs the inspection
• Building description and foundation type – all components
• Site observations supported with annotated photographs, analytical discussion, and conclusion
• Cost effective method to repair, when applicable
• Signature of the engineer of record with professional seal or state license number
• Name and curriculum vitae of all persons who assisted with the technical content of the report
• The engineer should not interpret SFIP terms and conditions or discuss coverage.
C.
Retention and Disclosure of Final Expert Reports from Professional Services
For the purposes of 44 CFR 62.23(i)(10), FEMA considers a final report from professional service a normal
component of a claim file. Accordingly, whenever the insurer retains professional service to investigate the claim,
the insurer must keep all reports in the claim file. When requested by policyholders, insurers must provide a
complete copy of the requested report.
D.
Avoiding Undue Influence on Analyses Performed by Outside Professional Services
Insurers and their representatives may not adopt any practice that may influence the opinions or recommendation
of the professional service. Insurers may not request changes to reports. However, when the insurer or a
representative has a question that requires a written response, they may request the professional service prepare
an addendum to final report in response.
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17 General Adjuster (GA) Re-inspection Request
Claims Examiners
All re-inspection requests must come directly from the NFIP insurer or the Federal Insurance Directorate to
NFIPFloodDisasterResponseMailbox@fema.dhs.gov.
The re-inspection program is designed to assist in maintaining quality claims processing within the NFIP. Re-
inspections are performed in cooperation with the insurers. There are five types of re-inspections:
1.
Special Assist;
2.
Congressional;
3.
FEMA Appeals;
4.
FEMA Requests;
5.
Random Claims Quality Check (RCQC).
For Special Assist re-inspections, the insurer claims management makes a request by email to the NFIP BSA at
NFIPFloodDisasterResponseMailbox@fema.dhs.gov. The email subject line should include the policy number and
the type of submission (ex. 1234567890 – Request for Re-inspection). The body of the email should contain the
policy number, policyholder name, property address, date of loss, and a brief description of the issues. Attach a
copy of the complete claim file, or upload to the SFTP site.
A GA will be assigned for a desk review or on-site re-inspection. The GA will contact the requestor to discuss the
file and determine if an insurer will accompany the GA on the on-site re-inspection.
Congressional, FEMA Appeals, and FEMA Requests are all sent by FEMA’s Federal Insurance Directorate.
RCQC is a practice by which the NFIP BSA chooses random claim files for review during disasters to
determine if the adjusters are properly handling the claim.
18 HVAC Equipment
The SFIP will pay for damage to Heating, Ventilation, Air and Cooling (HVAC) components,
when a component or the entire system suffers direct physical loss by or from flood. The SFIP
defines direct physical loss by or from flood as, “loss or damage to insured property, directly
caused by a flood. There must be evidence of physical changes to the property”.
Upgrades required due to change in cooling refrigerant or Seasonal Energy Efficiency Ratio:
When a new HVAC component replaces an existing component damaged by flood but is not
compatible to the existing undamaged HVAC component, the system may not function
properly or at all. The reason may be due to a different type of refrigerant, or a different
Seasonal Energy Efficiency Ratio (SEER) rating designed for each unit. SEER is the standard
used to measure the energy efficiency of building HVAC systems. As with refrigerants, federal
regulations require periodic increases in SEER ratings. Both rules were established to help our
nation consume energy more efficiently. Federal law requires the phase out of older
refrigerant types starting in 2010.
Although not covered by the SFIP, retrofit of the existing undamaged component could solve
the issue of component incompatibility. The most common retrofit in an undamaged interior
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HVAC unit (air-handler) is to replace the evaporator coil (E-coil). With an undamaged exterior
HVAC unit, a retrofit may be possible by replacing the compressor. Depending on the system
and incompatibility issues, simpler modifications may be available by installing a pressure
regulator or replacing the refrigerant with a different, but equally efficient, Environment
Protection Agency (EPA)-accepted variety.
In accordance with the SFIP, Section V.A.6-7, because the SFIP covers only damage to insured
property caused by direct physical loss by or from flood, the NFIP insurer cannot pay for the
cost to upgrade the HVAC system when the policyholder is forced to do so by law, regulation,
or ordinance.
Additionally, the Pairs and Sets provision under the SFIP (Section VII.A. of the Dwelling and
General Property Forms and Section VIII.A. of the RCBAP Form) does not provide coverage for
the undamaged component as the provision states it will pay only the fair proportion of the
total value of the pair or set that the lost, damaged, or destroyed article bears to the pair or
set.
19 Identification of Building Equipment, Appliances, Electronics, and
Mechanicals
The NFIP requires the adjuster to provide identifying information (manufacturer, model and
serial number, and whenever possible, capacity, etc.) on major building equipment such as
furnaces, central air conditioning units, and major appliances such as refrigerators, washers,
dryers, televisions, etc.
The adjuster must provide available identifying information on all covered flood damaged
appliances, electronic, and mechanical devices to include the make, model number, and serial
number, and include a photograph of any identifying tags or labeling. If this information is not
accessible, or not available, the adjuster should document the items with a detailed description
and explanation in the narrative report.
Air conditioning condensers and solar panels are covered even if set apart from the insured
building. The SFIP does not cover other equipment, like generators, air compressors, and
substation transformers owned by the policyholder that may service the insured building
unless the equipment is hard-wired and in an insured building as defined in the SFIP II.B.6 or in
a building physically attached to the covered structure by means of a qualifying addition or
extension per III.A.2. Generators stored in a building at the described location are personal
property. Generators and other such equipment in a basement are not covered.
See Figure 44 for an example of a non-covered generator. It is not in a building as defined in
the SFIP. See Figure 45 for an example of an attached utility shed. A generator is covered under
building when it is hard-wired to the building’s electrical system, is installed within an area of
the insured building, such as an attached utility shed or closet, or within an SFIP-covered porch
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or detached SFIP-eligible garage.
Figure 44 Non-Covered Generator
Photograph credit Generac
Figure 45. Attached Utility Shed
Claims Examiners
The examiner should confirm the adjuster provided identifying information (manufacturer, model and serial
number, and whenever possible, capacity, etc.) on major building equipment such as furnaces, central air
conditioning units, and major appliances such as refrigerators, washers, dryers, televisions, etc. and follow-up to
secure this information if not in the report.
19 Improvements and Betterments
The SFIP defines improvements as fixtures, alterations, installations, or additions comprising a
part of the insured dwelling or the apartment in which the policyholder resides.
19.1 Tenants’ Contents Only Policies
As explained in the SFIP Dwelling Form, Section III.B – Personal Property, paragraph 4, if the
policyholder is a tenant and has purchased Coverage B – Personal Property (contents
coverage), the SFIP will cover such property, including the policyholder’s cooking stove or
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range and refrigerator. The SFIP will also cover improvements made or acquired solely at the
policyholder’s expense in the dwelling or apartment in which the policyholder resides, but not
for more than 10 percent of the limit of liability shown for personal property on the
Declarations Page. Use of this insurance is at the policyholder’s option but reduces the
personal property limit.
The SFIP General Property Form, in Section III.B paragraphs 7–9, specifies coverage
conditions for improvements and betterments for a tenant or condominium unit owner.
Paragraph 7 makes clear that items acquired by or made at the expense of the tenant are
covered, even if the tenant cannot legally remove them, such as a built-in walk-in freezer.
If a tenant has a contents policy in his or her own name, flood-damaged items that the tenant
may claim as improvements and betterments under a covered loss will include all items
purchased at the tenant’s expense for which coverage would be provided under building
coverage (Coverage A), and that have not been paid under Coverage A for the same loss event
under a policy held in the building owner’s name.
Insurers may refer to the lease agreement to determine which policy will respond.
19.2 Building Owner and Tenant Named on Same Policy with Coverage A
As stated in the General Rules section of the Flood Insurance Manual, the building owner must
be named on a flood insurance policy with Coverage A. If the building coverage is purchased by
a tenant due to a lease agreement, the tenant may be named as an additional policyholder on
the policy. The NFIP does not designate any of the named policyholders as primary or
secondary. The rule is intended to ensure that all parties with an insurable interest in the
building are named on any claim settlement proceeds for building damage. Any claim payment
would be made to all parties named as policyholders on the policy.
19.3 Duplicate Policies with Coverage A Not Allowed
Excluding residential condominium buildings, NFIP-insured buildings can have only one policy
with building coverage (Coverage A). Section 100228 of the Biggert-Waters Flood Insurance
Reform Act of 2012, codified at 42 U.S.C. § 4013(b), clarifies that the total aggregate liability
for a non-residential building or non-condominium building designed for five or more families
is $500,000 per structure. The law also reiterates that the maximum coverage available for a
residential 1–4 family building or condominium unit is $250,000 per policy. The SFIP prohibits
duplicate building coverage by the same policyholder. This means that the NFIP will only pay
for building coverage under one policy, and the owner must be a named policyholder.
The NFIP also will not pay twice for the same covered loss (either Coverage A or Coverage B)
when an RCBAP provides coverage for a condominium unit insured under the Dwelling Form.
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20 Increased Cost of Compliance
The adjuster should provide the Increased Cost of Compliance (ICC) Brochure to the
policyholder at the time of the inspection.
Claims Examiners
The examiner oversees or can directly handle ICC claims, which involves securing from the policyholder the
necessary documentation to include:
• The community’s substantial damage determination letter confirming a compliance requirement
resulting from substantial damage. The community determination factors in all perils. For ICC, the SFIP
requires the percentage of damage to be by or from flood, whether covered by the SFIP or not.
• When ICC is required for repetitive loss, the examiner confirms the community has a repetitive loss
provision in its floodplain management ordinance, such as two losses during a 10-year period. The
state or community must have a cumulative or repetitive loss provision already within its floodplain
ordinance at the time of the flood. See Dwelling Form Section D.3.
• Securing from the policyholder bids to perform the work and confirms that work only for covered
mitigation activities. The SFIP does not allow payment of the ICC claim until the approved mitigation
activity is completed and the community has confirmed in writing that the activity resulted in a building
that complies with their floodplain management ordinance. However, FEMA encourages advance
payments when the policyholder signs a written agreement attesting the funds will be used only for
eligible ICC mitigation work and agrees that any dollar amount not spent by a specific date will be
returned to the insurer.
• Secure a new elevation certificate and provide to underwriting for re-rating the new policy.
• The ICC Policyholder’s Processing Checklist (See Appendix K) is a useful tool to send to the policyholder.
See Section 3 Increased Cost of Compliance of this manual for detailed guidance.
21 Inspection
The adjuster essentially has one opportunity to make a good first impression; that opportunity
should not be wasted. FEMA expects the adjuster to arrive at the inspection site and meet with
the policyholder on- time and present oneself as professional as possible. Apparel should be
appropriate but professional. The adjuster should always have their FCN card and any
government-issued photo ID present to show the policyholder at the start of the inspection.
When minors are present in the building that requires inspection, the adjuster should never
enter unless there is an adult present, preferably the policyholder or policyholder’s
representative.
The adjuster’s site visit to the insured property is the most important part in the claim handling
process. Adjuster professionalism and empathy towards the policyholder for the loss to their
property and potential financial ramifications, as well as meaningful communication, are key
aspects to the inspection that helps avoid issues. These three key aspects lay the groundwork
for prompt successful claim resolution. The adjuster should spend time with the policyholder
explaining the adjustment and claim processes and giving a realistic time line for completion of
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the estimate. This will help avoid future issues and help ensure a good working relationship.
These conversations are the adjuster’s investment in a successful claim result for the
policyholder and for the adjuster.
The adjuster must provide the policyholder a copy of the Flood Insurance Claims Handbook and
ICC Brochure and spend time reviewing the documents with the policyholder. The adjuster
must discuss with the policyholder SFIP coverage and non-coverage issues, and how they apply
to the loss, but cannot say whether the insurer will approve or deny the claim. The adjuster
must confirm that the mortgagee is correct and identify all parties to the contract.
If the adjuster cannot inspect within a reasonable timeframe, the adjuster should promptly
submit a status report explaining the cause(s) for the delay. The adjuster should also address
inspection delays caused by the policyholder, or their representatives, including their failure
to set a reasonable time and date to conduct the inspection and the reason for the delay. The
adjuster should avoid visiting the insured risk without an appointment.
Claims Examiners
The examiner should send a Reservation of Rights (ROR) outlining requirements in case of loss when the
policyholder, or their representative, either refuses an inspection or unreasonably delays the timeframe to
conduct the inspection.
22 Letter of Map Amendment/Letter of Map Revision
22.1 Letter of Map Amendment Definition
A Letter of Map Amendment (LOMA) is an official amendment, by letter, to an effective NFIP
map. A LOMA establishes a property’s location in relation to the SFHA. LOMAs are usually
issued because a property has been mapped as being in the floodplain, but the property is in
fact on natural high ground above the base flood elevation.
The LOMA officially amends the effective NFIP map. The community maintains this public
record. LOMAs are included on the community’s master flood map and filed by panel number
in an accessible location.
22.2 Letter of Map Revision Definition
A Letter of Map Revision (LOMR) is FEMA's modification to an effective Flood Insurance Rate
Map (FIRM), or Flood Boundary and Floodway Map (FBFM), or both. LOMRs are generally based
on the implementation of physical measures that affect the hydrologic or hydraulic
characteristics of a flooding source and thus result in the modification of the existing regulatory
floodway, the effective Base Flood Elevations (BFEs), or the SFHA. The LOMR officially revises
the FIRM or FBFM, and sometimes the Flood Insurance Study (FIS) report, and when
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appropriate, includes a description of the modifications. The LOMR is generally accompanied by
an annotated copy of the affected portions of the FIRM, FBFM, or FIS report.
All requests for changes to effective maps, other than those initiated by FEMA, must be made
in writing by the Chief Executive Officer (CEO) of the community or an official designated by the
CEO. The LOMR officially amends the effective NFIP map. The community maintains this public
record. LOMRs are included on the community’s master flood map and filed by panel number in
an accessible location.
22.3 Obtaining a LOMA or LOMR
Obtaining a LOMA/R is the responsibility of the policyholder in conjunction with the designated
community official.
The policyholder may download a LOMA/R application from the FEMA website. FEMA does not
charge a fee to review a LOMA/R request, but requesters are responsible for providing the
required mapping and survey information specific to their property. For FEMA to remove a
structure from the SFHA through the LOMA process, Federal regulations require the lowest
ground touching the structure, or Lowest Adjacent Grade (LAG) elevation, to be at or above the
BFE.
The exception to this requirement is when the submitted property information shows that the
structure is outside the SFHA. In this case, the property is referred to as “out as shown.” If
elevation information is required for the LOMA request, the requester should submit the
elevation data requested on the MT-EZ form.
22.4 How a LOMA or LOMR Applies to Claims
A LOMA or LOMR effectively removes a post-FIRM elevated building from the SFHA. If the
policyholder obtains a LOMA or LOMR after the loss, its effective date is the date of the loss.
This means that the coverage limitations to areas beneath the lowest elevated floor do not
apply. A LOMA or LOMR may not be issued if the lowest adjacent grade of the property is below
the BFE. If such a property has its lowest floor (enclosure floor) above the BFE, the property
may comply with the NFIP Floodplain Management Regulations. The insurer should send claims
involving such buildings to the NFIP BSA with a request for a waiver of the elevated building
coverage limitation (See Waiver of Elevated Building Coverage Limitations, in this section of the
manual, for instructions).
23 Lowest Elevated Floor Determination
Full coverage for post-FIRM elevated buildings in an SFHA begins at the lowest elevated floor.
This is the lowest floor raised above ground, even if the pilings extend beyond it. For the purposes
of coverage, false floors and raised floors that appear to be elevated do not qualify as the lowest
elevated floor. See Figure 46 and Figure 47 as examples of non-elevated floors. A hanging floor
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would qualify as a lowest elevated floor for the purposes of full coverage – see Figure 48. Full
coverage in a non-V zone starts at top of the floor. See the Flood Insurance Manual for definitions
and additional information.
Figure 46. Sleeper System Installed Over a Concrete
Figure 47. False (Raised) Floor
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Figure 48. Hanging Floor
24 Manufactured (Mobile) Home/Travel Trailer Worksheet
When concluding a covered loss on a SFIP-eligible mobile home or manufactured home, the
adjuster’s Final Report should include the NFIP mobile-home worksheet, the itemized building
valuation and building diagram. (MH Worksheet, FEMA Forms 086-0-17 and 086-0-18 at
Appendix E)
The adjuster must determine the pre-loss valuation or book value of the home. Complete an
industry-accepted method of establishing pre-loss valuations of manufactured/mobile homes.
The valuation should be for the mobile home unit only and any extras that were installed at the
factory. Any modifications, upgrades, and additions built or added on or in the unit after its
purchase must be valued separately and explained in the adjuster’s narrative report.
Claims Examiners
The examiner should confirm that the adjuster appropriately completed a Manufactured (Mobile) Home/Travel
Trailer Worksheet for every manufactured (mobile) home/travel trailer claim with a covered loss.
25 Non-Waiver Agreement
A non-waiver agreement allows the adjuster to investigate a loss where a potential coverage
concern exists without waiving the rights of the program. A non-waiver agreement is necessary
in these circumstances, even if there is evidence of a flood or flood damage to insured
property.
The adjuster secures a non-waiver signed by the policyholder for late reports or when the
adjuster identifies a coverage issue. To the extent possible, the adjuster must include all known
reasons for the non-waiver agreement. If the policyholder will not sign the non-waiver
agreement, contact the insurer to send a Reservation of Rights letter. See Reservation of Rights
in this section of the manual.
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26 Notice of Loss
The first report of loss, or notice of loss, from the policyholder is the first step in the claims
process. The SFIP requires the policyholder to give prompt written notice of loss to the insurer.
In addition to the normal information required on the notice of loss, every loss assignment to
an adjusting firm should include a brief description of the loss, even if the loss is minor.
Information about the loss, such as water depth, affected room areas, and unique
circumstances such as accessibility, high valued property, and extent of the damage, is
important as it helps to ensure assignment to an adjuster with the appropriate level of
experience and will help to prioritize the loss.
When the policyholder delays the notice of loss, the adjuster should ask questions so he or she
understands the circumstances. The concern here is, if an avoidable delay caused damage to
undamaged property, or increased damage from salvageable to non-salvageable property, the
SFIP may not provide coverage and the adjuster will face challenges. A justified delay in such
instances could be an order issued by local authorities, or prolonged inundation which
prevented the policyholder’s prompt access to the insured property. There may be others, but
it is important that the adjuster understand the delay and clearly report the explanation.
27 Overhead and Profit
Overhead and Profit (OHP) is added to an estimate when the complexity of the repairs
requires coordination by a general contractor at a typical industry standard of 10 percent
overhead, 10 percent profit. The adjuster should evaluate each claim and document support
of their decision in the file.
General contractors’ overhead expenses are the ongoing costs associated with running a
business. Overhead expenses are typically categorized as indirect (general) or direct.
Indirect overhead costs are fees that a contractor pays on a regular basis that are not
specific to a particular job, such as:
−
Salaries and benefits for office personnel who may not work on the site, such as
bookkeepers and administrative employees.
−
Office rent, utilities, supplies, phone and internet lines, business insurance and,
licenses, etc.
−
Various ongoing expenses such as marketing, advertising, travel costs, legal fees, etc.
Direct overhead costs are typically those ongoing costs for a particular job, such as:
−
Short-term office structures such as trailers, architect’s stations, and leased office space,
−
Project specific salaries for foremen, schedulers, engineers, job superintendents, etc.,
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−
Job specific equipment rentals (jackhammers, cranes, bulldozers, backhoes, etc.),
−
Short-term water and sanitation facilities.
Contractors’ profit allows a general contractor to earn their living.
When the policyholder performs the duties of a general contractor on some trades or repairs,
the policyholder is entitled to a fair overhead allowance (not profit) for the time spent hiring,
scheduling, and overseeing repair performance. This allowance is limited to 5 percent. The
adjuster must fully justify a higher percentage.
NFIP typically omits general contractor OHP on adjuster-estimated allowances for:
−
Cleanup
−
Treatment against mold & mildew
−
Building dry-out
−
HVAC
−
Kitchen appliances
−
Carpet and padding
−
Contractor receipts or quotes
These “Non-OHP trades” are mostly performed by the policyholder or outside services hired by
the policyholder.
If the general contractor estimates or repairs include “Non-OHP trades”, the adjuster
should ensure justification, note the file, and apply OHP accordingly.
