INTRODUCTION AND GENERAL RULES - H2O …

1 1 Welcome to The NFIP s Basic Agent Tutorial: Key Fundamentals of Flood Insurance Focused on flood insurance basics for insurance professionals (Part 1) 1 a INTRODUCTION AND GENERAL RULES Section 1 3 2 Here s our AGENDA Section 1 INTRODUCTION and GENERAL RULES Section 2 - Policy Rating, Elevations, Premiums and More Section 3- Coverage, limitations and Exclusions in the SFIP Section 4- Loss Settlement Provisions Section 5- Flood Insurance Resources This course is divided into two sessions Each session is approximately 2 hours 4 Access the NFIP Flood Insurance Manual.

2 Online at the Flood Insurance Library: 5 NFIP Flood Insurance Manual 3 6 Training Agenda Things Agents Need to Know Every building is in a flood zone. Flood insurance can be purchased in any flood zone not just high-risk flood zones. Building and contents coverage limits are usually purchased separately. A federal disaster declaration is not required for a policyholder to file a flood insurance claim . The Standard Flood Insurance Policy (SFIP) is not a guaranteed replacement cost policy. The SFIP provides limited coverage for basements. The SFIP excludes time-element exposures.

3 1 2 3 4 5 6 7 NFIP definition of flood 8 What is a flood? 4 NFIP definition of flood A GENERAL and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (one of which is your property) from: of inland or tidal waters, and rapid accumulation or runoff of surface waters from any source, 9 What is a flood? Mudflow A river of liquid and flowing mud on the surface of normally dry land areas as when earth is carried by a current of water Not Mudflows: Landslide Slope failure Saturated soil mass 10 What is a flood?

4 Source: 5 Flood Related Erosion Collapse or subsidence of land along the shore of a lake or similar body of water Caused by waves or currents of water exceeding cyclical levels Results in flooding What is a flood? 11 All Property Owners All Zones Who has flood risk? 12 6 SFHAs and Non-SFHAs Special Flood Hazard Areas (SFHAs) High Risk Zones AE (replaces A1-A30) A, AH, AO, A99, AR VE (replaces V1-V30), V, VO Non-Special Flood Hazard Areas (non-SFHAs) Low to Moderate Risk Zones B, C, X D (undetermined) 100-year floodplain = 1% annual chance flood Over 30-year mortgage likelihood grows from 1% to at least 26% 13 14 Training Agenda SFHAs appear as dark shading on a Flood Insurance Rate Map (FIRM).

5 Flood Insurance Rate Map (FIRM) 14 7 15 Digital Flood Insurance Rate Map (DFIRM) 16 Locating flood maps: FEMA Map Service Center 8 How does the NFIP Work? How is NFIP flood insurance purchased? 18 Community Participation All Zones Who can buy NFIP flood insurance? 19 9 Participating Communities 20 FEMA agrees to make flood insurance available COMMUNITY agrees to adopt and enforce floodplain management regulations Community Status Book Report 21 10 Buildings may be ineligible for coverage in participating communities, If constructed on or after identification date.

6 CBRS System Ability to write NFIP policies may be restricted in some: Coastal Barrier Resources Act (CBRA) areas Otherwise Protected Areas (OPA) Coastal Barrier Resources Act and Coastal Barrier Improvement Act enacted: October 18, 1982 November 16, 1990 22 Write Your Own Company NFIP Direct Servicing Agent Licensed Property and Casualty Agent How is NFIP flood insurance purchased? 23 11 A or V Zones Who MUST buy flood insurance? 24 Used as security for a loan Who MUST buy flood insurance? 25 12 Designated Loan Who MUST buy flood insurance? 26 Please note: Emphasis on a building or mobile home as collateral What is a designated loan?

7 A loan secured by a building or mobile home that is located or to be located in a Special Flood Hazard Area in which flood insurance is available under the Act 27 13 Flood Insurance vs. Disaster Assistance Who SHOULD buy flood insurance? 29 Flood Insurance vs. Disaster Assistance 30 14 NFIP maximums vary by building type and program limits How much NFIP flood insurance can be purchased? 31 How much flood insurance coverage is available? 32 Emergency Program Regular Program Residential (1-4 family) Building Contents $35,000 $10,000 $250,000 $100,000 Other Residential Building $100,000 $500,000 Non-Residential Business/Other Non-Residential Building Contents $100,000 $100,000 $500,000 $500,000 Contents $ 10,000 $100,000 15 30-day waiting period Exceptions When does an NFIP policy become effective?

8 33 34 For detailed information, please see the GENERAL RULES section of the Flood Insurance Manual When does an NFIP policy become effective? There is a 30 day waiting period before new or modified flood insurance policies go into effect. Exceptions are provided for: Insurance in connection with a loan transaction. (MIRE) Insurance purchased within 13 months of a map revision (1-day wait). Wildfire exception 16 KEY NFIP TERMS, TOOLS, AND RULES To use and to live 36 37 Defining Pre-FIRM and Post-FIRM Post-FIRM On or After the initial FIRM or After 12/31/1974 .. whichever is LATER Pre-FIRM Built before initial FIRM or On or before 12/31/1974 17 Full-Risk Rates vs.

9 Subsidized Rates 38 Represent the building s true flood risk. Premium reflects the risk assumed by the program and all administrative expenses. Takes into account the full range of possible flood losses. Do not represent the building s true flood risk. Determined with limited underwriting information Discounted rates that have traditionally been available for Pre-FIRM buildings in A or V zones. Full Risk Rates Subsidized Regular vs. Emergency Program 39 Initial participation phase Limited amount of coverage Flood Hazard Boundary Map (FHBM) Emergency Program Final phase of participation Full limits of coverage Flood Insurance Rate Map (FIRM) Regular Program 18 Base Flood Elevations (BFEs)

10 40 BFE = 1% Chance Flood Preferred Risk Policy 41 Preferred Risk Policy Lower Cost B,C,X, A99, AR Zones GENERAL Property Form Dwelling Form 19 Miscellaneous NFIP RULES 42 RULES NFIP Policy Term 1 year annual term All policies NFIP Direct Write-Your-Own Evidence of Insurance Flood insurance application & premium payment Copy of declarations page No binders Community Participation Probation Suspension Special Flood Hazard Areas are represented on flood maps as zones A or V. NFIP flood insurance can be purchased in communities participating in the NFIP regardless of the flood zone.