28 Payment and Paying the Undisputed Loss
The loss will be payable 60 days after the insurer receives the policyholder’s proof of loss or
within 90 days after the insurance adjuster files the adjuster’s report signed and sworn to by
the policyholder and the insurer reaches an agreement with the policyholder; there is an entry
of a final judgment; or there is a filing of an appraisal award.
Claims Examiners
Important: If the insurer receives proof of loss that is not supported or agreed to, the insurer should pay the
undisputed claim and issue a partial proof of loss rejection letter.
Remember, the lienholder is not required on payments under Coverage B – Personal Property unless there is a
loan specific to the coverage. SBA loans can apply to personal property, Coverage C – Other Coverages, or
Coverage D – Increased Cost of Compliance.
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29 Perimeter Wall Sheathing
This topic addresses perimeter wall sheathing when flooded.
29.1 General Guidance on Perimeter Wall Sheathing
The SFIP provides coverage for perimeter wall sheathing that experiences a direct physical loss
by or from flood. As with any loss claimed under the policy, a policyholder must prove the loss,
and an NFIP insurer must, where appropriate:
•
Invoke any options afforded to the insurer necessary to investigate a claim. See SFIP
Section VII.K.
•
Assert any applicable exclusion or limitation of coverage. See SFIP Section IV and V.
•
Retain a licensed engineer or other qualified professional to assist the insurer, as may be
necessary.
Additionally, when a policyholder claims flood damage to perimeter wall sheathing, an NFIP
insurer must verify:
1.
The presence and classification of sheathing in an insured building at the time of a flood;
2.
That flood water came into contact and damaged such sheathing; and,
3.
That no coverage exclusions or limitations, such as pre-existing damage or design defects,
apply.
29.2 Determining Coverage of Damage to Perimeter Wall Sheathing
FEMA published Technical Bulletin 2- Flood Damage-Resistant Materials Requirements for
Buildings Located in Special Flood Hazard Areas in Accordance with the National Flood
Insurance Program (TB2), to provide communities enforcing their local floodplain management
requirements with guidance on which building materials FEMA considers flood damage-
resistant. Using TB2, FEMA has developed the following guidance on the adjustment of claims
for perimeter wall sheathing.
A. Class 1 or 2 Sheathing
When Class 1 or 2 sheathing material is damaged directly by contact with floodwaters, the
material is not salvageable. It is not necessary for a qualified professional, such as an engineer,
to document the flooded sheathing material’s condition. However, such professional services
may be appropriate to investigate possible exclusions or to recommend methods of repair.
B. Class 3 Sheathing
When Class 3 sheathing material is damaged directly by contact with floodwaters, it may
not be salvageable. If questions arise over whether Class 3 sheathing material is
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salvageable, insurers may involve a qualified professional. Such professional services may
also be appropriate to investigate possible exclusions or to recommend methods of
repair. If the Class 3 material used for sheathing is documented as paper-faced gypsum,
FEMA recommends replacement of the affected portion if inundated and damaged
directly by flood on the claimed date of loss, provided it was not previously flooded or
damaged from another cause of loss or defect.
C. Class 4 or 5 Sheathing
When Class 4 or 5 sheathing material is in direct contact with floodwaters, it is expected to be
salvageable. If questions arise over whether Class 4 or 5 sheathing material is salvageable,
insurers should involve a qualified professional. Such professional services may also be
appropriate to investigate possible exclusions or to recommend methods of repair.
29.3 Determining Methods of Repair or Replacement of Damaged Sheathing
Once an NFIP insurer has determined that perimeter wall sheathing in an insured building
experienced direct physical damage by or from flood and that no coverage limitations or
exclusions apply, an NFIP insurer should handle the claim appropriately. The claim handling
process should determine the type of sheathing material installed, the extent of damages
incurred, and the appropriate scope to repair.
When perimeter wall sheathing experiences flood damage, an appropriate and reasonable
repair can generally be made without demolishing the exterior surface of the building, unless
it is economically or physically impractical to do so. The adjuster must document the complete
scope to repair the flood- damaged sheathing from the interior side. Insurers must adjust
each loss on its own merits and base the appropriate repair method on the extent of damage
and the construction type at the time of loss.
If the policyholder discovers additional damage after they complete repairs or improvements,
the adjuster must base the additional estimate on the condition of the building immediately
following the flood and prior to completion of the repairs or improvements. The adjuster
should not make additional allowances to re-do elements of repair, e.g., if payment was made
to repair and replace drywall, additional costs associated with replacing sheathing shall not
include repair and replace drywall.
The adjuster may need to consult with a local building official, qualified professional, or the
policyholder’s contractor to determine the most reasonable and cost-effective method of
repair. Multiple methods of repair may exist, including alternative interior approaches or an
exterior approach, so the adjuster should obtain at least one estimate for each approach to
document and support claim payment.
Insurers may engage a qualified professional to address disagreements concerning the
damage or method of repair.
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29.4 Adjuster Considerations
In addition to the guidance provided above, NFIP insurers and adjusters should consider the
following when investigating and adjusting claims for perimeter wall sheathing:
•
The SFIP pays for the direct physical damage by or from flood. It does not cover the cost
to match undamaged building components.
•
The SFIP does not cover damage to sheathing or exterior siding, including masonry veneer,
when installed in a wall that is below the lowest elevated floor of a post-FIRM elevated
building located in a special flood hazard area or basement.
•
Adjusters must take detailed photographs and document thorough observations to
support their recommendations.
•
Adjusters must identify and document any pre-existing damage to the perimeter wall
sheathing from insect damage, rot, improper installation or construction defect, prior
unrepaired flood damages, other evidence of deterioration from continuous exposure
to moisture, or other non- covered causes.
30 Photographs
The adjuster should take as many photographs as necessary to portray the damage; to include
photographs of undamaged property and damage from other causes. Photographs should
document the flood damage and the condition and quality of building finishes and contents.
The adjuster must label the photographs, provide the date, the room, and a description of what
the photograph represents to include:
1.
All sides, elevations, and foundation components of the building, to include any
vents if applicable;
2.
Interior and exterior water lines on the building;
3.
All damaged rooms including any special architectural features;
4.
Discrepancies pertaining to basements, elevated buildings, garages, additions and
extensions or other buildings requiring review for coverage determination.
5.
Exterior and interior of cabinets;
6.
Appliances and building equipment including make, model, serial number identification;
7.
All undamaged rooms;
8.
Representation of the damage to personal property; and
9.
Photographs of the curbside debris.
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31 Pollutants
The cost to test for and monitor pollutants is only covered if required by ordinance or law.
When a flood causes direct physical damage to covered building material containing asbestos,
the removal and proper disposal of the covered building material is covered as part of the
covered repair, including necessary abatement charges when incurred. The claim file should
contain a copy of the mandated requirement for testing or monitoring, a paid invoice
documenting the policyholder incurred the expense, other costs associated with increased
disposal fees and special handling process, including detailing in the narrative.
The SFIP will not cover to test for, monitor, remove, or mitigate areas of the home not directly
damaged by flood. For example, tile in the living room damaged by flood is found to contain
asbestos, and asbestos was also found in insulation around plumbing lines not directly
damaged by flood. Coverage is limited to the asbestos tile in the living room.
Under the Dwelling and RCBAP Forms - the cost to remove the flood damaged building material
containing asbestos is limited only by the building property coverage limit less the deductible.
The General Property Form contains a $10,000 limit for damage caused by pollutants. Under
this provision, excess damage greater than this limit may not be applied to the building
deductible.
32 Porches
The SFIP covers porches and excludes other surfaces including walks, walkways, decks, patios,
and other surfaces, all whether covered by a roof or not, located outside the perimeter, exterior
walls of the insured building.
Porch design and construction has varied over time. It may be original to the building or an
attached addition. A porch can be fully or partially enclosed, screened or open; it can be built
on the ground or elevated.
A porch is covered if it shares a continuous roofline and continuous foundation type with the
main dwelling.
If the porch is an addition or extension attached to and in contact with the dwelling by one
of the five means of connection as fully described at Section III. Property Covered A.2, it can
be covered.
The adjuster should use good judgment in determining coverage for a porch. Good judgment
includes clear photographs of the complete construction of the porch’s roof, walls, and
foundation, and the reasonable explanation or documentation that justifies the coverage
recommendation.
Adjusters should also keep in mind building materials that are used to construct a porch are
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exterior-rated, which may resist damage from flood inundation. The same is true with common
porch furniture. The scope of loss should be reasonable, and the adjuster should consider if a
repair and refinish is the extent of the loss. A scope that replaces porch building material or
porch contents should be documented in the claim file.
33 Prior Loss Request
The SFIP does not cover damage to insured property that occurred prior to the covered loss,
including unrepaired damage from a prior flood. In general, NFIP insurers must verify that
damages from any prior loss have been repaired before the subject loss occurred and must
exclude from the adjustment any unrepaired prior damages. This normally requires the NFIP
insurer to obtain and review prior flood claim files prior to adjusting the loss.
For claims filed under the SFIP Dwelling form, an NFIP insurer may adjust a claim without
obtaining a prior flood claim file if there is evidence of completed repairs following a prior flood
loss. Examples of evidence include, but are not limited to, an inspection of the property that
clearly shows repairs to or replacement of prior damage and a review of available documentation,
such as paid contractor invoices and receipts.
FEMA relies on the flood adjuster and insurer personnel to evaluate and document in the claim
file the evidence demonstrating prior repairs. If the adjuster cannot substantiate repairs based on
their preliminary assessment, the adjuster should recommend obtaining and review of the prior
loss file to the insurer. The adjuster should provide the insurer with adequate documentation
and photographs of any unrepaired prior damage.
For claims filed under the SFIP General Property and RCBAP forms, the adjuster must obtain the
prior loss claim file.
Claims Examiners
Examiners should identify prior losses as quickly as possible following a new report of a claim and provide the
estimate and photographs to the adjuster to assist with confirming prior damage and repairs.
If the current insurer needs prior loss information on a claim handled by a previous insurer, the current insurer
can make a request by email to the NFIP at NFIPClaimsMailbox@fema.dhs.gov. The email subject line should
include the current policy number and the type of submission (ex.1234567890 – Request for Prior Loss
Information). The body of the email should contain the current policy number, policyholder name, property
address, and date of loss. It should also contain any information you have regarding the prior loss and your
reason for the request.
Requestor should expect to receive initial reply containing basic information, building amount paid and contents
amount paid for each prior loss requested, within 48 hours of the request.
If a copy of the file is needed, the NFIP BSA will request the claim file from the previous insurer and relevant
information will be forwarded to the requestor upon receipt; typically, within 72 hours.
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34 Prompt Communications
NFIP flood adjusters must contact the policyholder within 24-48 hours of the claim
assignment, or as soon as reasonably possible depending size and scope of the storm. This
initial contact will preferably be by telephone; however, if contact by telephone is not
possible, the adjuster will send the policyholder or designated agent an electronic message,
postcard, or letter acknowledging the assignment and providing the adjuster’s telephone
number and any other means of contact.
FEMA expects the adjuster to return telephone or electronic messages within 24 hours after
receipt of a message from a policyholder, agent, or company staff person. When unable to
contact the policyholder, the adjuster should contact the carrier to seek guidance on how to
proceed with the loss and document their efforts to make contact in the activity log.
FEMA expects adjusters to provide each policyholder timely status and to set appropriate
expectations or to advise when issues arise.
Claims Examiners
FEMA expects the examiner to:
• Return telephone or electronic messages within 24-48 hours after receipt of a message from a
policyholder, agent, or adjuster;
• Reply to written communications within ten business days of receipt;
• If all or part of the claim is to be denied, send partial or full denial letters within ten business days of claims
closure; and
• Accept or reject the POL in whole or in part within seven to ten business days of receipt. Timely
acceptance or rejection of the POL gives the policyholder time to file a request for additional payment
if accepted, or an amended POL within the required time frame if rejected.
Important: Retain electronic communications in the claim file.
FEMA may extend these time frames due to catastrophic events; the extension does not relieve the examiner
of the responsibility of properly documenting the file.
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35. Proof of Loss/Increase Cost of Compliance Waiver Request
Process
Claims Examiners
When the examiner receives the Final Report or POL after 60 days from the date of loss, or the ending date of a
FEMA issued POL extension, the examiner must submit a POL Waiver request through the Underwriting and Claims
Operation Review Tool (UCORT) and receive approval on the waiver before issuing payment. The carrier does not
have authority to extend the timeframe for filing a POL per SFIP Section VII.D.
35.1 Navigating to the POL/ICC Waiver in UCORT and Requesting Access
1.
Access the UCORT site: https://www.nfip.fema.gov/Login.aspx
2.
Click on the “Request Access” hyperlink
3.
Complete the Access request form
35.2 Creating a New Waiver Request
1.
Log into UCORT and select POL Waiver by hovering the mouse over the Claims tab at the top of the
page to reveal a drop-down menu.
2.
To create a new POL/ICC Waiver Request, click the “Create New Request” button at the upper left-
hand corner of the POL Waiver homepage.
Quick Tip:
Click the “POL ID” hyperlink to access existing POL/ICC Waiver Request Forms.
35.3 Submitting a Standard POL Waiver Form
After clicking the “Create New Request” button, a pop-up box will prompt you to select a form type. Please
review the section above entitled Creating a New Waiver Request for additional details.
1.
Select the Standard Waiver form type and click “OK” to access the Standard POL Waiver Form.
2.
Tab down to complete each section of the waiver form.
3.
Click the “Add Comment” button to include comments for FEMA to review.
4.
Click the “Save” button to save the In Draft waiver form.
5.
After completing the form, check the “Disclaimer” checkbox at the bottom of the form to
acknowledge acceptance.
6.
After affirming the disclaimer, click the “Submit Waiver” button to generate the pop-up
confirmation window.
7.
Within the pop-up confirmation window, click the “OK” button to submit the waiver to FEMA as a
New Request.
8.
FEMA will review and approve or return the waiver request.
Quick Tip:
Clicking the “Save and Exit” button will save the In Draft form and direct you back to the proof of loss
Waiver homepage. The “Back” button will exit the page without saving the form. In addition, when you see in red
at the top "POL Alert: This waiver is a possible duplicate" it means that a previous waiver was submitted on the
claim. ALL additional payments must be submitted under the same waiver. You can locate the previous waiver by
searching ALL by the insurers policy number. Delete this submission and submit under the prior proof of loss
waiver.
35.4 Submitting an ICC POL Waiver Form
After clicking the “Create New Request” button, a pop-up box will prompt you to select a form type. Please
review the section above entitled Creating a New Waiver Request for additional details.
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Claims Examiners
1.
Select the ICC Waiver form type and click “OK” to access the ICC Waiver Form.
2.
Tab down to complete each section of the waiver form.
3.
Click the “Add Comment” button to include comments for FEMA to review.
4.
Click the “Save” button to save the In Draft waiver form.
5.
After completing the form, check both of the “Disclaimer” checkboxes at the bottom of the form
to acknowledge acceptance.
6.
After affirming the disclaimers, click the “Submit Waiver” button to generate the pop-up
confirmation window.
7.
Within the pop-up confirmation window, click the “OK” button to submit the waiver to FEMA as a
New Request.
8.
FEMA will review and approve or return the waiver request.
Quick Tip:
Clicking the “Save and Exit” button will save the In Draft form and direct you back to the proof of loss
Waiver homepage. The “Back” button will exit the page without saving the form. In addition, when you see in
red at the top "POL Alert: This waiver is a possible duplicate" it means that a previous waiver was submitted on
the claim. ALL additional payments must be submitted under the same waiver. You can locate the previous
waiver by searching ALL by the insurers policy number. Delete this submission and submit under the prior
proof of loss waiver.
35.5 Accessing an Additional Payment POL Waiver Form
After clicking the “Create New Request” button, a pop-up box will prompt you to select a form type. Please
review the previous section, Creating a New Waiver Request for additional details.
1.
Select the Standard Waiver – Additional Payment or ICC Waiver – Additional Payment form type.
2.
Use the Policy Number data field to search for the original Standard or ICC POL Waiver. Please
note that all Additional Payment Waiver Forms must be associated with an existing approved POL
Waiver Request.
3.
Select the associated waiver and click “OK” to open a read only version of the original Standard or
ICC Waiver.
4.
Locate section F. Additional Payment at the bottom of the waiver form.
5.
Click on the “Add a new additional payment” button to access the Additional Payment Waiver
Form.
Quick Tip:
You may also access the additional payment waiver by clicking the “POL ID” hyperlink of an existing
approved waiver from the proof of loss Waiver homepage.
35.6 Submitting an Additional Payment POL Waiver Form
The “Add new additional payment” button will generate a pop-up box with the Additional Payment Waiver
Form. Please review the previous section, Accessing an Additional Payment Waiver Form for additional details.
1.
Complete the waiver form. Please note that all fields must be completed prior to submission.
2.
Once the form is complete, check the “Disclaimer” checkbox at the bottom of the form to
acknowledge acceptance.
3.
After affirming the disclaimer, click the “Submit Waiver” button to generate the pop-up
confirmation window.
4.
Within the pop-up confirmation window, click the “OK” button to submit the waiver to FEMA as a
New Request.
5.
FEMA will review and approve or return the waiver request.
Quick Tip: Clicking the “Save as Draft” button will save the In Draft form and direct you back to the proof of loss
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Waiver homepage. The “Back” button will exit the page without saving the form.
35.7 Reviewing the Status of a Waiver Request
A.
Organizing the POL Waiver Homepage by Adjudication Status
1.
Locate the POL Waiver Status drop-down at the top of the POL Waiver homepage to filter waiver
requests by adjudication status. Please note, the waiver status will always default to All.
2.
POL/ICC Waiver Requests can be sorted into the following categories:
3.
All:
Includes all waiver statuses.
4.
New Requests:
Includes initial wavier requests that have been submitted to FEMA but that FEMA
has not adjudicated.
5.
In Draft:
Includes saved, in-progress waiver requests that have not yet been submitted to FEMA.
6.
Action Needed:
Includes waiver requests that have been returned to the requester for editing, or
that have been resubmitted to FEMA for adjudication.
7.
Approved Requests
: Includes waiver requests that have been accepted and approved by FEMA.
8.
Closed Requests:
Includes waiver requests that FEMA has returned to the requester but were not
resubmitted within 10 calendar days. Please note that you can restore Closed Request waivers by
clicking the “Restore” button located at the bottom of the closed waiver. The restored waiver will
move to the Action Needed queue, with the insurer as the owner.
Quick Tip:
Waivers may be withdrawn until they have been approved by FEMA, including New
Request, In Draft, Action Needed, and Closed Request waivers. To withdraw a waiver, click the
“Withdraw Waiver” button located at the bottom of the waiver forms or within the Additional
Payment pop-up box.
B.
Locating specific POL/ICC Waiver Requests to Review the Adjudication Status
The POL Waiver homepage can be sorted and filtered to locate specific waiver requests using policy
information.
1.
Locate the filter text boxes at the top of each column, and enter the specified policy information
(i.e., POL ID or Policy Number) to locate a specific waiver request.
2.
Click the column headers (i.e., Policyholder Name) to sort POL/ICC Waiver Requests by ascending
and descending order.
3.
After you locate a specific waiver, click the “POL ID” hyperlink to access and review the waiver
request.
Quick Tip:
You may check the status of an Additional Payment Waiver Request by clicking on the “POL ID” of the
original or additional Payment request on the POL Waiver homepage.
35.8 Reviewing Returned Waiver Requests for Edits
Upon reviewing a POL/ICC Waiver Request, FEMA can approve or return the waiver. If the waiver is returned
for edits, the requester may edit the waiver to address FEMA’s comments.
1.
Locate the POL Waiver Status drop-down on the POL Waiver homepage, and select Action Needed.
2.
The Owner column denotes which party must take action in regards to a waiver request. If FEMA is
listed as the owner, FEMA must review and adjudicate the resubmitted waiver. If Co/Vend is the
owner, the insurer must review FEMA’s comments, update the form as necessary, and resubmit
the waiver request to FEMA.
3.
To access and resubmit forms that require action, click on the “POL ID” hyperlink of the forms that
lists Co/Vend as the owner.
4.
Update the waiver form as requested by FEMA and add comments as necessary by clicking on the
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“Add Comment” button.
35.9 Editing and Resubmitting Returned Waiver Requests
Upon reviewing FEMA’s comments on a returned POL/ICC Waiver Request, update the waiver form as
necessary, and resubmit the waiver request to FEMA.
1.
Update the data fields required by FEMA. If supporting documentation is requested, locate Section
F. Document Upload, and click the “Attach File” button to locate supporting documentation files
on your computer.
2.
Once the appropriate file has been added, click the “Save” button to save the documentation to
the waiver request.
3.
Once the updates are complete, check the “Disclaimer” checkbox at the bottom of the form to
acknowledge acceptance.
4.
After affirming the disclaimer, click the “Submit Waiver” button to generate the pop-up
confirmation window.
5.
Within the pop-up confirmation window, click the “OK” button to resubmit the waiver to FEMA as
an Action Needed request.
6.
FEMA will review and approve or return the waiver request.
35.10 Exporting Waiver Request Data and Forms to Printable Format
The proof of loss Waiver homepage and the POL/ICC Waiver Request Forms can be exported to Microsoft®
Excel, Comma Separated Values (CSV), and Adobe® Portable Document Format (PDF) documents.
1.
Navigate to the proof of loss Waiver homepage and locate the “Excel” and “CSV” icons in the top
right-hand corner of the page. Click on either icon to generate a printable version of the POL
Waiver homepage.
2.
To print a specific waiver request form, locate the specified waiver using the POL Waiver Status
drop-down, the filter text boxes, and/or the column sort function. Please see Reviewing the Status
of a Waiver Request, above, for additional information.
3.
After identifying the specific waiver request, click on the “POL ID” to open the waiver form.
4.
Within the form, locate the “PDF” icon at the top right-hand corner of the page. Click on the icon
to generate a printable version of the waiver request form.
For additional technical support, you may contact FEMA-UCORT@fema.dhs.gov.
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36 Property Address Waiver
Claims Examiners
You may not endorse an SFIP to change the insured property location. This includes relocation from one unit to
another unit within the same building, and relocation of a mobile home or travel trailer to a new location. You
may not submit an endorsement when it will result in a change to the actual building to be insured regardless of
whether a loss has or has not occurred. You must submit a new Application and a new premium. Any applicable
waiting period for the SFIP to become effective will apply.
An endorsement may be submitted to correct an erroneous property address (e.g., one made through
typographical error or an Emergency 911 property address change) when it does not result in a change of the
building to be insured. You may make a correction in the case where there are no paid or pending claims,
without a waiver from the Federal Insurance Administrator of the requirement to submit accurate information in
Section I of the SFIP. You may correct the address in the following situations:
• The property address submitted on the Application was typed incorrectly, and the building
description, coverage, and rating elements belong to the building at the address indicated on the
correction endorsement; or
• The address used to describe the insured building indicated on the Application has changed with
the United States Post Office; or
• A postal address is being supplied for a descriptive or legal address originally provided on the Application.
In a situation where there is a pending claim, and the agent indicates that the address on the policy is not the
correct address for the building intended to be insured, you may seek a waiver from the Federal Insurance
Administrator of the requirement to submit accurate information in Section I of the SFIP in the following
instances:
• The property address submitted on the Application was typed incorrectly, and the building description,
coverage, and rating elements belong to the building at the address indicated on the correction
endorsement, and the policyholder has no insurable interest in the building at the address incorrectly
indicated on the application; or
• The address used to describe the insured building indicated on the Application has changed with the
United States Postal Service. The agent must demonstrate that the building description, coverage, and
rating elements belong to the building at the address indicated on the correction endorsement; or
• A postal address is being supplied for a descriptive or legal address originally provided on the
Application. The agent must demonstrate that the building description, coverage, and rating elements
belong to the building at the address indicated on the waiver request.
You may not pay a pending claim on a policy requiring an address change without FEMA approval.
When the request is not due to a typographical error or an Emergency 911 property address change the waiver
request must come from the insurer and be sent by email to the NFIP at
NFIPUnderwritingMailbox@fema.dhs.gov. The email subject line should include the policy number and the type
of submission (ex. 1234567890 – Property Address Waiver).
For a Property Address Waiver the following documentation is required:
• The complete underwriting file; documentation that was used to issue the policy, e.g. Flood
Application, elevation certificate, photographs, etc.
• A signed statement from a community official that the policyholder has no insurable interest in the
property with the wrong address or that the property address does not exist.
• A signed statement from the agent as to why the wrong property address was written on the
Application. This may indicate that property address submitted on the Application was typed
incorrectly, and the building description, coverage, and rating elements belong to the building at the
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address indicated on the correction endorsement.
• A copy of current claim file and any previous claim files, if applicable.
• For corrections on multiple buildings, submit the following supporting documentation:
• A sketch identifying each building.
• A schedule listing the correct building addresses.
• Photographs of each building showing the property address.
A Property Address Waiver is not required in the following instances:
• There is no open claim.
• There is letter from the community indicating a change in the property address.
• The address change is due to an Emergency 911 property address change.
37 Property Related to Controlled Substances
This governs the NFIP building and contents coverage for facilities that manufacture scheduled
items under the Controlled Substances Act of 1970 (CSA).
Some states have enacted laws that have legalized the growing and sale of marijuana to the
public. Marijuana is a Schedule 1 illegal substance pursuant to the CSA. It is also illegal to
knowingly operate a facility that manufactures such illegal substances per 21 U.S.C. § 856.
Federal law prohibits providing federal benefits (including contracts) to individuals or
entities convicted of possession or trafficking of such illegal substances at 21 U.S.C. §
862(d). The Federal Government cannot directly or indirectly support such illegal
activities. Arguments that this may be legal under state law have no merit, because
only federal law governs the operations of the NFIP, and the application of state law is
inapplicable to determine coverage or the ability to insure items under the SFIP. The
building and the personal property or contents therein are ineligible for coverage. The
SFIP Section VII. General Conditions, paragraph B, Concealment or Fraud and Policy
Voidance, subparagraph 4.b., may be applicable.
Additionally, under the terms of the SFIP, plants are excluded from coverage under the policy.
See Section IV. Property Not Covered, paragraph 6. Containers and related equipment are
excluded from coverage under the SFIP Section IV, paragraph 10.
Further, presumably the premiums for the SFIP would be paid for with proceeds from the
business entity engaged in the unlawful act of growing marijuana. Accepting such dollars
derived from marijuana sales, and the issuance of insurance to help such illegal activities
resume may constitute a financial transaction with the intent to promote unlawful activities and
be a violation of money laundering statutes (18 U.S.C. §§ 1956-1957) which DHS has a role in
enforcing. This would be problematic not only for FEMA and DHS, but much more problematic
for the private insurance companies and their employees participating in the NFIP if they were
to accept commissions, etc., based upon sales of a prohibited substance.
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38 Record Request from Third Party Special Investigation Units for
Fraud Investigation
When a request is received from a third party’s special investigations unit (SIU), such as from a
wind insurer, disclosure of the WYO flood claim file for fraud is not authorized under the Privacy
Act and NFIP’s System of Records Notice (SORN).
The NFIP SORN’s routine use exception to the Privacy Act allows disclosure to certain entities
investigating fraud or potential fraud in connection with claims, subject to the approval of the
DHS Inspector General. 79 Fed. Reg. 28747, 28751 (2014), https://www.gpo.gov/fdsys/pkg/FR-
2014-05-19/html/2014-11386.htm (allowing disclosure “[t]o property loss reporting bureaus,
state insurance departments, and insurance companies to investigate fraud or potential fraud in
connection with claims, subject to the approval of the DHS Office of the Inspector General”).
The requesting party must make the request for disclosure direct to the DHS Inspector General
at https://www.oig.dhs.gov/foia
39 Release of Claim File Information to Policyholders
39.1 Integrity of Claim Files
NFIP insurers must ensure that claim files contain all documentation in their possession directly
related to the adjustment, investigation, and payment of an individual claim.
16
Such
documentation includes:
1.
Declaration page or verifications of coverage applicable on the date of loss.
2.
Copies of claim payment checks
3.
Correspondence to or from the insurer and policyholder regarding the claim at
issue or underwriting issues relevant to the claim at issue
4.
Communications between insurer, claims examiner, adjuster, and other insurer
employees and contractors
5.
Adjuster reports and supporting materials, including preliminary reports, final reports,
estimates, log notes, and photographs
6.
Materials submitted by the policyholder, including estimates or supporting documents
provided by the policyholder or policyholder representative
7.
Proofs of loss and other requests for additional payment
8.
Claim decision letters
16
See 44 CFR 62.23(i)(10) (2018).
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9.
Denial letter(s)
10.
Expert reports (e.g., engineering assessments)
Insurers should include electronic mail or other electronic communications in the file
(either as print copies, or in PDF or similar format).
NFIP insurers may only rely on documentation contained within a claim file when making a
claim determination. NFIP insurers are not required to obtain drafts of the documents
described above but must maintain and disclose them if acquired during the adjustment,
investigation, or payment of a claim.
NFIP insurers must ensure that individual claim files do not contain materials unrelated to the
claim. For instance, if an insurer receives communications pertaining to multiple
policyholders, the insurer must remove the personally identifiable information of other
policyholders who are not part of the claim file in question prior to including the
communication in the claim file.
NFIP insurers may redact any privileged communications from a claim file prior to disclosure.
Privileged communications are limited to privileges that the insurer anticipates will be asserted
to preclude disclosure in court, such as the attorney-client privilege.
39.2 Disclosure of Claim Files
Policyholders may obtain a copy of their claim file by submitting a signed request to their NFIP
insurer. At minimum, such request must include the policyholder’s full name, current address,
and date and place of birth. The policyholder’s signature must either be notarized or submitted
with the following statement prescribed by 28 U.S.C. 1746:
I declare (or certify, verify, or state) under penalty of perjury that the foregoing is true
and correct. Executed on (date).
(Signature)
In addition, if a representative of a policyholder, such as an attorney or public adjuster, requests
a copy of a claim file on behalf of their client, the representative also must provide a letter of
representation that meets the requirements below.
39.3 Letters of Representation
NFIP insurers may not disclose a policyholder’s information to a policyholder’s representative or
allow a representative to act on behalf of a policyholder without obtaining a letter of
representation signed by all policyholders named on the policy. At minimum, a letter of
representation must include the following:
1.
Policyholder’s full name.
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2.
Policyholder’s current address.
3.
Policyholder’s date and place of birth.
4.
Name of third-party representative.
5.
Statement from policyholder authorizing authorized representative to act on their behalf
and for the insurer to release records to the representative.
The policyholder’s signature must either be notarized or submitted with the following
statement prescribed by 28 U.S.C. 1746:
I declare (or certify, verify, or state) under penalty of perjury that the foregoing is true
and correct. Executed on (date).
(Signature)
40 Remediation, Drying, and Emergency Service Contractors
Most flood losses with interior inundation require drying. When a loss is covered by the SFIP,
there are three ways an adjuster can include the cost to structurally dry salvageable building
materials on a claim:
1.
By square foot method similar to flood cleanup, when professional services or rental
equipment are not involved; this allowance represents the estimated cost and time to
structurally dry the building based on the owner’s time and equipment, including the
building’s HVAC system. An increased allowance for treating against mold and mildew
may be required on longer drying efforts. An average base unit price can be derived by
adding these estimated allowances for an average loss, then dividing the sum by the
square foot for an average size dwelling. This unit price may be adjusted based on the
facts on the loss. It is also acceptable for the adjuster to simply list each allowance in the
estimate without converting the allowance to a square foot unit price.
2.
When professional drying or rental equipment is involved, but there is no properly
completed “drying log”, the number of dehumidifiers and air movers, and the number
of days of drying is based on the following factors:
a.
The length of time floodwater remained inside the building.
b.
The reasonable period unsalvageable materials remained installed; and,
c.
The length of time after the removal of unsalvageable building items, building
cleanup and sanitizing was performed, to the start of mechanical drying.
The scope and costs must be reasonable and in line with water mitigation costs.
3.
When professional drying services are performed and a properly completed drying log is
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provided along with the itemized invoice, the claim payment should consider the number
and type of equipment for the duration of time validated by the drying log. The scope and
costs must be reasonable and in line with water mitigation costs.
A drying log is a record of daily temperature and relative humidity readings of both indoor
and outdoor air, plus moisture readings and the recorded location of affected and
unaffected building materials, as well as the drying goal and dry standard for the affected
materials. The properly completed drying log, an industry standard, should also include a
moisture map, the daily operating status of the building’s HVAC system and all the
instruments and equipment used by the technician.
For more information, the claims professional may refer to Structural Drying bulletin, Appendix
F, in this manual or the Institute of Inspection Cleaning and Restoration Certification (IICRC).
The IICRC is a certification and Standards Developing Organization (SDO), a non-profit
organization for the inspection, cleaning and restoration industries. In partnership with
regional and international trade associates, the IICRC serves more than 25 countries with
offices in the United States, Canada, United Kingdom, Australia, New Zealand, and Japan. The
industry standard, Standard and Reference Guide for Professional Water Damage Restoration,
is certified by the American National Standards Institute (ANSI). The document is officially
known as ANSI-IICRC S-500 (2015).
41 Reporting
41.1 Timely Reporting
An adjuster should submit the NFIP Preliminary Report within 15 days after receipt of the loss
assignment. The NFIP Final Report is due 30 days later. An adjuster should conclude the claim
within 45 days after the Preliminary Report. When the claim cannot be concluded within 45
days, an adjuster should file an interim report every 30 days until the claim is concluded or as
directed by the claims examiner.
Claims Examiners
The examiner should confirm the following and maintain a proper diary to insure compliance:
• NFIP Preliminary Report received within 15 days after receipt of the loss assignment.
• Signed NFIP Final Report received by 30 days after receipt of Preliminary Report or an interim report
received every 30 days until the adjuster completes the adjustment.
• Signed proof of loss received from the policyholder within 60 days of date of loss, or by the deadline of
a FEMA issued proof of loss extension.
Important:
The examiner must receive a signed Final Report or signed proof of loss by the 60
th
day or ending
date of a FEMA issued proof of loss extension. If the examiner receives the signed document after the deadline,
the examiner must submit a proof of loss waiver request to FEMA through UCORT and receive approval on the
waiver request before issuing payment.
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41.2 Preliminary Report
The adjuster’s first report is the Preliminary Report Form. It is important to submit the
Preliminary Report as soon as possible, preferably the same day as the inspection but no later
than 15 days after the assignment, along with perimeter photographs of the risk and
photographs of the damage. The adjuster must complete all sections in the Preliminary Report
as accurately and detailed as possible. When a unique circumstance develops with the
assignment that delays the initial inspection, the adjuster should immediately submit a
narrative documenting the insurer’s claim file of the reason for the unavoidable delay. The
report detailing the delay is to be submitted no later than the 15
th
day after the assignment.
The form must be signed by the adjuster and include the active FCN.
All the data recorded on the Preliminary Report Form is important. The adjuster should
complete the entire form and give special attention to:
A. Reserve Amounts
The approximate value of the covered payable loss is important for financial reasons.
B. Building Foundation Components
1.
A building that has walls installed over top of a concrete slab is non-elevated, and has
either slab-on-grade, raised slab-on-grade, or raised slab-on-stem wall foundation.
2.
A building that has a floor installed above the ground level, supported by foundation
walls, shear walls, posts, piers, pilings or columns, is an elevated building.
−
If a concrete slab is installed within the foundation’s perimeter, the slab is not
considered structural to the foundation, unless it is six inches thick and reinforced
with “re-bar” which is driven into the building’s foundation.
−
If an elevated floor is constructed over a crawlspace and the crawlspace is below the
ground level on all sides, the building is not considered elevated and the building’s
lowest floor is the below ground level crawlspace floor, meeting the SFIP definition of
a basement.
C. Measuring Waterlines
The adjuster must record the highest waterline on the exterior and interior of the building, and
the recorded interior waterline should not be higher than the exterior waterline. The adjuster
should look for an exterior debris line on all buildings and provide measurements. It is advisable
to have a photograph of the tape measure against the exterior and interior walls clearly
showing the waterline measurement.
Plantings and shrubbery may retain debris so the adjuster should photograph and report that
measurement. If the adjuster is not able to identify a debris line, address it in the narrative
report.
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1.
Waterlines: Must be recorded in inches.
2.
Exterior: Waterlines are always recorded using a positive number. Adjusters should
measure the exterior water depth from the lowest point of the land immediately outside
the building.
3.
Basements: Measure the interior waterline from the floor above the basement down and
record the value on the Preliminary Report with a negative sign in front of the recorded
inches. This is necessary for FEMA actuarial purposes. If the water enters the main living
area (the floor above the basement) – the measurement will be from that floor, up, and
will show as a positive number. Please also note the height of the basement ceiling.
4.
Elevated Buildings: Measure the interior water height in a crawlspace or enclosure from
the lowest floor as defined in the Flood Insurance Manual. In non-V Zones, the reference
point of the lowest floor is the top of the floor. In V-Zones, the reference point of the
lowest floor is the lowest horizontal structural member. When the water depth is below
the lowest floor, the number of inches should be represented by a negative number.
*To collect accurate data of areas damaged, it is necessary that every adjuster use either
negative or positive numbers. A negative number reported indicates that flood water
was found only in the basement. In the case of elevated buildings, the negative number
indicates that flood water did not enter above the floor used for rating.
Figure 49. Basement Interior Waterline
Photograph credit Anthony Thorne, FEMA
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D. Adjuster Memo to the Insurer
When a special issue arises from the loss inspection, the adjuster should include a narrative
memo accompanying the Preliminary Report. This may involve a customer service issue with
the policyholder or a representative, help support a large advance payment, request an expert,
or submit an underwriting referral noting any potential policy rating issues.
Claims Examiners
The examiner ensures that the adjuster provides the NFIP Preliminary Report within 15 days after the adjusters’
receipt of the assignment, along with perimeter photographs of the risk and photographs of the damage. The
form must be signed by the adjuster and include the adjuster’s FCN. Review the form for accuracy, underwriting
or rating concerns, advance requests, and reserves. Communicate to the adjuster necessary changes, errors, or
omissions. The examiner should refer any rating issues to their underwriting department.
The adjuster should recommend reserves on the Preliminary Report based on the initial
inspection. It is the adjuster’s best approximation of the amount of damage to covered building
and personal property at the time and prior to an estimate being prepared.
Claims Examiners
Some flood systems set minimal reserves when a flood claim is open. The examiner must update the claim
reserves based on the adjusters’ recommendations as outlined in the Preliminary Report. The examiner must
revise reserves when they receive new information from the adjuster and prior to the next payment.
41.3 Interim Report
The adjuster’s interim report is required every 30 days after the Preliminary Report submission
until the Final Report is complete or anytime issues arise that the insurer should be aware. It is
important for the adjuster to inform the insurer why a claim remains open more than 45 days
after the assignment. The interim report also gives the insurer assurance the policyholder and
their claim is receiving the proper care and attention. The report can be a brief memo notifying
the insurer of the claim handling status, or it can be a copy of correspondence from the
adjuster to the policyholder, which requests additional information or which serves as a
reminder of previously requested information discussed at the date of the loss inspection.
41.4 Narrative Report
The NFIP Narrative Report serves as a summary of coverage, interests, claim activities,
adjustment decisions, and settlement recommendations. The adjuster may need to provide
multiple Narrative Reports when the circumstances are unusual, suspect, or especially
complicated and additional explanation is appropriate. Only facts should be included in reports.
The narrative should outline relevant information based on fact that addresses who, what,
where, when, and how. The adjuster should keep in mind that conjecture, sarcasm, innuendo,
or any other unprofessional language have no place in Narrative Reports. Adjusters should also
provide specific details in the Narrative report when the adjuster’s judgment is applied to any
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part of the loss adjustment.
Claims Examiners
The examiner should confirm that the Narrative Report properly summarizes the loss including coverage, points
of interest, claim activities, adjustment decisions, and settlement recommendations and request an amended
report if additional information is required to support the adjustment and payment recommendation.
41.5 NFIP Final Report
A policyholder who suffers flood damage to the insured property has only one claim arising
from that event, regardless of the number of proofs of loss with documentation packages the
policyholder may submit in support of that claim. The insurer’s assignment of an adjuster to a
loss plays a critical part in the claims experience for both the policyholder and the insurer. As
the policyholder is tasked with certain responsibilities when a flood loss occurs
17,
the insurer
assigns the adjuster to help the policyholder meet these responsibilities and to document the
loss. The policyholder, with assistance from the adjuster, develops the agreed-to proof of loss
during the Flood Claims Process
.18
The NFIP Final Report is required on all losses.
41.6 Proof of Loss
A proof of loss is a policyholder’s signed and sworn statement of loss with documentation to
support the dollar amount requested.
19
The proof of loss is not the claim and it is not just a
form. FEMA encourages the policyholder, adjusters, and insurers to utilize the FEMA-generated
proof of loss form when complying with the policy’s requirement in case of a loss. However,
completion and signing the form alone does not meet all SFIP requirements, the policyholder
must provide documentation to support the loss and dollar amount declared on the form.
The policyholder is required to submit a proof of loss within 60 days of the date of loss or
within any extension granted by the Federal Insurance Administrator. The adjuster may assist
the policyholder in completing the proof of loss; however, this assistance is only a courtesy.
Policyholders must use their own judgment concerning the amount of the loss, and they
must justify that amount. A fully completed NFIP proof of loss form, signed by the
policyholder(s) with the required documentation is required on every claim on which the
adjuster recommends payment.
A signed Increased Cost of Compliance (ICC) proof of loss is required on valid ICC Claims.
Proof of loss forms do not require a Notary. Electronic signatures are acceptable (see NFIP
Insurers’ Acceptance of Electronic Signatures in this manual).
FEMA expects the adjusters to communicate to policyholders that the proof of loss is NOT a
17
See SFIP, Section VII. General Conditions, paragraph (J) “Requirements in Case of Loss”
18
FEMA Fact Sheet, Flood Claims Process, https://www.fema.gov/media-library/assets/documents/114402
19
FEMA.gov, Proof of Loss, https://www.fema.gov/media-library/assets/documents/9343
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waiver. Signing the proof of loss allows the policyholder to comply with the policy requirement
to submit a proof of loss but does not prevent the policyholder from submitting an additional
proof of loss, such as an amended proof of loss or replacement cost proof of loss form, for
additional payment.
A payment arising from litigation is considered settlement of a case and not a claim. Therefore,
a proof of loss is not required for payments arising from litigation unless specifically directed by
counsel.
Claims Examiners
The examiner reviews the Final Report and proof of loss to confirm accuracy and that the policyholder
properly supported their claim for damage on the form.
When the proof of loss is not compliant in content or in form, the examiner should reject the proof of loss and
communicate the decision directly to the policyholder. However, when the examiner can support payment of a
portion of the claim, issue a partial rejection of the proof of loss to allow payment of the undisputed claim. The
examiner should provide written notification of the rejection to the policyholder explaining all issues and request
the documentation required to resolve those issues.
42 Requests for Additional Payment
Claims Examiners
42.1 Handling of Requests for Additional Payment Prior to Repairs
A policyholder requesting an additional payment and who has not completed repairs is not required to prove how
they spent funds previously paid on the same claim. If a policyholder has not completed the repair or
replacement of items damaged by a covered loss, NFIP insurers may not deny requests for additional payment
solely because the policyholder did not provide evidence that all amounts previously paid on the claim, plus the
value of the deductible(s) and any applicable physical depreciation, were spent to repair or replace covered flood
damage. NFIP insurers must evaluate such requests for additional payments using the same methods,
procedures, and requirements used to evaluate the initial requests for payment.
While policyholders are responsible for substantiating their claims, NFIP insurers must make best efforts to assist
policyholders and work collaboratively to reach agreement on the scope and cost to repair or replace covered
damage, regardless of the documentation provided, and when necessary:
• Provide the policyholder with guidance on the documentation necessary to support the
policyholder’s request for payment.
• Assign an adjuster to review the claim and, when warranted, inspect the property.
• Confirm that the property for which payment is sought is covered by the SFIP. This review likely will
assess whether the scope or price includes material improvements, repair re-design, costs incurred to
comply with building codes, undamaged or non-covered property items, damage resulting from causes
other than flood, pre-existing damage, duplicate allowances, or costs to repair that are outside of
industry standards.
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•
Use the services of an expert when there are questions concerning whether the damage was caused by
flood or the extent of the damage repairs.
42.2 Handling of Requests for Additional Payment When Repairs are
Complete
Where repairs have been made before a request for additional payment is submitted, NFIP insurers must
determine that funds previously provided were spent to make repairs and that the supplemental request does
not duplicate the prior payment. Once payment is made to the policyholder, the NFIP has no control over the use
of the funds. The policyholder may use the funds to repair the covered loss, repair losses that are not covered by
the SFIP, or for any other use. Also, the deductible and any applicable depreciation are the responsibility of the
policyholder and cannot be reimbursed as a part of any additional payment(s). Accordingly, if a policyholder does
not have the funds to complete repairs, it does not necessarily mean there has been an underpayment.
To be eligible for additional NFIP payment, the policyholder must document that funds previously paid were used
to repair or replace covered damage and must show with specificity that additional funds to repair covered
damage are required. NFIP insurers should carefully review the evidence of actual loss, together with paid receipts,
paid invoices, canceled checks, and other evidence of payment for repairs, to ensure that the policyholder is not
seeking duplicate payments, payment for uncovered losses, or the values of applicable deprecation and the
deductible(s) in a request for additional payment.
43 Reservation of Rights
Claims Examiners
The examiner may send a Reservation of Rights letter when the policyholder does not sign the non-waiver
agreement, when there is a lack of cooperation on the part of the policyholder, or when it becomes necessary
to compel some action on the part of the policyholder seeking compliance with policy conditions. Non-Waiver
Agreements and Reservation of Rights letters must clearly state the issue in question. See Non-Waiver
Agreement in this section of the manual.
44 Salvage
The adjuster should address the potential for a financial recovery in one of three ways:
1.
Readjust the scope of damage from replacement (non-salvageable) to repair (salvageable)
and reach an agreement with the policyholder on the cost to repair. This value should
include any applicable cost to disassemble, clean, repair, refinish, reassemble, plus any
handling by the repair provider.
2.
Keep the scope of damage for the item as replacement (ruined and non-salvageable) and
reach an agreement with the policyholder on the “buy-back” value.
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a.
The adjustment must specify the salvage and the buy-back value either within an
appendix to the estimate, or within the estimate itself.
b.
The adjuster should keep in mind property damages settled under this option (2)
ruined and non- salvageable, are no longer insurable or claimable on a future loss;
hence the potential that option (1) (salvageable) is more suitable to the
policyholder’s interests.
3.
When the policyholder is not amendable to either (1) or (2), the adjuster should promptly
inform the insurer who may instruct the adjuster to contact an outside third party, such
as a salvor. While uncommon for a loss on the Dwelling Form, residential salvage interest
exists with hardwood furniture, HVAC units, and major household appliances especially
those with certain metals such as copper.
Financial recovery paid to the program by a third party salvor is contingent upon prompt
coordination between the adjuster and the salvor. The insurer should retain a list of reputable
salvors involved on past claims and make that list available to its adjusters. When applicable,
the adjuster should discuss with the policyholder, the potential visit by a salvor soon after the
adjuster’s inspection. An inspection by the salvor only involves inventorying damaged items
worth purchasing. The salvor may not take possession of any property before the loss is
settled, until it is agreed upon by the policyholder and the insurer. The salvor should promptly
provide the salvage list and price to the adjuster for direction, and the adjuster should
promptly discuss the matter with the policyholder and the examiner. The salvor is entitled to
an inspection fee if the salvage offer is turned down by the insurer. See SALAE section in this
manual for instructions to request approval to pay the salvor’s fee. Otherwise, the salvors’ fee
is taken from the sale of the salvage. The salvor should issue payment for the overage to the
insurer as a recovery. The insurer may allow the adjuster to make decisions involving salvage
on its behalf.
The adjuster’s narrative in the Final Report must address the “financial recovery” applicable to
the loss. Oftentimes this portion of the narrative is omitted or is incomplete, which may lead to
missed opportunities by the program. When financial recovery is not available, the narrative
should explain why.
The adjuster’s service charge is based on the gross loss at RCV before any salvage. The
adjuster or the adjusting firm may not act as salvor on a loss, in whole or in part. This includes
taking possession of insured property for the inspection or purchase by a third party.
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The examiner should confirm that the adjuster considered salvage value of all replaced items. The insurer is
entitled to a 10 percent salvage allowance only when there is an actual cash collection of salvage from the
policyholder. The 10 percent allowance does not apply in any other situation.
The insurer’s share of salvage recoveries (10 percent) must be deducted from the net recovery proceeds prior to
remitting the remaining proceeds to the restricted bank account. The amounts of salvage recoveries reported to
FEMA (via the recovery after final payment transaction) will be for the total recoveries, inclusive of the insurer’s
entitlement.
45 SFHAs and Non-SFHAs
45.1 Special Flood Hazard Areas (SFHAs)
High Risk Zones
1.
AE (replaces A1-A30)
2.
A, AH, AO, A99, AR
3.
VE (replaces V1-V30), V, VO
45.2 Non-Special Flood Hazard Areas (Non-SFHAs)
Low to Moderate Risk Zones
1.
B, C, X
2.
D (undetermined)
See the NFIP Flood Insurance Manual for descriptions of the stated zones.
46 Special Allocated Loss Adjustment Expense (SALAE) Processes
Claims Examiners
IMPORTANT:
FEMA already requires NFIP insurers to request prior approval for SALAE Types 1 and 3.
This requirement will now apply to all SALAE types incurred on or after May 1, 2019.
46.1 Engineer Fees
FEMA expects examiners to employ the services of an expert when needed to determine causation, the
scope of covered repairs, subrogation, or method of repair, etc. Fees should be reasonable for the
work performed. Following are guidelines to assist the examiner in evaluating engineering fees:
1.
Engineers’ invoices must be itemized by time and expense (no lump sums) and round itemized
hours to the nearest whole.
2.
Inspection and travel time should be fully explained to support why they became necessary and
reported separately. The engineer must provide all applicable receipts for air travel, vehicle
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rental, hotel, tolls, parking etc. provided. Exceptions should be clearly explained and
documented.
3.
Expenses should be fair and responsible and equal to or less then the pre-inspection cost
estimate. FEMA will not authorize payment for any expense that exceeds the original quoted fee
unless the engineer can document pre-approval from the insurer or authorized vendor prior to
the expense being incurred.
4.
The engineer should thoroughly explain the need to retain additional subcontractors or vendors
to complete the assigned task and the charges itemized. FEMA will not pay for multiple
engineers to conduct an inspection unless pre-approval was received from the insurer with a
detailed explanation and/or the inspection requires different expertise or disciplines to evaluate
the damage, for example a structural and electrical engineer.
5.
The number of individuals involved with producing the final work product should be limited to
only those who are essential.
6.
The total billing involved with producing the final report should be reflective and
commensurate with the complexity of the assignment.
7.
All expenses submitted to FEMA require the specific recommendation for payment by the
insurer’s Principal Coordinator or their designee.
46.2 SALAE Type 1 (Expert Services) Reimbursement Requests
A SALAE Type 1 is an expert expense incurred by the insurer on the use of services provided by a subject
matter expert as part of the claim investigation. An expert can be an Engineer, Surveyor, Architect,
Salvor, Certified Public Account (CPA), or other similar expert. FEMA reimburses insurers for use of such
services.
• Insurers must request FEMA approval for all SALAE Type 1 expenses regardless of dollar
amount.
• SALAE Type 1 expense approval requests must include all supporting documents including the
engineer report and any amended report(s) and itemized invoices with applicable receipts for
travel, etc.
A. Navigating to the SALAE Module in Underwriting and Claims Operation Review Tool (UCORT)
1.
Accessing UCORT and requesting access to UCORT for a New User:
a. Access the UCORT site: https://www.nfip.fema.gov/Login.aspx
b. Click on the “Request Access” hyperlink
c. Complete the Access request form
2.
Navigating to the SALAE homepage in UCORT:
a. After logging in to UCORT, select “SALAE Home” from the “Claims” drop-down menu.
This brings you to the SALAE homepage.
3.
SALAE Homepage Features:
a. The “create new request” button allows you to start a new SALAE Type 1
reimbursement request.
b. The Filter panel allows you to search and filter SALAE requests by: policyholder
name, policy number, insurer, engineering entity, owner, and status.
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c. The “in-progress” tab displays SALAE requests that are in draft, in FEMA’s queue for
review, or ones that require additional information from the insurer prior to FEMA‘s
determination.
d. The “complete” tab displays SALAE requests that are approved, rejected, or closed.
B. Submitting a New SALAE Request
1.
Step 1: Requestor Information Page
a. The first step of the SALAE request submission process is to verify (or update if needed) the
requestor information that is auto-populated on the Requestor Information Page.
b. After the requestor’s information is verified, click “next” to proceed to the SALAE Type
Designation Page.
2.
Step 2: SALAE Type Designation Page
a. Verify that “Type 1 (Expert Expense)” is chosen from the drop-down menu on the “SALAE
Type Designation” page.
b. After “Type 1 (Expert Expense)” is chosen, click “next” to proceed to the Policy Information
Page.
3.
Step 3: Policy Information Page
a. You are required to enter all of the policy information on the Policy Information Page.
b. After inputting information for required fields (denoted with “*”), you should click “next”
to navigate to the Expert Service Information Page.
4.
Step 4: Expert Service Information Page
a. You are required to select the “type of expert” from the drop-down menu on the Expert
Service Information Page.
b. Click the “add new entity” button to provide the entity name(s) and address(es) from
which expert services were sought. You are required to click “update” to save the entity
details to the request. You can add up to three entities per request.
c. Report the inspection state, Certificate of Authorization (COA)/Registration Number
and expiration date. Some states do not license engineering firms; however, there may
be a requirement for the firm to register with the Secretary of State.
d. Enter the request details and provide a justification for the expense.
e. For engineering or surveyor services
only
, you are required to respond to additional
questions.
f. For engineering services
only
, click “add new engineer” to provide the names and license
information for all engineers from which engineering services were sought. Click “update”
to save the engineer’s information to the request.
g. For engineering or surveyor services
only
, you are required to certify the request and
electronically sign and date the certification.
h. Click “next” to proceed to the Documentation Upload Page.
5.
Step 5: Documentation Upload Page
a. You are required to upload the applicable invoice and provide the invoice date and invoice
number on the Documentation Upload Page. Click “select file” to browse for the
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appropriate file on your computer and then click “upload invoice” to save the file to the
request.
b. You are also required to provide the engineering report or expert’s work product. Click
“select file” to browse for the appropriate file on your computer and then click “upload
report” to save the file to the request.
c. If you have additional documentation to upload, you should utilize the optional “Other”
section on the Documentation Upload Page. Click “select file” to browse for the
appropriate file on your computer and then click “upload other” to save the file to the
request.
d. Click “next” to proceed to the Final Review Page.
6.
Step 6: Final Review Page
a. On the Final Review Page, you can review all of the information pertaining to the request
that was previously entered.
b. If you need to update information prior to submitting to FEMA, you should utilize the “edit”
link in the section headers to navigate back to the appropriate page.
c. After reviewing and verifying the information on the Final Review Page, you can choose to
provide any additional comments or files they wish to attach to the SALAE request and
submit to FEMA. You are required to click “add comment/file(s)” to save comments/files to
the request.
d. Click “submit to FEMA” at the bottom of the Final Review Page to officially submit the
request to FEMA for review. You will be redirected back to the SALAE homepage.
Once FEMA provides a determination, insurer users will receive an email notification informing you of
FEMA’s review decision (approved, rejected, or additional information requested).
C. Providing Additional Information for a Specific SALAE Request
1.
To provide additional information on a request returned by FEMA:
a. Filter requests by status: “Action Needed” on the SALAE homepage.
b. Verify the policyholder’s name, date of loss, and policy number to ensure you are entering
the appropriate request.
c. Click “open request” to enter the request and provide additional information.
2.
To review what additional information is requested:
a. Scroll to the comment section on the Final Review Page and review the comment left by
FEMA (comment also available in the email from UCORT).
b. Respond to/carry-out the action that is requested by FEMA prior to re-submitting the
request.
(1) To edit information, go to the appropriate page and update the information and
return back to the Final Review Page for review and submission.
(2) To provide additional files, utilize the comment section on the Final Review page to
upload documents and provide a description of the file. You are required to click
“add comment/file(s)” to save the file to the request.
c. Click “return to FEMA” to re-submit the SALAE Type 1 request for review. Upon FEMA
reviewing the additional information, you will receive an email notification, informing you
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that your request has been approved, rejected, or if additional information is required.
For additional technical support, you may contact FEMA-UCORT@fema.dhs.gov.
46.3 SALAE Type 2 (Adjustment Expenses) Reimbursement Requests
Insurers must request FEMA approval for all SALAE Type 2 expenses incurred on or after May 1,
2019, regardless of dollar amount.
SALAE Type 2 are extraordinary adjustment expenses that are not reimbursed by the applicable
NFIP Adjuster Fee Schedule. These expenses can include travel expenses or time intensive tasks
like establishing coverage on a specific claim.
1.
Specific FEMA approval is required for adjuster expenses regardless of dollar amount. The
adjuster must have pre-approval and agreement from the WYO prior to incurring or charging
SALAE Type 2 expenses.
2.
Adjusters must retain all receipts and submit invoices, detailed time-and-expense billing with
rates, activity log, etc. to support the SALAE Type 2 expense.
3.
Travel expenses to remote access to loss must be pro-rated between multiple assignments in
the same area. Adjusters should use the published IRS standard mileage rate as of the date
of inspection. In special circumstances, housing may be allowed. Reimbursement would also
be based on published GSA per diem rates.
4.
Reimbursement of SALAE Type 2 cannot be made to the insurer or the adjuster until FEMA
has approved the exact amount of the SALAE.
5.
The insurer must thoroughly explain in writing the reason it was necessary for the adjuster to
incur the excess expense, details of the activity, what effect this activity or work had on the
adjustment, any unusual circumstances, and why FEMA should approve the expense. All
FEMA SALAE approval requests must be accompanied by copies of the report (including any
previous reports), all actual bills, and any itemized time and expense sheets.
6.
SALAE Type 2 expenses never includes CWOP fees (regardless of the number of supplemental
payments made) or Texas tax – these expenses are reimbursable as Loss Adjusting Expenses
(LAE) per the published adjuster fee schedule.
A. Reimbursement of SALAE Type 2
1.
Step 1: Log into UCORT
a. Navigate to https://www.nfip.fema.gov/Login.aspx.
b. Enter UCORT credentials.
2.
Step 2: Navigate to the SALAE Homepage in UCORT
a. Select “SALAE” from the “Claims” drop-down menu.
3.
Step 3: Create New Request
a. Click on “Create New Request” to begin your submission.
4.
Step 4: Requestor Information
a. Edit your personal and company information (as needed) and click “Next”.
5.
Step 5: SALAE Type Designation
a.
Select “Type 2 (Adjuster Expense)” from the drop-down menu.
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b. Click “Next” to continue with your submission.
6.
Step 6: Policy Information
a. Enter the policy information.
b. Click “Next” to continue with your submission.
7.
Step 7: Expense Details
a. Complete the expense details.
b. Use the appropriate Fee Schedule to calculate the “Total Adjusting Expenses Paid to Date”
and use the drop-down to indicate which Fee Schedule was used.
c. Click “Next” to continue with your submission.
8.
Step 8: Documentation Upload
a. Enter invoice information.
b. Under Invoice, click “Select Files . . .”to browse for the appropriate invoice(s) and upload to
the application.
c. Under “Other”, click “Select Files . . . “to browse for other documentation related to the
submission.
d. Click “Next” to continue with your submission.
9.
Step 9: Review Your Submission
a. Review all information entered into the system.
b. Upon completion of data entry, click “Submit to FEMA.”
c. Submission Complete
B. Notifying the Insurers
After FEMA makes a determination, the following emails are sent to the requestor:
• Notice of approval
• Notice of rejection
• Notice that additional action is required
If FEMA returns a request to the insurer, the requestor has 14 business days to provide the additional
documentation or the request is automatically closed.
For questions or technical support, please contact FEMA-UCORT@fema.dhs.gov.
46.4 SALAE Type 3 (Litigation Expenses) Reimbursement Requests
A.
Reimbursement of SALAE Type 3
Approval for All Expenses
Type 3 SALAEs are reimbursed solely for litigation expenses. The regulations and the Arrangement do
not authorize the reimbursement of other legal expenses, including pre-litigation matters or other legal
advice. 44 C.F.R. § 62.23 and App. A. Only actual litigation expenses related to a filed lawsuit are
reimbursable. Prior to the filing of a lawsuit, the matter is considered claims handling and ineligible for
Type 3 SALAE reimbursement. This provision does not revise any of the expenses typically reimbursed
throughout the claims handling process.
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FEMA requires WYO Companies to seek FEMA approval for all litigation expenses incurred to defend a
lawsuit within the scope of the Arrangement brought against an insurer for claims under a WYO
Company-issued policy.
Customary Standards
FEMA reimburses Type 3 SALAE Litigation expenses incurred by a WYO Company pursuant to the
Arrangement subject to FEMA Office of Chief Counsel, FIMA Law Division guidance and direction. The
WYO Company is responsible for ensuring litigation expenses for which reimbursement is sought are
consistent with its own customary standards, staff and independent contractor resources, as it would
in the ordinary and necessary conduct of its own business affairs, subject to the Act, the SFIP, the
Arrangement, and other regulations prescribed by FEMA. 44 C.F.R. § 62.23(e). For example, if the
customary standards of the WYO Company require reduction of hourly rates or expenses or other
limitations on payment for outside expenses, the WYO Company is required to do the same for any
Type 3 SALAE-related expense.
Under the Arrangement, FEMA is not responsible for payment to counsel representing WYO
Companies. The WYO Company is responsible for paying its counsel without delay and for seeking
reimbursement for eligible expenses under the Arrangement. WYO Companies must submit requests
for reimbursement within 60 days of receipt of the invoice/bill from its outside counsel. If an
invoice/bill will not be submitted within the 60-day period, the WYO Company shall notify FEMA of its
existence and provide an explanation and estimation of when the invoice/bill will be submitted.
Further, any invoice/bill submitted after 180 days will be denied unless sufficient justification is
provided, or FEMA expressly and in writing waived the 180-day period authorizing an extension.
Prior to seeking FEMA’s approval for reimbursement, a WYO Company must review the invoice to
verify the work was completed, accuracy of the billing, reasonableness of the expenses incurred, and
that the reimbursement would be approved under the WYO Company’s customary standards as
submitted subject to the Arrangement, Act, Regulation and FEMA guidance. A certification signed by
the WYO Company representative must be attached as a cover sheet or the expense will be denied.
The certification must provide the following:
I have reviewed and understand the FEMA guidelines that govern the Type 3 Special Allocated Loss
Adjustment Expenses (SALAEs). I am responsible for reviewing and ensuring that Type 3 SALAE
requests comply with the FEMA guidelines. I have reviewed the invoice for which reimbursement is
sought, and to the best of my knowledge, information and belief, confirm that the invoice is
reasonable, appropriate and complies with the applicable FEMA guidelines.
Executed on (date).
(Signature)
Overhead Expenses are Not Reimbursable
Customary charges such as overhead, ordinary office supply costs, and local telephone costs are
included in the hourly rate and are not reimbursable as Type 3 SALAE. The following expenses are
considered overhead and generally are not reimbursable. FEMA will consider reimbursement on a
case-by-case basis after pre-approval:
a.
Fees attributed to secretarial and administrative services;
b.
Organizing material for storage;
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c.
Unless an attorney is required, responding to inquiries concerning services, billing
statements, cases files or audit letters;
d.
Fees incurred for “learning time”;
e.
Scheduling and arranging meetings, depositions, examinations or other event scheduling;
f.
Data entry, document scanning, document conversion to other electronic formats;
g.
Arranging travel;
h.
Time spent photocopying, collating, and faxing;
i.
Bates stamping of documents;
j.
Date stamping documents;
k.
Management of personnel;
l.
Annual or monthly fees for computerized legal research services such as LexisNexis,
Westlaw, or Public Access to Court Electronic Records (PACER). Research time is
reimbursable;
m.
Rent for office space, equipment or software;
n.
Utilities including local and long distance telephone service;
o.
Charges for use of a teleconference line;
p.
Meeting rooms in the assigned counsel’s law offices for local depositions and conferences;
q.
Catering;
r.
Facsimile charges of any kind;
s.
Postage;
t.
Meals or refreshments for anyone other than the attorney assigned to the case while
attending meetings, depositions or similar events;
u.
Support staff salaries;
v.
Technology costs such as depreciation on electronic devices, copiers and other machinery;
w.
The use of an outside vendor for copy services unless pre-approved by FEMA (In-house
photocopy charges are limited to ten cents per page); and
x.
Any other item associated with overhead or profit.
As noted above, FEMA recognizes there may be circumstances that warrant reimbursement of an
expense listed above. Accordingly, FEMA may approve such expenses upon written request and
appropriate justification by the WYO Company.
B.
Limitations on Reimbursement for Discovery
Substantial legal fees and expenses are incurred as part of discovery. WYO Companies must monitor
these costs. Depositions can provide critical information, but present one of the most significant
litigation costs to the NFIP. FEMA will reimburse up to three depositions per case without preapproval.
This does not apply to defending depositions. FEMA recognizes the need to ardently represent the
Program. This provision is not intended to restrict or interfere with the outside counsel’s ability to
represent the WYO Company. The purpose of this provision is to provide better monitoring of
discovery expenses. The WYO Company simply needs to provide a brief justification for the additional
depositions to FEMA-NFIP-WYO-Litigation@fema.dhs.gov. The Write Your Own Oversight Team will
promptly review and respond to all requests.
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Video Teleconference for depositions and other proceedings is highly encouraged.
Any questions should be referred to FEMA’s Office of Chief Counsel.
46.5 SALAE Type 4 (Appraisal Expenses) Reimbursement Requests
Insurers must request FEMA approval for all SALAE Type 4 expenses incurred on or after May 1,
2019, regardless of dollar amount.
SALAE Type 4 are expenses incurred under the SFIP Appraisal Clause.
1.
Reimbursement of SALAE Type 4 expenses cannot be made to the insurer until FEMA has
approved the exact amount of the SALAE.
2.
All SALAE approval requests should be accompanied by copies of the report (including any
previous reports), all actual bills, and any itemized time and expense sheets. The insurer must
thoroughly explain in writing why FEMA should approve the expense.
A. Reimbursement of SALAE Type 4
1.
Step 1: Log into UCORT
a. Navigate to https://www.nfip.fema.gov/Login.aspx.
b. Enter UCORT credentials.
2.
Step 2: Navigate to the SALAE Homepage in UCORT
a. Select “SALAE” from the “Claims” drop-down menu.
3.
Step 3: Create New Request
a. Click on “Create New Request” to begin your submission.
4.
Step 4: Requestor Information
a. Edit your personal and company information (as needed) and click “Next”.
5.
Step 5: SALAE Type Designation
a. Select “Type 4 (Appraisal Expense)” from the drop-down menu.
b. Click “Next” to continue with your submission.
6.
Step 6: Policy Information
a. Enter the policy information.
b. Click “Next” to continue with your submission.
7.
Step 7: Expense Details
a. Complete the expense details.
b. Fill in or use the “Auto Calculate” button to calculate the reimbursable amount.
c. Click “Next” to continue with your submission.
SAVE YOUR WORK! At any time in the submission process you can withdraw or save your expense
request.
Withdraw
only if you no longer want to submit this expense.
Save
at any t
ime and your work will
be saved in your dashboard but the application will remain open. Work is automatically saved when you
click “Next”.
8.
Step 8: Documentation Upload
a. Enter invoice information.
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b. Under Invoice, click “Select Files . . .” to browse for the appropriate invoice(s) and upload to
the application.
c. Under “Other”, click “Select Files . . . “ to browse for other documentation related to the
submission.
d. Click “Next” to continue with your submission.
9.
Step 9: Review Your Submission
a. Review all information entered into the system.
b. Upon completion of data entry, click “Submit to FEMA.”
c. Submission Complete
B. Notifying the Insurers
After FEMA makes a determination, the following emails are sent to the requestor:
• Notice of approval
• Notice of rejection
• Notice that additional action is required
If FEMA returns a request to the insurer, the requestor has 14 business days to provide the additional
documentation or the request is automatically closed.
For questions or technical support, please contact
FEMA-UCORT@fema.dhs.gov
.
47 Statute of Limitations
Interplay Between the Extension of the Proof of Loss Deadline for NFIP Policyholders and the 1-
Year Statute of Limitations in 42 U.S.C. § 4072 (VII.R. Suit Against Us)
NFIP Insurer
The SFIP is a Federal regulation promulgated by FEMA, which has three forms. The Dwelling form is found at 44
C.F.R. § 61, Appendix A(1); the General Property form is found in Appendix A(2); and the Residential
Condominium Building Association Policy (RCBAP) form is found in Appendix A(3). In these regulations, FEMA
established the 60-day proof of loss deadline. See Section VII(J) of the Dwelling and General Property forms and
Section VIII(J) of the RCBAP form. The Associate Administrator of the Federal Insurance and Mitigation
Administration has the authority to grant waivers of and extend the proof of loss deadline pursuant to 44 C.F.R. §
61.13(d). See also 44 C.F.R. § 61, Appendices A(1) and A(2), Section VII(D), and Appendix A(3), Section VIII(D).
Congress, in enacting the National Flood Insurance Act of 1968, as amended, (42 U.S.C. § 4001, et seq.) enacted a
1-year statute of limitations for an NFIP policyholder to bring a lawsuit after denial/disallowance or the partial
denial/disallowance of the policyholder’s claim. See 42 U.S.C. §4072. This 1-year statute of limitations was
incorporated into the SFIP by FEMA. See 44 C.F.R. § 61, Appendices A(1) and A(2), Section VII(R), and Appendix
A(3), Section VIII(R).
Unlike the SFIP proof of loss deadline, which is a regulation created by FEMA, FEMA cannot extend the time limit
for NFIP policyholders to bring a lawsuit. The applicable time limit to file a lawsuit was set by statute, not FEMA.
Although FEMA has the administrative authority to extend the proof of loss deadline it established by regulation,
FEMA lacks the authority to extend the time limit to file a lawsuit established by statute. This statute of
limitations has never been extended.
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NFIP Insurer
It is important to understand that the proof of loss is not the claim. The claim is the assertion by the policyholder
that they are entitled to be paid for a covered loss under their SFIP (i.e., the demand for money). An NFIP
policyholder whose insured property is damaged by an event only has one claim arising from that event,
regardless of the number of proofs of loss that the policyholder may submit in support of that claim.
Even in the instance of an Increased Cost of Compliance (ICC) claim under Coverage D of the SFIP there is only one
claim that arises from that substantial damage determination regardless of the number of proofs of loss
submitted by the policyholder.
The SFIP sets forth the process that the policyholder must follow in supporting his or her claim in the General
Conditions section of each form of the SFIP (which is Section VII for the Dwelling and General Property SFIP forms
and Section VIII for the RCBAP SFIP form). For example, Section VII(J)(1) of the SFIP requires prompt written
notice of the loss. Also, Section VII(J)(4) and its subparts set forth what information must be included for the
proof of loss (which is the policyholder’s statement of the amount of money demanded and submitted in support
of their claim) and indicate that it must be sent within 60 days after the loss.
NFIP court rulings hold that if the policyholder does not comply with all the terms and conditions of the SFIP prior
to filing a lawsuit (including the proof of loss requirements), then the necessary conditions for the policyholder to
be able to bring a lawsuit have not been met. What this means is that, in the instance in which a denial letter has
been issued such that the statutory 1-year to bring the lawsuit will run before a proof of loss extended deadline
runs, the policyholder has to both file the lawsuit and have the required proof of loss requirements completed
within 1 year of the date of the denial or partial denial of the claim. This situation will typically arise when the
insurer has determined that the policyholder has not suffered a “direct physical loss by or from flood” and there
is no coverage under the SFIP. For example, if the insurer has determined that flood waters did not reach the
insured building, a denial letter will be sent because there is no insured loss and no coverage under the SFIP.
In any event, FEMA requires NFIP insurers to continue to work with their policyholders. The NFIP can pay
additional amounts if properly supported, even if the formal proof of loss deadline has passed. FEMA does this
through the granting of the policyholder’s request of an individual waiver of the proof of loss deadline through
the insurer. The NFIP makes every possible effort to ensure that a proper claims payment and resolution of the
claim are achieved in every instance.
The limited waiver and extension of the proof of loss deadline recognizes the difficulties policyholders may
experience evaluating damage and supporting their flood insurance claim. The typical dispute arises after a
policyholder has received payment based on an adjuster’s report and the insurer’s approval and later believes
there is additional uncompensated damage. However, as discussed above, there are instances when the claim
may be denied for reasons that do not require an adjuster’s report or proof of loss from the policyholder. Even in
those claims where a denial letter was issued early, the policyholder still has a full year from the date of that
denial letter to collect all required documentation, file the proof of loss, and then file a lawsuit if such is believed
necessary.
The extended time to file the proof of l
oss is an effective mechanism that allows policyholders to fully present their
claims. For most claims, disputes will not arise until after the submission of the proof of loss and formal denial of
the amount sought. While FEMA does all it can to assist NFIP policyholders, it does not have authority to waive or
extend the applicable statute of limitations.
48 Subrogation
Subrogation is the right of the insurer to pursue legally a third party that caused the loss as a
means of recovering the amount of the claim paid by the insurer to the policyholder for the loss.
Pursuant to 44 C.F.R. § 62.23(i)(8), FEMA has the right of first recovery in the event of any
subrogation claim under the NFIP. The adjuster should consider subrogation on every flood claim
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and confirm the potential for subrogation and address subrogation in the Narrative Report. This
often requires the use of an expert to confirm causation and to verify the potential at fault party.
Investigations should be timely to prevent the loss of key evidence that would allow a successful
recovery
If the adjuster believes there may be potential for subrogation, the adjuster should complete
FEMA Form 086-0-16 – Cause of Loss and Subrogation Report (Appendix E), to identify a
potentially responsible third party; and characterize how their actions that may have caused or
worsened flood damage.
Claims Examiners
The insurer should evaluate subrogation recovery. Whether the insurer pursues recovery or foregoes pursuit, the
insurer should notify the NFIP BSA and submit the Cause of Loss and Subrogation Report and a copy of the claim
and underwriting file.
Send subrogation-related documentation and information to the NFIP BSA via electronic mail at
NFIPSALAEMailbox@fema.dhs.gov. Upon receipt of the information, the NFIP BSA will log it, and then refer all
documents by email to FIMA Office of Chief Counsel, Write-Your-Own Oversight Team, FEMA-NFIP-WYO-
Litigation@fema.dhs.gov, for handling. The Write-Your-Own Oversight Team will contact the insurer if additional
information is required or necessary.
49 Underwriting Referral
It is important that the adjuster brings to the insurer’s attention any issue involving a
potentially improperly rated policy or ineligible building or contents promptly upon
discovery. The sooner in the claims process the adjuster raises a potential problem, the
sooner Underwriting (UW) can review the concern, minimizing delays to the loss settlement.
An UW referral should cite the current rating of the policy, followed by the facts, along with
supporting photographs. When the issue involves a potential basement or post-FIRM
elevated building located within a special flood hazard area, but the adjuster is unsure about
the facts, the referral should disclose this and recommend the insurer hire a qualified
outside professional service.
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With an issue involving an elevation status of a floor level, an elevation certificate, or a written elevation study, a
detailed “bird’s-eye” drawing is typically necessary. A bird’s-eye drawing plots all elevation points for each floor
level, area or room, in addition to recording the elevation points along the building’s exterior perimeter
foundation, and high and low points at the described location. A report of this nature generally requires
certification with a signature and seal from a professional land surveyor; however, some states also permit a
signature and seal from a professional engineer. The insurer should ensure the professional it hires complies with
all rules established by the state for land surveying.
The conversion of elevation “vertical datum” may also present an UW issue. A vertical datum is a base
measurement point (or set of points) from which elevations are determined. Historically, the standard datum
used by the federal government was the National Geodetic Vertical Datum of 1929 (NGVD 29). However, the
North American Vertical Datum of 1988 (NAVD 88) is now the national standard. Elevation values based on
different vertical datum cannot be used together directly since they are based on a different vertical reference
point. When comparing the updated flood hazard data released by FEMA with elevation information on an
elevation certificates and other documents from different sources, the insurer must take care to ensure all
elevations are in the same datum. If they are not the same, the insurer must apply a conversion factor so that the
values are referenced to the same datum before they are used. Failure to do this can result in improper structure
design (e.g., building at the wrong elevation), which can have serious implications in terms of complying with
community and state building requirements. Flood insurance rates can also be impacted, including eligibility for
the Waiver of the Limitation or a Letter of Map Amendment or Revision.
The examiner must carefully review the adjusters’ report for discrepancies in the declarations page, the
preliminary report, or photographs, and immediately refer any discrepancies to the UW Department for review
and provide the necessary supports, i.e. photographs, surveyors report, etc.
How to address potential rating changes:
• When the rating change will result in greater coverage, the adjustment should proceed based on the
current rating and revised once underwriting confirms the rating, reforms the policy, and collects the
correct premium.
• When the rating change will potentially restrict coverage, have the adjuster secure a non-waiver
agreement, or send a Reservation of Rights letter addressing the coverage issue. The adjustment
continues and payment issued based on the undisputed covered loss. The adjuster revises the estimate
once UW confirms the rating, reforms the policy, and collects the additional premium.
The examiner should keep the policyholder informed through the process and communicate the change to
the adjuster and the policyholder as necessary.
50 Waiver of Elevated Building Coverage Limitation
A Letter of Map Amendment (LOMA) or Letter of Map Revision (LOMR) removes the post-FIRM
elevated building from the Special Flood Hazard Area, and the elevated building limitations of
the SFIP then do not apply to the area beneath the lowest elevated floor. The LOMA or LOMR
obtained after the loss is effective as of the date of the loss.
If the lowest adjacent grade (LAG) of the property is below the Base Flood Elevation (BFE), this
would prevent a LOMA or LOMR from being issued to the property owner, so that the property
owner will not be able to obtain full coverage for the enclosure. (See Letter of Map
Amendment/Letter of Map Revision in this section of the manual, and the Flood Insurance
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Manual for additional information regarding LOMA and LOMR.)
However, there are buildings where the LAG is below the BFE, but the lowest floor elevation
(LFE), the enclosure floor, is at or above the BFE. Such buildings comply with the NFIP
Floodplain Management Regulations, in that the lowest floor of the building is elevated to or
above the community’s BFE. This means the enclosure does not have the higher risk of
flooding that elevated building enclosures normally has. In such cases, a claim may qualify for
a waiver of the elevated building coverage limitation.
The waiver applies to buildings located in SFHA zones beginning with the letter A where a BFE is
available. Buildings located in SFHAs beginning with the letter V do not qualify for this waiver.
The waiver is based on the current flood map and the use of a grandfathered flood map is not
applicable. The flood zone on the current map must also be an AE flood zone. Consequently,
the waiver is only applicable to the current loss, and a separate waiver request must be filed on
any future claim to ensure use of the current flood map, the proper flood zone, and BFE.
Claims Examiners
The examiner must send the waiver request by email to the NFIP BSA at
NFIPUnderwritingMailbox@fema.dhs.gov. The email subject line should include the policy number and the type
of submission (ex. 1234567890 – Waiver for Elevated Building Coverage Limitation).
Documentation to attach to the email must include:
• Complete Underwriting file.
• Documentation used to issue the policy.
• Current Flood Zone Determination.
• Elevation Certificate and datum conversions if applicable.
• Color photographs of all sides of the building and photographs showing machinery and equipment and
location
• Copy of current claim file and any previous claim files if applicable.
The NFIP BSA will send an acknowledgement of receipt of the waiver request to the insurer. If additional
information is required, the NFIP BSA will notify the insurer within 10 business days. Otherwise, the NFIP BSA will
submit the packaged documents to the FEMA Underwriting Branch for review and determination. If all
documentation is submitted timely and properly, the entire process should not take more than 15 business days.
51 Wildfires
51.1 Application of Post Wildfire Exception to 30-Day Waiting Period for New
Policies
In general, new policies for flood insurance become effective following a 30-day waiting
period.
20
However, the Biggert-Waters Flood Insurance Reform Act of 2012 provided an
additional exception to this requirement related to flooding caused by post-wildfire
20
See 42 U.S.C. 4013(c)(1); 44 CFR 61.11(c)
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conditions, referred to as the Post-Wildfire Exception.
21
Under the Post-Wildfire Exception,
the standard 30-day waiting period does not apply to new policies if:
1.
The covered property experiences damage caused by flood that originated on Federal land;
2.
Post-wildfire conditions on Federal lands caused or worsened the flooding; and,
3.
The policyholder purchased the policy either:
a.
Before the fire containment date; or
b.
During the 60-calendar-day period following the fire containment date.
For the purposes of the Post-Wildfire Exception, the Federal Agency responsible for the land on
which the post-wildfire conditions existed determines the fire containment date.
Where a policyholder meets the requirements of the Post-Wildfire Exception, the insurer must
make the policy effective at 12:01 a.m. (local time) on the date of the flood loss qualifying for
the exception. Once the policy is made effective, the insurer must adjust and pay claims in
accordance with the SFIP, including provisions governing a flood in progress and requiring that
a flood occurs after the purchase of the policy.
51.2 Assistance with the Proper Application of Post Wildfire Exception
FEMA supports the application of the Post-Wildfire Exception by tracking containment dates
for wildfires occurring on Federal lands and consulting when necessary with appropriate
Federal agencies to determine whether post-wildfire conditions caused or exacerbated a flood.
Insurers may request assistance with the proper application of the Post-Wildfire Exception by
contacting FEMA- FIDClaimsMailbox@fema.dhs.gov.
52 Wind/Flood Loss
When adjusting wind/water losses, the adjuster should use established and proven investigative
methods to document flood and wind damage to buildings and contents occurring during
hurricane or storm events. “Wind/Water Investigative Tips” below can also be helpful.
The adjuster should record the process they use when approaching a wind/water claim. In
addition to looking for signs of flood damage and a general condition of flood and documenting
the exterior water line, the adjusters should note any exterior wind damage, such as missing
shingles, turbine, or fascia damage. The adjuster should also photograph this damage and
mention what was observed in the narrative report.
The SFIP only pays for direct physical loss by or from flood to insured property. Once inside the
building, the adjuster should always document the flood water line. Damage below this line is
typically flood damage (exceptions like wicking should be noted in the narrative report).
21
See 42 U.S.C 4013(c)(2)(C) (added by the Biggert-Waters Flood Insurance Reform Act of 2012 § 100241)
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Damage above the flood water line is typically wind damage, such as water-stained ceilings or
water damage at broken windows or exterior doors. This damage should also be
photographed and mentioned in the narrative report.
52.1 Wind/Water Investigative Tips
1.
Research local newspapers and check with the National Weather Service, or other
agencies to determine the specific data relative to the storm in the location of the
claim. Specific information to look for includes wind speed data, storm surge data,
flood height data, and other relevant information.
2.
When damage is caused by a hurricane, tropical storm, nor’easter, or other event that
may cause both wind and flood damage, determine and record the following (check and
record the timing and duration for each):
Data Element
Measurement
Timing
Duration
Highest Wind Speed
Barometric Pressure
Amount of Rainfall
Tidal Heights
Storm Surge
Wave Heights
3.
Record the distance and direction of the insured risk relative to the eye of the storm.
Remember that the waves are higher to the right of the storm’s path.
4.
Research and record site conditions:
−
Original ground elevation
−
Distance from body of water
−
After-storm ground elevation or other indications of scour
−
Amount and type of storm debris
5.
Canvass the neighborhood for eyewitnesses and take their recorded or signed
statements. Be certain to identify where each witness was at the time of the storm, the
amounts or descriptions of wind and flood each witness saw, and the time of day that
each saw it. Record in the claim files only what each witness says verbatim—not hearsay
or your own opinion.
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6.
Check for and photograph the debris line. Measure and record how many feet the
debris line is from the shoreline and from the insured risk. Be sure to describe the
topography in detail. Check for and photograph houses and objects adjacent to the
insured risk. If damage appears to be different from that of the insured risk, determine
why and record the reason in the claim files. Usually, the damage is different for one of
two reasons:
−
Different cause of damage (e.g., a tornado can cut a relatively narrow path,
leaving neighboring buildings relatively undamaged).
−
Different building construction and anchoring. Look for connectors or tie-down straps
for elevated buildings and enclosures beneath elevated buildings. Check the pilings for
evidence of scouring. Photograph the remaining pilings, showing patterns of the
leaning pilings. Determine how deep the pilings were installed and measure the
distance between pilings.
7.
Determine and record in the claim file a complete description of the damaged or
demolished building, including the type of construction; whether elevated (if elevated
with an enclosure, be sure to indicate the type of enclosure – breakaway walls, open
lattice work, vents, etc.); number of floors (including basement); roof covering and pitch;
windows, carports, etc.; and the building’s relative position to the wind. It is also
important to include a description of the foundation type (slab, piles, piers, etc.) and
damage.
8.
Photograph (close-up) the remains of connectors or tie-downs. Be sure to describe the
size, type, method of installation, and if possible the brand name.
9.
Make a notation in the initial report where evidence suggests the insured risk was not
built as securely as neighboring buildings. The flood insurer or adjuster may want to check
the local building codes to determine if a building construction violation has occurred and
document the claim files, both with copies of the code and the evidence of a violation.
Document the age of the building and the effective dates of the building codes.
10.
Check for and photograph any wind-caused openings in the building and/or missing roof
shingles.
11.
Check for and photograph all possible wind-related watermarks or stains visible on
both the exterior and interior walls and ceilings of the building.
12.
Check for and photograph all possible flood-related watermarks or stains visible on
both the exterior and interior of the building.
13.
Check for and photograph any watermarks visible on nearby trees or fence posts,
or other buildings.
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Overall, flood claim adjusters should take special care when adjusting claims caused by both
flood and other perils. In addition to thoroughly examining all flood damage, adjusters should
also photograph and note evidence of damage caused by non-flood perils. General notations of
damage caused by non-flood perils do not rise to the level of providing a professional opinion
regarding causation, damages, or repair methods. Such notations can help resolve
disagreements later in the claims process.
53 Withdrawal Letters and Denial Letters
Claims Examiners
53.1 Withdrawal Letters
The examiner will issue a letter of withdrawal confirming the policyholder’s voluntary withdrawal of the claim
prior to or after inspection. A policyholder’s withdrawal is not a denial and does not trigger the one-year limit to
file suit or the 60-day timeframe to file an appeal; however, if an inspection occurred the letter should reflect the
findings of the adjuster and address any applicable exclusions.
53.2 Partial Denial Letters and Full Denial Letters
Send letters to policyholders so that they are aware of the disposition of the claim and provide copies of
estimates and inventories to support the claim payment and settlement.
Send a denial letter on all partial or full denial of claims. Denial letters must include all known reasons for the
denial, cite the appropriate section of the SFIP supporting the denial, and include information regarding FEMA’s
formal appeals process (see Section 4 Appeals, in this manual).
Provide the policyholder a courtesy copy of experts’ reports.
54 Oversight
54.1 Claims Oversight
FEMA maintains oversight of the NFIP claims processing performed by the insurers. This
oversight is conducted primarily through claims and underwriting Operation Reviews and
Random Claims Quality Checks (RCQC). The Operation Reviews are typically performed on closed
claim files. An RCQC is conducted during disasters on open and closed claims. The RCQC review
involves reviewing at least one claim from each adjuster to determine if the claim is on the right
path and provide guidance as necessary. Additionally, insurers engage CPA firms to perform
biennial audits that include a claims audit section.
Adjusters and insurers should be mindful of the findings from the Operation Reviews, RCQC, and
biennial audits.
The NFIP is a federal program and therefore subject to the scrutiny of the Department of
Homeland Security (DHS) and other federal agencies including the Government Accountability
Office (GAO), the DHS Office of Inspector General (OIG), and the Office of Management and
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Budget (OMB). Adjusters and insurers should be aware and mindful of findings from the
following audits: DHS Improper Payment Elimination and Recovery Information Act (IPERIA), DHS
Financial Audit and various GAO and OIG studies and reports.
Many of the findings can be avoided simply by adherence to good claims handling practices and
knowing the terms and provisions of the SFIP. Helpful tips may be included with the findings. The
following will identify findings and preferred methods when indicated:
A. Incorrect Estimate/Worksheet Calculation
1.
Estimates are line-by-line, room-by-room using unit costs.
2.
Depreciation to both building and contents are taken on a line-by-line basis.
3.
Rooms should be described and identified and the adjuster should verify
that the estimate/worksheet and the building diagram match.
4.
The adjuster should be careful to include only building items on the building
estimate/worksheet; for instance, clothes washers and dryers are always contents and
should not be included as building items.
5.
Qualifications for Replacement Cost Loss Settlement should be clearly documented,
including single family residence, principal residence, insured to at least 80 percent of full
replacement cost or maximum available.
B. Insufficient Damage Documentation
1.
Invoices may be needed to adequately support a commercial inventory or other complex
claim items. A salvor or CPA may be required and must be approved by the insurer.
2.
Photographs should adequately document the claimed damage – photographs of undamaged
building elements and contents are also important as well as damage from causes other than
flood.
C. Payment Processing Errors
The adjuster should make all payment recommendations clear. Other claim documents
including the estimate/worksheet, Final Report, and the proof of loss should support the
recommendations.
D. Covered Loss Exceeded the Value of Certain Items
1.
Care is taken when items with Special Limits are claimed, not to exceed the amount of
special limits in the aggregate.
2.
Loss Avoidance Measures should be properly documented and supported with
invoices or other documentation.
3.
Property Removed to Safety claims should be properly documented and supported with
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invoices or other documentation.
E. Case Loss Reserving
The reserving system mandates that reports must be timely and reflect true reserves. The
initial case loss reserve may be a system-generated amount based on criteria established by
the insurer or it may be an individually set reserve based on the best knowledge of the loss at
the time the reserve is established.
The insurer may also set a bulk catastrophe reserve. The NFIP Preliminary Report and each
subsequent adjuster report should refine the case loss reserve amount as the insurer becomes
aware of additional facts, inspections, and estimates. The goal is that this knowledge along with
any reductions of partial or advance payments will result in a case loss reserve that closely
reflects the value of all future payments and ultimately the value of the final payment.
54.2 Claims Operation Reviews Description of Findings
Claims payments arising out of policies issued by the insurer are issued from NFIP funds. FEMA
performs claims operation reviews to confirm compliance with the rules of the program and
the SFIP. The following are the description of findings that could result in a critical error
finding.
Claims Examiners
A. No Signed Proof of Loss
The policyholder is required to send the insurer a complete, signed and sworn proof of loss (or for claim payments
of $7,500 or less, the policyholder signs the adjuster’s final report) within 60 days after the date of loss or within
any extension granted by the Federal Insurance Administrator (Administrator). The proof(s) of loss must include
documentation to support the amount requested initially and any requests for additional payment. Failure to have
the required properly executed Proof(s) of Loss in the file is a critical error.
B. No Proof of Loss Waiver
When the policyholder submits a proof of loss after the 60-day SFIP time requirement or any extension granted
by the Administrator, the insurer must request a waiver from the Administrator of the time required for the proof
of loss. The insurer does not have authority to extend the time required to file a proof of loss per the SFIP Section
VII.D., “This policy cannot be changed nor can any of its provisions be waived without the express written consent
of the Federal Insurance Administrator.” Payments made without the required waiver are unauthorized. Such
payments are critical errors.
C. Incorrect CWOP Reason Code
The insurer must carefully review the adjusters’ reports for claims that are to be closed without payment and
close the claim file using the correct CWOP reason code in accordance with the National Flood Insurance Program
Bureau and Statistical Agent (NFIP BSA), Transaction Record Reporting and Processing (TRRP) Plan. If the
incorrect reason code results in an improper payment to the insurer, or to the adjuster, the payment is a critical
error.
D. No Denial Letter or Improper Denial Letter / Withdrawal Letters
The insurer must carefully review the adjusters’ reports for claims that are to be closed without payment. Denial
letters are required on all denials of the entire claim or any portion of a claim and must include all reasons for
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denial known at the time of the letter citing the appropriate section of the SFIP supporting the denial. The denial
letters must also include information regarding FEMA’s formal appeals process. The insurer must also send
letters to policyholders confirming their voluntary withdrawal of a claim. A policyholder’s withdrawal is not a
denial and does not trigger the one-year limit to file suit or the 60-day time frame to file an appeal; however,
writing a policyholder that the review of the claim found no damage by or from flood is considered a denial. Due
to the importance of the denial letters in the appeals process and the litigation process, failure to send a denial
letter is a critical error.
E. Mortgage Issues
SFIP, Section Q. Mortgage Clause, “The word ‘mortgagee’ includes trustee. Any loss payable under Coverage A –
Building Property will be paid to any mortgagee of whom we have actual notice as well as any other mortgagee or
loss payee determined to exist at the time of loss, and you, as interests appear.” The Mortgage Clause is a
contract within a contract. That is, a contract between the mortgagee and the insurer within the contract
between the policyholder and the insurer. Including the name of the mortgagee on each building claim payment
is the surest method to keep this promise to the mortgagee. Building payments should include all known
mortgagees. Because of the potential exposure to not only the insurer, but also to the Federal Government,
failure to pay a known mortgagee, when required, is an error. If the failure to name the mortgagee results in
expenditures of Federal funds, that failure is a critical error.
F. Underwriting Issues
The insurer must carefully review the adjusters’ reports for any discrepancies from the Declaration page and refer
any discrepancies to the insurer’s UW Department for review. Non-money discrepancies may be non- critical
errors; however, if the discrepancy would result in an endorsement involving a change in premium, it is a critical
error.
G. Adjustment Issues
A claim file is deficient when the adjuster has not explained the facts satisfactorily enough to determine coverage,
or when the coverage is misapplied. These issues may result in critical errors depending upon delay or monetary
consequences.
H. Time Standards
The insurer must assign the notice of loss to an adjuster within 24 hours of the policyholders’ reporting. The
adjuster must contact or attempt to contact the policyholder within 48 hours of that assignment. The adjusters’
preliminary reports are due to the insurer within 15 days of assignment of the claim. In the absence of the
preliminary report, the claims examiner should have requested the report from the adjuster and taken action if
they recognize a trend with any particular adjuster and adjusting firm. Missing reporting deadlines may indicate
too many claims to adjust. Time standard infractions that result in significant delay in payment to policyholders
are critical errors. All other unexplained time standard infractions are non-critical errors.
I. Special Allocated Loss Adjustment Expenses
All SALAE payments must be adequately documented with a valid reason for the payment and the proper SALAE
type must be used. SALAE payments made without the required FEMA approval are improper payments. If the
payment was ineligible, the error is considered a critical error.
J. Incorrect Payment Amount
Incorrect payment amount is the error for claim payments and adjuster fees that are improperly paid. The
insurer must make immediate arrangements to address the incorrect payments. The insurer must make the
correct payment to the policyholder or independent adjuster, if underpaid, or issue a reimbursement to the
National Flood Insurance Program, if overpaid. Use of an improper CWOP code can generate an incorrectly
Allocated Loss Adjustment Expense (ALAE) payment. All incorrect payments are critical errors.
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K. Deficient or Redundant Case Loss Reserves
The individual case loss reserves of the insurers have no effect on the NFIP’s balance sheet. The minimal test will
compare the final case loss reserve(s) with the final payment(s). The insurer will need to revise its case reserve to
reflect new information about an individual claim. However, it is not critical that reserves are decreased or
increased in the same TRRP cycle that new information is learned. FEMA recognizes that there will be occasions
where the insurer will want additional time to evaluate the new information before revising case reserves.
However, it is important that the claims examiner revise the reserves before the next payment. FEMA further
recognizes that it is sound business practice for case reserves, collectively, to be somewhat redundant. Reserve
redundancy of 10-15 percent is not discouraged.
Note: The above list is not exhaustive and may be changed with adequate notice.
55 Claim Overpayment Recovery
55.1 Claim Overpayment Recovery Process
Reimbursement to the NFIP of claim overpayments is not contingent upon recovery from the
respective policyholder(s). Specifically, the insurer is responsible for recovery of erroneous
claim overpayments.
Upon receipt of written notification of flood claim overpayments, the respective insurer’s flood
insurance principal coordinator has thirty (30) days to respond to the notification from the
NFIP using one of the two options below:
1.
Submit the entire amount of the overpaid claim to the NFIP using one of two acceptable
methods to avoid creation of a federal debt collection item (see 53.2 below); or
2.
Appeal this matter in writing to the NFIP and submit relevant, reliable, and verifiable
supporting documentation. Additional time to gather supporting documentation for the
purpose of the appeal must be requested in writing by the principal coordinator within 30
days of the date of the notification from the NFIP. A maximum of 60 days from the date
of the notification may be granted by the NFIP for an appeal.
55.2 Methods of Claim Overpayment Reimbursement to the NFIP
A. Method A:
1.
Reduce the claim payment by the overpaid amount on the financial statement, Write
Your Own Accounting Procedures Manual, Exhibit I, Line 115.
2.
Reduce the claim payment by the overpaid amount on the TRRP statistical data.
3.
Issue a disbursement for the overpayment amount to the U.S. Treasury via ACH, internet,
or wire transfer. Report the disbursement on the appropriate Exhibit VIII schedule.
4.
Submit the supporting documents (policy number, date of loss, original loss payment,
adjusted loss payment, original error code generated, and original error code date) to:
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DHS-FEMA Debt Collection Office
Attn: NFIP/Debt Collection Officer
400 C Street SW 6th Floor, SW
Washington, D.C. 20472-3010
B. Method B:
1.
Reduce the claim payment by the overpaid amount on the financial statement, Write
Your Own Accounting Procedures Manual, Exhibit I, Line 115.
2.
Reduce the claim payment by the overpaid amount on the TRRP statistical data.
3.
Issue a manual check in the amount of the overpayment, made payable to NFIP.
Record the manual check as a disbursement to the U.S. Treasury and report on the
appropriate Exhibit VIII schedule.
4.
Submit the manual check and supporting documents (policy number, date of loss,
original loss payment, adjusted loss payment, original error code generated, and original
error code date) to:
DHS-FEMA Debt Collection Office
Attn: NFIP/Debt Collection Officer
400 C Street, SW 6th Floor
Washington, D.C. 20472-3010
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Section 3: Increased Cost of Compliance
1 Increased Cost of Compliance (ICC)
The NFIP encourages mitigation efforts and supports individual and local initiatives to
mitigate future flood risks. ICC coverage currently provides eligible policyholders up to
$30,000 towards the costs they incur to comply with minimum NFIP floodplain management
regulation, state laws, or the local community ordinance. An NFIP policyholder now has up to
six years from the date of loss to complete eligible compliance activities to a flood-damaged
building in the ICC process described below. While there is only one NFIP flood claim, ICC
(Coverage D) is a separate policy benefit, as is Building Property (Coverage A), Personal
Property (Coverage B), and Other Coverages (Coverage C). A (Coverage D) payment is not
subject to the Mortgage Clause as with a (Coverage A) payment. ICC is an additional amount
of insurance above the Coverage A - Building limit of liability but cannot result in payment
beyond the current Program maximums of $250,000 for dwelling, $500,000 for commercial,
and $250,000 x the number of units under the RCBAP when combined Coverage A and
Coverage D payments are made.
22
The insurer only accepts ICC after the community has declared in writing that the insured
building has been substantially damaged (see below) and the policyholder sends that
substantial damage declaration letter on community letterhead and written by an official
authorized to make the declaration to the NFIP insurer. ICC pays benefits to eligible SFIP
policyholders to comply with state, or local floodplain management law or ordinance affecting
repair or reconstruction of a building damaged by flood.
23
The following compliance activities are eligible for payment:
1.
Floodproofing of the basement (for non-residential buildings only)
2.
Relocation
3.
Elevation
4.
Demolition
or any combination of the above.
24
In order to initiate, receive partial payment, and finalize an ICC claim, the policyholder property
owner is required to provide the insurer with a copy of the substantial damage declaration letter
they received from the community official confirming that the building is “substantially or
repetitively damaged” and therefore requiring the property owner to comply with floodplain
22
See SFP (III)(D)(2). See also 42 U.S.C. § 4013(b); 44 C.F.R. § 61.6 (2018)
23
See SFP (III)(D)(3)
24
See SFIP (III)(D)(1)
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regulations (“substantially” and “repetitively” are both defined in the SFIP at Section III.D.3.(1)
and (2)). If applicable, either substantial damage or repetitive damage must be adopted by the
community in their floodplain management ordinance and enforced uniformly in the community.
The policyholder’s substantial damage declaration letter to the insurer is the policyholder’s
intent to file for ICC Coverage D benefits, and the insurer should begin the ICC benefit process.
Note: Some states, rather than the communities within the state, have land-use management
authority. Floodplain management guidelines may be in state law and not in community
ordinance. It is always good practice to include both in the claim file if there are questions.
For the purposes of ICC, flood damage must be to the percentage threshold adopted by law or
ordinance although other damages may be involved, such as wind or fire. The percentage
threshold is typically 50 percent but can be a lower threshold if adopted by law or ordinance.
Note that “substantial damage” and “substantial improvement” are often used interchangeably
by a community official for all causes of loss. For the purposes of ICC Coverage D, substantial
damage attributed only to flood is considered. All covered and non-covered damages sustained
to the insured building by flood may be considered in the community’s determination of
substantial damage.
The policyholder or adjuster are required to obtain a copy of the local ordinance and confirm
the community official’s market value (not replacement cost value) for the insured building
used to determine substantial damage. If the substantial damage letter signed by the
authorized community official advises of the specific standard enforced against the building is
included, this information can be used in lieu of obtaining the ordinance copy. The letter must
also indicate the market value. It is important to note that FEMA never determines market
value; it is solely determined by the community official.
Market value can be obtained from the following sources:
1.
Independent appraisals by professional appraisers.
2.
If the community prefers, a detailed estimate of the building’s ACV as a substitute for
market value.
3.
Property appraisals used for tax assessment purposes can be used as a screening tool.
4.
The value of the building taken from NFIP claims data can be used as a screening tool.
5.
Qualified estimates based on sound professional judgement made by staff of the
local building department or local or state tax assessor’s office.
6.
A copy of the detailed signed contract from the policyholder’s contractor confirming a
start and completion date of the mitigation work to be performed. The contract must
show the contractor’s and policyholder’s (property owner’s) signatures.
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A community is a governmental body with the statutory authority to enact and enforce zoning,
building codes, subdivision, and other land use control measures. The authority of each unit of
government varies by State. Eligible communities can include:
1.
Cities
2.
Villages
3.
Towns
4.
Townships
5.
Counties
6.
Parishes
7.
States
8.
Native American tribes and Alaskan villages
1.1 Required ICC Requirements For Advance or Partial Payment:
The policyholder may request an advance/partial payment from their insurer to help cover the
cost of the eligible compliance measure(s) subject to the insurer’s approval once supporting
documentation and a signed ICC proof of loss for the partial payment amount has been
submitted. Previous FEMA guidance dated April 24, 2013 under Bulletin w-13024 (Appendix H)
stipulate the requirements and guidelines for issuing an ICC advance:
Section III of the SFIPs, “Coverage D”, authorizes ICC Coverage. See 44 C.F.R. Pt. 61, App.A(1-3).
Section III.D. ICC benefits are available to eligible properties for floodproofing, relocating,
elevating, or demolishing a structure following a flood (or any combination of these activities).
The SFIP allows for up to $30,000 in ICC benefits to be paid towards these activities, subject to
the statutory limitation that the combined total amount paid for building damages under
Coverage A of the SFIP and ICC benefits paid under Coverage D of the SFIP cannot exceed the
statutory limit on coverage for any structure (currently $250,000 for residential structures). See
42 U.S.C. § 4013. Under the terms of the Policy, ICC benefits are not payable until after the
eligible work is completed. See 44 C.F.R. Pt. 61, App(A)(1-3), § III.D(5)(e).
The National Flood Insurance Program encourages mitigation efforts and supports individual
and local initiatives to mitigate future risks, and allowing advance payments will further that
goal.
25
Accordingly, to facilitate implementation of ICC and to effect mitigation measures to
reduce the risk of future loss, FIMA Associate Administrator issued a conditional waiver of the
provision in the SFIP Coverage D, subpart (5)(e)
26
), that requires completion of ICC work before
payment, and authorizing partial advance payments up to 50 percent of the available ICC limits
25
See 61 Fed. Reg. 49720 (1996)
26
44 C.F.R. Pt. 61, App.(A)(1-3), Section III. D(5)(e)
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or $15,000. Specifically, the NFIP insurers may advance up to one-half of the available ICC funds
under an SFIP to an eligible policyholder, conditioned upon:
1.
The policyholder signing a written agreement that the funds will be used only for
eligible ICC work only, and
2.
The policyholder signing a written agreement that if all or part of the advanced funds
are not used within the permitted time limits for completing the eligible work (or any
extensions that may be granted of that time), the policyholder agrees that those
amounts not spent on such eligible work will be refunded.
If a policyholder fails to complete the ICC eligible work within the authorized time, the
policyholder must return the ICC funds provided. Failure to do so will subject the policyholder
to any available administrative, civil or criminal remedies. Those remedies include, but are not
limited to, a determination that an SFIP is void pursuant to its General Conditions, Sections (B)
and (G)(3) provisions
27
, a Federal debt collection action
28
, and legal actions under State or
Federal laws.
If the policyholder does not agree to the above conditions, the terms of the SFIP will
apply (i.e., no amount of ICC benefits will be paid until after completion of eligible work).
All other terms and conditions of the SFIP for ICC claims, including the ICC proof of loss
requirements, are not affected by the conditional waiver.
The conditional waiver applies to all ICC claims made on or after February 11, 2013.
If an insurer issues a payment in accordance with the terms and conditions set forth here and
properly documents ICC advance partial payments, FEMA will apply these standards in all
reviews or audits of files, including any reviews under the Arrangement or the Improper
Payment Information Act of 2002.
29
If a payment is incorrectly made to a policyholder, if a
claim is not properly documented, if the insurer omits an additional named policyholder or
mortgagee from being listed as an additional payee, or if the insurer otherwise does not act
consistent with the obligations set forth in the Arrangement or applicable law, however, the
insurer will be responsible for the erroneous payment.
1.2 Required ICC Claim File Documents and Requirements
Once the work is complete, the policyholder must provide the flood adjuster or insurer with
all final ICC documents, such as a post-FIRM elevation certificate or a floodproofing certificate,
including any other supporting documentation confirming completion of the work.
The local community official must also inspect the compliant building or demolished area and
27
44 C.F.R. Pt. 61, App.A(1,2), Section VII B, G(3) and App.A(3) Section Vlll B, G(3)
28
See 44 C.F.R. Part 11, Subpart A
29
Public Law 107-300, 33 U.S.C. §3321), as amended by the Improper Payment Elimination and Recovery Act of 2010 (Public
Law 111-204).
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provide the property owner with a certificate of occupancy, or a letter confirming compliance
with floodplain management regulations has been met.
Once all required ICC documents are received, including confirming all other eligibility criteria,
an insurer sends the policyholder an ICC proof of loss form for final payment that must be
signed, dated, and returned to the insurer for processing.
The insurer issues the final ICC payment once all required steps have been completed relating
to the eligible compliance measures and the building complies with minimum NFIP floodplain
management regulations and the community ordinance. This process requires that the
policyholder work closely with their local officials to ensure that the ICC work is completed
timely. This also requires that the policyholder work closely with the flood adjuster and claims
examiner to ensure timely submission of all required ICC documents. Please note that there
can be no duplication of allowances considered in the underlying flood claim and ICC
Coverage D nor does ICC provide coverage for deterioration or rot conditions of the building,
additional costs associated with structural modifications, upgrades, or any additional increase
in square footage.
Table 13. Required ICC Claim File Documents
Document
Details
Copy of the community’s
floodplain management
ordinance.
• Once FEMA provides a community with the flood hazard information upon
which floodplain management regulations are based, the community is
required to adopt a floodplain management ordinance that meets or
exceeds the minimum NFIP requirements.
• The overriding purpose of the floodplain management regulations is to
ensure that participating communities take into account flood hazards, to
the extent that they are known, in all official actions relating to land use
management.
Permit copy for floodplain
development associated
with the compliance
measure.
•
Must be valid and has not expired.
• A permit is required before construction or development begins within any
Special Flood Hazard Area (SFHA). Permits are required to ensure that
proposed development projects meet the requirements of the NFIP and
the community's floodplain management ordinance.
• A community must also review all proposed developments to ensure that
all necessary permits have been received from those governmental
agencies from which approval is required by Federal or State law.
Photographs
• Detailing the compliance measure’s progress from start to completion.
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Document
Details
Elevation Certificate (EC),
for elevation projects.
•
This can be pre- or post-construction.
• The elevation certificate (EC) is an administrative tool of the NFIP, which is
to be used to provide elevation information necessary to ensure
compliance with community floodplain management ordinances, to
determine the proper insurance premium rate, or support a request for a
Letter of Map Amendment (LOMA) or a Letter of Map Revision (LOMR)
based on fill.
−
Letter of Map Amendment
.
An amendment to the current effective
FEMA map, which establishes that a property is not located in an
SFHA. A LOMA is issued only by FEMA.
30
−
Letter of Map Revision
.
An official amendment to the current effective
FEMA map. A LOMR is issued by FEMA and changes flood zones,
delineations, and elevations.
31
1.3 What to Know Concerning Elevation, Demolition, Relocation, and Floodproofing
of a Flood Damaged Building:
A. Elevation
The ICC claim file should include:
1.
Documentation on what elevation the building will permanently be raised to, including
the required Base Flood Elevation (BFE), adopted ABFE (Advisory Base Flood Elevation),
Best Available Data including any freeboard requirement.
2.
Costs to setup equipment, elevate, and temporarily support the building.
3.
Permit for floodplain development.
4.
Cost to build the new compliant foundation.
5.
Temporary support (cribbing).
6.
Confirmation of the total number of vents and cost, if applicable to the elevation project.
7.
Drawings of the projected building perimeter footprint, including dimensions of any
attached garage and ground level utility room, if applicable.
8.
Confirmation of the first floor living space square footage in comparison to the original
flood- damaged building as the ICC payment will be limited to the costs to mitigate the
building as it was at the time of loss as there is no coverage for any additional costs
associated with structural modification, upgrades, or any additional square footage
increase.
9.
Pre-mitigation elevation certificate, if needed.
30
See https://www.fema.gov/letter-map-amendment-loma; 44 C.F.R. Part 70
31
See https://www.fema.gov/letter-map-revision; 44 C.F.R. Part 65
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10.
Post-mitigation elevation certificate.
11.
Costs associated with disconnecting required utilities (electricity, water, sewer, or gas).
12.
Costs associated with reconnecting required utilities (electricity, water, sewer, or gas;
extensions and modifications).
13.
Costs associated with reconstruction of egress (steps and railing plus allowances of 16
square feet of landing) front and rear or under building.
14.
Cost of the installation of platform for air conditioning unit.
15.
Cost to separate an attached garage, if applicable.
16.
Architectural and engineering fees associated with a design for elevating an eligible
insured building.
17.
Before and after photographs of the structure and site.
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•
•
•
•
•
•
•
•
•
•
•
•
•
Table 14. Covered vs. Non-C
overed Elevation Expenses
Covered Elevation Expenses
Non-Covered Elevation Expenses
Architectural and engineering fees
• Elevation of any structure other than
associated with a design for elevating an the insured building.
eligible insured building.
• Elevation of the insured building already
Cost of permits. at the minimum required height.
Pre-mitigation elevation certificate, • Elevation of the insured building above
if required. the minimum required height.
Disconnecting required utilities • Elevating the insured building outside of
(electricity, water, sewer or gas).
a Special Flood Hazard Area, except
Clearing of plant-life and excavation around
when required according to an existing
the insured building for the setup and
local community flood management
installation of lifting equipment and
ordinance. Code upgrades unrelated to
supports. Cost to separate an attached
State or local floodplain management
garage.
law or ordinance. Added improvements,
Elevation of the insured building to
remodeling, or additions.
minimum required height (BFE or
• Disconnection, elevation and re-
freeboard).
attachment of decks or walkways.
Temporary support (cribbing).
• Re-attachment of garages or grade
Removal and disposal of pre-mitigation
level utility closets.
insured building foundation
• Repair, removal, reinstall or replacement
components, when applicable (see
of exterior siding or masonry veneer.
Demolition).
• Re-grading and re-seeding of lawns or
Construction of the compliant
the replacement of plant-life.
foundation. Required minimum flood
• Other surfaces (sidewalks, driveways,
venting.
patios, etc.) or structures (fences,
Re-connection of required utilities
containment or retaining walls, etc.)
(extension or modification).
outside the perimeter exterior walls of the
insured building.
Re-construction of egress (steps &
railings plus 16 SF landing), front and
• Expenses not included in the
rear of the structure, or under the
covered elevation expenses above.
structure.
• Allowances for items already
Installation of platform for air-
considered under Coverage A –
conditioning equipment.
Building Property.
Post-mitigation elevation certificate.
• Any payable amount over the NFIP’s
maximum for Coverage A – Building
Property, on any single loss.
B. Demolition
The ICC claim file should include:
1.
Cost to demolish the insured building or foundation (plus associated cartage and dump
fees).
2.
Cost to demolish other covered items other than the insured building, if applicable.
3.
Cost to grade and stabilize the building site or fill for basements.
4.
Cost of clearing the existing building site of any remaining materials of the insured
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building, such as the foundation.
5.
Cost to disconnect and cap required utilities (electricity, water, sewer or gas).
6.
Cost to grade and stabilize the site in accordance with state or local regulations.
7.
Before and after photographs of the structure and site.
The property may be redeveloped after demolition is complete, subject to all applicable
Federal, state, and local community laws and regulations.
•
•
•
•
Table 15. Covered vs. Non-Co
vered Demolition Expenses
Covered Demolition Expenses
Non-Covered Demolition Expenses
Cost of permits. • Demolition of an insured building already
Demolition of an eligible insured building.
in compliance with State or local
Disconnect and cap required utilities
floodplain management law or ordinance.
(electricity, water, sewer and or gas) in
• Demolition of other surfaces (sidewalks,
accordance with State and local
driveways, patios, etc.) or structures
regulations. Cartage of debris (demolished
(detached garages and carports, sheds,
insured building) and dump site fees.
play sets, fences, containment or retaining
Clearing the existing building site of any
walls, etc.) outside the perimeter exterior
remaining materials of the insured
walls of the insured building.
building, such as the foundation.
• Re-grading and re-seeding of lawns or
Grade and stabilize the building site in
the replacement of plant-life.
accordance with State or local regulations
• Expenses not included in the
(fill for basement foundation voids).
covered demolition expenses
above.
• Allowances already paid in a claim
under Coverage A – Building Property.
• Any payable amount over the NFIP’s
maximum for Coverage A – Building
Property, on any single loss.
C. Relocation
The ICC claim file should include:
1.
Confirmation of the moving route preparation.
2.
Costs for the building transport, mileage and cost.
3.
Costs associated with installation and anchoring of the building to the new foundation.
4.
Costs to disconnect electricity, water, sewer and gas and reconnection charges for
electricity, water, sewer, and gas.
5.
Architectural and engineering fees associated with a design for relocating and eligible
insured building.
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6.
Permit for floodplain development.
7.
Costs associated with clearing of plant life and excavation around the insured building
to allow setup, installation of lifting and transportation of equipment and supports.
8.
Costs associated with preparation, elevation, and transport of the insured building to
the new site.
9.
Cost to clear the existing building site of any remaining material of the insured building,
such as the foundation.
10.
Cost to construct the compliant foundation of the new site.
11.
Cost to install and anchor the insured building to the foundation at the new site.
12.
Cost to connect required utilities at the new site, electricity, water, sewer, or gas.
13.
Before and after photographs of the structure and site.
Table 16. Covered vs. Non-Covered Relocation Expenses
•
•
•
•
•
•
•
Covered Relocation Expenses
Architectural and engineering fees associated
with a design for relocating an eligible insured
building.
Cost of permits.
Clearing of plant-life and excavation
around the insured building to allow the
setup, installation of lifting and
transportation equipment and supports.
Preparation of the moving route.
Disconnect and cap required utilities in
accordance with state and local
regulations. Preparation, elevation, and
the transport of the insured building to the
new site.
Clearing the existing building site of any
remaining materials of the insured
building, such as the foundation (see
Demolition).
Construction of the compliant foundation
at the new site (see Elevation).
Installation and anchoring of the insured
building to the foundation at the new
site. Connecting required utilities at new
site (electricity, water, sewer, and or
gas).
•
•
•
•
•
Non-Covered Relocation Expenses
Relocation of any structure other than
the insured building.
Elevating the insured building at the new
site located in a non-SFHA.
Expenses not included in the
covered relocation expenses
above.
Allowances already paid in a claim
under Coverage A – Building
Property.
Any payable amount over the NFIP’s
maximum for Coverage A – Building
Property, on any single loss.
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D. Floodproofing
The ICC claim file should include:
1.
Completed Floodproofing Certificate.
2.
Photographs of shields, gates, barriers, or components, designed to provide
floodproofing protection to the building.
3.
Written certification from a licensed professional engineer that all portions of the
building below the BFE are made watertight or substantially impermeable to the
passage of water and must perform in accordance with Title 44 Code of Federal
Regulations (44 CFR 60.3(c)(3)).
See the Flood Insurance Manual for information regarding floodproofing.
Eligible structures for floodproofing:
1.
Non-residential buildings in A zones (floodproofing is not allowable in any V zones). The
specifications for floodproofing ensure that the building is watertight, its floodproofed
walls will not collapse, and the floor at the base of the floodproofed walls will resist
flotation during flooding conditions.
2.
Residential dwellings with basements, located in zones A1-30, AE, AR, AR Dual, AO, AH,
and A with BFE that are within communities specifically approved and authorized for
residential floodproofing by FEMA. For residential buildings, the building must be
watertight without human intervention.
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Table 17. Covered vs. Non-Covered Floodproofing Expenses
•
•
•
•
•
•
•
•
•
Covered Floodproofing Expenses
Architectural and engineering fees
associated with a design for floodproofing
an eligible insured building.
Cost of permits.
Floodproofing certification completed by
a design professional for non-residential
buildings.
Installation of watertight shields for doors
and windows.
Reinforcement of walls to withstand
floodwater pressures and impact
forces generated by floating debris.
Membranes and other sealants to reduce
seepage of floodwater through walls and
wall penetrations.
Installation of drainage collection systems
and sump pumps to control interior water
levels, collect seepage, and reduce
hydrostatic pressures on the slab and walls.
Installation of check valves to prevent
backup of floodwater or sewage through
utilities.
Anchoring the building to resist
flotation, collapse, and lateral
movement.
•
•
•
•
•
•
Non-Covered Floodproofing Expenses
Floodproofing of any structure other than
the insured building.
Code upgrades unrelated to state or
local floodplain management
ordinance.
Expenses not included in the
covered floodproofing expenses
above.
Allowances already paid in a claim
under Coverage A – Building
Property.
Any payable amount over the NFIP’s
maximum for Coverage A – Building
Property, on any single loss.
Measures such as floodwalls
independent from the building, berms,
and levees around buildings are not
allowable floodproofing measures under
the NFIP.
1.4 Assignment of Coverage D, ICC Benefits
FEMA authorizes policyholders the ability to assign their ICC claim payments when eligible to
be included in a FEMA-sponsored flood mitigation grant involving eligible ICC compliance
activities. The policyholder's agreement to transfer this interest is accomplished by submitting
the Assignment of Coverage D – Increased Cost of Compliance Coverage Form (Appendix I) to
the local authorities, state, or community administering the grant. Once the policyholder
assigns the ICC claim, the local authorities, state, or community will be responsible for
completing the eligible mitigation activity. Upon receipt of the completed Assignment of
Coverage D Form, the insurer should process the ICC claim in the customary manner up to the
policy limit of $30,000, when available.
Therefore, adjusters and insurers are required to verify and include the required ICC
documentation based on the selected mitigation activity as they normally would.
A. Steps for the Assignment of Coverage D – Increased Cost of Compliance Coverage:
1.
Policyholder consents to the assignment of the ICC claim payment.
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2.
The community official will provide the policyholder with an Assignment of Coverage
D Form (Appendix I).
3.
The policyholder signs the form and provides the signed form to the community official.
4.
The community official sends a copy of the completed form, along with the community's
signed declaration of substantial damage to the NFIP Bureau & Statistical Agent at
NFIPClaimsMailbox@fema.dhs.gov, or PO Box 310, Lanham, MD 20703-0310.
5.
NFIP BSA maintains a database of the ICC information submitted by the community. The
NFIP BSA then sends the documents to the appropriate insurer, with instructions. The
insurer will then assign an adjuster.
6.
The assigned adjuster contacts the policyholder to advise s/he has the claim and
contacts the local community official to coordinate and help complete the claim.
7.
The adjuster receives/reviews the contract for demolition, elevation, relocation or
floodproofing to determine the cost.
8.
The adjuster has the community official sign the proof of loss once the claim value
has been determined.
9.
The adjuster sends the final report, along with the proof of loss to the insurer for payment.
10.
The insurer issues the check to the community and advises the NFIP BSA of the
amount of the claim payment.
NOTE: The policyholder cannot assign an ICC claim when the owner transfers title of the
property to a new property owner. The SFIP allows policyholder to assign the policy in
writing when policyholder transfers title, but not a flood or ICC claim.
1.5 Grants
ICC benefits can be used as the non-Federal cost share that is the policyholder’s
responsibility for SFIP policyholders participating in a FEMA mitigation grant.
FEMA offers three Hazard Mitigation Assistance (HMA) grant programs to assist the states,
U.S. territories, federally-recognized tribal governments, and local communities in
implementing cost- effective, long-term hazard mitigation measures including elevation. All
three have different periods of funding availability and eligibility considerations.
1.
Hazard Mitigation Grant Program (HMGP) provides grants to states and local
governments to implement long-term hazard mitigation measures after a major
disaster declaration to protect public or private property through various mitigation
measures. When a Federal disaster declaration is made, new opportunities for
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mitigation funding may be available.
32
2.
Pre-Disaster Mitigation (PDM) Program provides funds to states and local communities
annually, so they may continue to achieve a higher level of risk management capability
through the implementation of hazard mitigation planning and mitigation projects prior
to a disaster event. This is a competitive grant program that addresses many different
types of natural hazards.
33
3.
Flood Mitigation Assistance (FMA) Program is competitive and focuses solely on flood
mitigation. The FMA program provides funds on an annual basis to states, territories,
federally-recognized tribes and local communities for projects that reduce or eliminate
the long-term risk of flood damage to buildings insured under the National Flood
Insurance Program.
34
Individuals may not apply directly to the State for assistance from any of these programs;
however, local governments may sponsor an application on their behalf. FEMA awards
mitigation grant funds to the state, which disburses those funds to its communities. States
have the primary responsibility for prioritizing, selecting, and administering state and local
hazard mitigation projects.
1.6 Cost Share
Cost share, also known as the “non-federal share” or “non-federal match”, is the portion of the
costs of a FEMA mitigation grant that is the policyholder’s responsibility not borne by the
federal government. The authorizing statute for each HMA program establishes the minimum
cost share. The total cost to implement approved mitigation activities is generally funded by a
combination of federal and non-federal sources. Both the federal share and the non-federal
cost share must be for eligible costs used in direct support of activities that FEMA has approved
in the grant award. Contributions of cash, third-party in-kind services, materials, or any
combination thereof, may be accepted as part of the non-federal cost share.
To meet cost-sharing requirements, the non-federal contributions must be reasonable,
allowable, allocable, and necessary under the grant program and must comply with all
federal requirements and regulations.
The terms of the SFIP, Coverage D, control what a policyholder is paid under the policy. The
terms of the grant and any non-federal cost-share are separate and distinct from the terms of
the SFIP. The recipient (state, territory, or federally recognized tribe) and FEMA’s regional HMA
program offices will make and verify a determination that an assignment of the ICC claim has
not resulted in a duplication of benefits for purposes of the grant.
32
42 U.S.C. § 5170(c)
33
42 U.S.C. § 5133
34
42 U.S.C. § 4101(c)
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1.7 Some ICC Issues
A. Sale of the Structure
The sale of a building from one individual to another is a contract between those individuals
and should not involve the NFIP. The NFIP contract is with the policyholder who owned and
insured the building on the date of loss and it will or has met those obligations. If the purchaser
must repair the building to meet the community’s floodplain management ordinance, the cost
of that obligation should be reflected in the purchase price.
B. Converting or Retrofitting a Building
ICC covers second story conversions and are accomplished by abandoning the lower enclosed
area making it non-habitable as long as the enclosed area is raised above ground level by
foundation walls, shear walls, posts, piers, pilings, or columns. A new second story is
constructed usually when the depth of the base flood is more than four or five feet. The roof
and roof framing are removed and a new second story is built on top of the lower level.
Considerations such as cost, final appearance, the strength of the existing foundation, and the
need to address other natural hazards should also be considered. The building must meet the
requirements of floodplain management and the community ordinance. The building after
reconstruction must also meet the SFIP definition of an elevated building (Section II.B.14.14
Elevated Building. A building that has no basement and that has its lowest elevated floor raised
above ground level by foundation walls, shear walls, posts, piers, pilings, or columns.). The
policyholder is required to submit a certification statement from a registered design
professional to certify under seal that the structural design, plans, specifications, and method
of construction are in accordance with accepted standards of practice in addition to meeting or
exceeding the minimum floodplain management requirements of the NFIP and building codes.
C. Filing a Subgrade Basement
Coverage is available under Coverage D ICC to fill in a basement and then elevate the existing
home to meet the SFIP definition of an elevation building, if this activity is required by the
community enforcing their floodplain management ordinance as it relates to elevation.
D. Mitigation Measures
Mitigation measures completed prior to the issuance of the substantial damage declaration
will not be considered. Substantial damage determinations for the purposes of ICC claims
cannot be issued after repairs have been started or mitigation completed as it is no longer
possible to verify that the building was out of compliance and the cost of repairs attributed
directly to flood.
E. Elevating on Fill
Elevation on Fill is allowed in A and AE zones as complying with NFIP minimum standards,
however, some communities prohibit the use of fill in their ordinances. The insurer should
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review the community ordinance to verify the use of fill.
Note: Allowing a claim for fill dirt only is not true mitigation with no structure in place. ICC is
concerned with completed mitigation to the insured building and or a replacement structure.
F. Itemized Contractor Estimates
Lump sum estimates are not acceptable for ICC purposes. The ICC adjuster is required to write
their own estimate to ensure the integrity of the pricing provided by the contractor is correct.
The examiner must also review the ICC estimate for validity which includes identifying non-
covered allowances related to ICC.
G. Asbestos Abatement
Excludes the cost associated with enforcement of any ordinance or law that requires any
policyholder or others to test for, monitor, clean up, remove, contain, treat, detoxify, or
neutralized, or in any way respond to or assess the effects of pollutants.
35
H. Opening in Foundation Walls and Wall Enclosures
Non-engineered openings are used to meet the NFIP’s prescriptive requirement of one square
inch of net open area for every square foot of enclosed area. As an alternative, engineered
openings that have characteristics that differ from non-engineered openings may be used
provided they are designed and certified by a registered design professional as meeting certain
performance characteristics. FEMA Technical Bulletin 1, Openings in Foundation Walls and
Walls of Enclosures Below Elevated Buildings in Special Flood Hazard Areas, August 2008 may
be helpful.
1.8 ICC U-CORT Waiver Process
A FEMA waiver is required when the timeframe to complete an eligible mitigation activity has
expired. Once the eligible and approved mitigation activity is complete, the NFIP insurer on
behalf of the policyholder will request that waiver using FEMA’s U-CORT. The insurer may
submit a request directly to FEMA through FEMA’s U-CORT requesting authorization to pay
benefits to the policyholder. The insurer must confirm that the rights of the Program have not
been prejudiced by the late submission and provide the Administrator with a valid reason for
the delay when the request is submitted. The policyholder and insurer must work together to
ensure that the ICC claim meets all eligibility and documentation requirements. FEMA reviews
and approves each request on a case-by-case basis. The ICC work must be completed before the
waiver is be submitted to FEMA for consideration of payment. A waiver should not be submitted
to FEMA for pre-approval.
See Section 2 of this manual for details on the ICC waiver process.
This ICC process is not exhaustive and additional supporting documents may be required as
35
Section III.D.5.b.
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deemed necessary by the insurer. Not all buildings qualify for an ICC payment. ICC also does
not cover for any duplication of an item included in the SFIP Coverage A-Building Property
payment made or for any amount over the Program’s statutory limit for the type of building
insured.
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Section 4: NFIP Claims Appeals
Section 4: NFIP Claims Appeals
1 NFIP Claims Appeals
NFIP policyholders file claims with their insurers after experiencing a flood and most claims will
settle without dispute. A policyholder may disagree with their insurer in some cases and they
may appeal their insurer’s final claim decision to FEMA.
FEMA reviews policyholder appeals concerning final claim determinations because FEMA
oversees the NFIP but recommends the policyholder work with their adjuster, the adjuster’s
supervisor, and the insurers first. The insurers and their representatives are in the best
position to quickly address a specific claim problem. The NFIP policyholder retains the right to
appeal any denial directly to FEMA when an agreement cannot be reached on the claims
determination along with any denial of all or a portion of their claim.
1.1 Eligibility
A policyholder may appeal a full or partial denial of a claim by the insurer and must appeal
within 60 days of the date of the insurer’s written denial letter to FEMA by email at FEMA-
NFIP-Appeals@fema.dhs.gov or by postal or express mail at FEMA, 400 C Street SW, 6th Floor
Washington, DC 20472-3010.
36
FEMA begins counting the day after the date on the denial
letter and counts every Saturday, Sunday, and legal holiday. If the 60th day is a Saturday,
Sunday, or legal holiday; FEMA extends the period to the next day that is not a Saturday,
Sunday, or legal holiday. FEMA considers an email electronic time stamp, U.S. Mail postmark,
or express carrier acceptance date as the time of submission to FEMA.
Federal regulation prohibits policyholders who have filed suit against their insurer or entered
into appraisal to determine the amount of their loss from appealing their denial to FEMA.
37
With appraisal, an impartial third party determines the value of the covered scope of damage,
when the insurer and policyholder disagree on that dollar amount.
38
1.2 Filing an Appeal
In addition to the name of the policyholder(s) and the property address, appeal letters must
include:
39
1. The flood insurer’s denial letter;
2. The flood insurance policy number (from the policy’s declarations page);
36
See 44 C.F.R. § 62.20(e)(1) (2018)
37
See 44 C.F.R. § 62.20(c)(1); (d) (2018)
38
See SFIP, Section VII or Section VIII. General Conditions, paragraph (P) “Appraisal”
39
See 44 C.F.R. § 62.20(e) (2018) for requirements
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3. Contact information;
4. Letter of Representation40
:
If the author of the letter is a representative of the
policyholder (e.g., a relative, a public adjuster, an attorney, or a translator), he or she
should indicate the relationship and provide documents verifying and authorizing the
relationship. A letter of representation allowing access to personal information under the
Privacy Act, 5 U.S.C. § 552a must include:
−
The policyholder’s full name, current address, date and place of birth, the name(s) of
the representative(s), and the policyholder’s signature;
−
The following statement from the policyholder: ““I expressly grant permission to
FEMA to release my records to this third party representative.”;
−
The policyholder must have this document notarized or include the following
statement:
“I declare under penalty of perjury that the foregoing is true and correct.
Executed on <DATE>. <SIGNATURE>.”
41
;
−
The details of the policyholder’s concern; and
−
Documentation that illustrates, explains, and supports the policyholder’s
position.
FEMA reviews the incoming appeal package and then requests the claim file from the insurer to
verify the information the insurer relied upon is current and accurate. To best address the
issue(s) raised in an appeal, FEMA encourages policyholders to provide as much detail and
documentation needed to support their position in the initial appeal.
Policyholders should provide all information relevant to their particular issue(s).
42
Policyholders
can access a sample list of documentation in the NFIP Flood Insurance Claims Handbook. This
list serves as an example and policyholders need not submit all of the documentation listed;
only the documentation that applies.
FEMA may require additional information depending on the circumstances of the
disagreement. The policyholder is allowed an additional 14 calendar days to supplement the
appeal file, using the same process and information described above.
43
1.3 What to Expect
FEMA will review the claim file to determine if the insurer properly evaluated and paid the
40
See 6 C.F.R. § 5.21(d); (f) (2018)
41
See 28 U.S.C. § 1746.
42
See 44 C.F.R. § 62.20(e)(4) (2018)
43
See 44 C.F.R. § 62.20(f)(2) (2018)
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claim based on the terms and conditions of the SFIP when a policyholder files an appeal.
The policyholder may raise new questions or provide documentation in the appeal that they
did not present to the insurer before the insurer denied the claim. FEMA may recommend
submitting any additional documentation that the policyholder may have directly to the
insurer to support their claim(s) for additional payment or to preserve the policyholder’s
appeal rights.
FEMA begins its process by acknowledging receipt of the appeal in writing to the policyholder
and requesting the claim file from the insurer. During the appeal process, if the insurer is able
to resolve the appeal issue(s) in favor of the policyholder under the terms and conditions of the
SFIP, FEMA encourages them to do so.
At the conclusion of the appeal, FEMA will provide its decision in writing with specific
information concerning the resolution of the appeal.
44
FEMA’s response will address each issue raised on appeal in one of two ways:
1. FEMA will inform both the policyholder and the insurer of its determination and
recommend the most appropriate action(s) to the insurer when FEMA agrees with the
policyholder.
2. FEMA will explain its decision in plain language with references to the SFIP and other
relevant publications when FEMA disagrees with the policyholder. FEMA may also suggest
actions the policyholder can take to achieve a different outcome.
1.4 Insurer Responsibility
Policyholders must have a formal letter of denial, in whole or in part of the policyholder’s
claim, from their insurer to appeal a decision to FEMA.
45
For the policyholder to comply with
FEMA’s requirements for the appeals process, the insurer must provide a properly written
denial letter to policyholders when they deny a claim, in whole or in part. The insurer must
include the following elements in all denial letters:
1. The date of the denial letter. The date of the initial denial letter begins the one-year
period from which the policyholder may file suit; the denial letter date also triggers the
60-day period to file an appeal with FEMA under Title 44, Code of Federal Regulations,
Section 62.20.
2. The name(s) of the policyholder(s), the mailing address, and the loss location. While
straightforward, these elements are especially important when policyholders involve
legal representatives, public adjusters, or other representatives when submitting a claim
44
See 44 C.F.R. § 62.20(f) (2018)
45
See 44 C.F.R. § 62.20(b) (2018)
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for payment (i.e., the proof of loss).
3. The date of loss. Necessary when policyholders file claims for the same properties across
multiple events.
4. The date(s) the policyholder submitted a request for payment (e.g., advance payment,
proof of loss) or failed to comply with a material term of the SFIP (e.g., failed to submit a
timely proof of loss). Sequentially, a denial letter should be issued only after the
policyholder submits a signed and sworn proof of loss, signs the final adjuster’s report, or
fails to comply with a material term of the SFIP.
5. The item(s) denied with the corresponding dollar amount denied, whenever applicable.
Denial letters should avoid general terms such as “various items” or “finished items in a
basement,” and instead list the items not covered by the SFIP.
6. A plain-language explanation for the non-payment or non-coverage. Rather than quote
the SFIP at length, the denial letter should explain why the SFIP does not provide
coverage.
−
Example: “The Standard Flood Insurance Policy does not cover shrubs. We
therefore must deny the part of your claim seeking payment for shrubs. This
limitation appears in the SFIP at Section IV, Paragraph 6.”
−
Not: “The above-referenced claim has been closed without payment. IV.
PROPERTY NOT COVERED 6. Land, land values, lawns, trees, shrubs, plants,
growing crops, or animals[.]”
7. Citations to the relevant sections of the SFIP and a web link to the SFIP. This should
complement the plain-language explanation, not replace it.
Insurers should continue to acknowledge coverage restrictions in their communications
with policyholders. Nothing in this section is intended to broaden coverage or change
standard claims- handling procedures.
With every denial, the insurer must also include an attachment that explains the rights of the
policyholder after a whole or partial denial. FEMA is providing the Policyholder Rights document
(Appendix G). WYO Companies may modify this document to the extent that they want to
include any brand identity or contact information elements. FEMA intends for this attachment
to replace the previous standard paragraphs in the denial letters themselves concerning
appeals and litigation. The Policyholder Rights document provides policyholders with the option
to submit flood insurance appeals by email.
When the reasons given in the denial letter do not agree with the facts of the claim, or if the
SFIP citation referenced does not fully support the denial decision, the letter may be faulty and
result in a premature or ineligible appeal. In such a case, FEMA will forward the policyholder’s
letter to the insurer requesting that they deal directly with the policyholder to resolve the
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matter by making a final determination and send an adequate denial letter. Insurers should
continue to acknowledge coverage restrictions in their communications with policyholders.
Finally, FEMA is currently receiving appeals prior to the policyholder receiving a denial letter.
FEMA reminds the insurers that the SFIP does not authorize adjusters to approve or disapprove
claims, or to tell the policyholder whether the insurer will approve the claim.
46
The adjusters
may answer general flood insurance coverage questions in the effort to provide good customer
service to policyholders but should also inform policyholders that the insurer provides the final
claim decision. FEMA asks that the insurers have their adjusters inform policyholders that they
cannot file an appeal until they receive a denial letter. The proper sequence for claims-handling
and dispute resolution is explained in the FEMA Fact Sheet, “Flood Claims Process” available on
fema.gov.
46
See SFIP, Section (VII)(J)(8)
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Appendix
Appendix
Appendix
Document
Appendix A – Adjuster Fee Schedule
AppendixA Adjuster
Fee Schedule_eff0824
Appendix B – ICC Fee Schedule
AppendixB ICC Fee
Schedule_eff 090120
Appendix C – FEMA Policy Guidance for Closed Basin Lakes
AppendixC FEMA
Policy Guidance for Cl
Appendix D – SALAE Approval Request Form
AppendixD SALAE
Approval Request For
Appendix E – NFIP Claims Forms
AppendixE NFIP
Forms.docx
Appendix F – Bulletin w-13025a Structural Drying
AppendixF Bulletin
w-13025a Structural
Appendix G – Policyholder Rights
AppendixG
Policyholder Rights.p
Appendix H – Bulletin w-13024 Increased Cost of Compliance
Amendments
Appendix H w-13024
Increased Cost of Com
Appendix I – Assignment of Coverage D
AppendixI
Assignment of Covera
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Appendix
Appendix
Document
Appendix J – BVLA Methods and FAQs
Appendix L BVLA
Method and FAQs.doc
Appendix K – ICC Policyholders Processing Checklist
AppendixK
ICCPolicyholdersProc
Appendix L – NFIP Customer Service Standards
Appendix L_NFIP
Customer Service Sta
Appendices are made available online at https://www.fema.gov/media-library/assets/documents/169171.
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Appendix
Acronyms and Abbreviations
Acronym
Acronym Definition
ACO Adjuster Claims Office
ACV Actual Cash Value
ADA Americans with Disabilities Act of 1990
ALE Additional Living Expenses
ANFI® Associate in National Flood Insurance®
ANSI American National Standards Institute
APDA Adjuster Preliminary Damage Assessment
ASC Areas of Special Consideration
BFE Base Flood Elevation
BVLA Building Valuation Loss Assessment
CBIA Coastal Barrier Improvement Act
CBRA Coastal Barrier Resources Act
CBRS Coastal Barrier Resources System
CFR Code of Federal Regulations
CPA Certified Public Accountant
CSA Controlled Substances Act
CWOP Closed Without Payment
DHS Department of Homeland Security
DRC Disaster Recovery Center
E&O Errors and Omissions
EC Elevation Certificate
EMI Emergency Management Institute
FBFM Flood Boundary and Floodway Map
FCN Flood Control Number
FEMA Federal Emergency Management Agency
FICO Flood Insurance Claims Office
FIMA Federal Insurance and Mitigation Administration
FIRM Flood Insurance Rate Map
FIS Flood Insurance Study
FMA Flood Mitigation Assistance
FRO Flood Response Office
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Appendix
Acronym
Acronym Definition
GA General Adjuster
GAO Government Accountability Office
GFIP Group Flood Insurance Program
GP Form General Property Form
HFIAA Homeowner Flood Insurance Affordability Act of 2014
HMA Hazard Mitigation Assistance
HMGP Hazard Mitigation Grant Program
HVAC Heating, Ventilation, and Air Conditioning
ICC Increased Cost of Compliance
IFICO Integrated Flood Insurance Claims Office
IHP Individuals and Households Program
IICRC Institute of Inspection Cleaning and Restoration Certification
Insurer NFIP Direct and WYO Companies
IPERIA Improper Payment Elimination and Recovery Information Act
JFO Joint Field Office
LAG Lowest Adjacent Grade
LOMA Letter of Map Amendment
LOMR Letter of Map Revision
NFIP National Flood Insurance Program
NFIP BSA National Flood Insurance Program Bureau and Statistical Agent
NFIP Direct National Flood Insurance Program Direct Servicing Agent
NWS National Weather Service
OHP Overhead and Profit
OIG (DHS) Office of the Inspector General
OPA Otherwise Protected Areas
POL Proof of Loss
RCBAP Residential Condominium Building Association Policy
RCQC Random Claims Quality Check
RCV Replacement Cost Value
RL Repetitive Loss
SALAE Special Allocated Loss Adjustment Expense
SAP Single Adjuster Program
SF Square foot/feet
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Appendix
Acronym
Acronym Definition
SFHA Special Flood Hazard Area
SFIP Standard Flood Insurance Policy
SRL Severe Repetitive Loss
TRRP (Plan) Transaction Record Reporting and Processing Plan
U.S.C. United States Code
UAV Unmanned Aerial Vehicle
UCORT Underwriting and Claims Operation Review Tool
UW Underwriting
WYO Company Write Your Own Company
Questions or suggestions regarding content or formatting errors in the NFIP Claims Manual, or
suggestions for improvement should be directed to FEMA-FIMA-[email protected].
All claims coverage questions should be directed to the insurer. The insurer may consult with
FEMA at FEMA-FIDClaimsMailbox@fema.dhs.gov.
