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Editor's Notes

1. Basically, the government was trying to come up with a flood policy that would be available on a nationwide basis. In 1983, the Write Your Own program was established which meant that insurance companies could contract with the Federal Government agreeing to certain regulations and in doing so they would be able to write on their own paper. The same, rules, rates and regulations apply to each Write Your Own company.
2. So who needs flood insurance? As you see here just about everyone; as long as they are eligible. So, make sure to offer it to owners of insurable properties and condo associations. Many times we still hear insureds say they are not in a flood zone so they don’t need flood insurance. It is vital that we let them know everyone is in a flood zone! It may be that they are in a low risk zone, but the bottom line is they still need flood insurance.
3. Flood is basically an excess of water on land that is normally dry. NFIP does follow a definition that is a little more detailed so let’s take time to break it down and understand it better. The first part says it is a general and temporary condition of partial or complete inundation of 2 or more acres of normally dry land area, so if your insured owns 5 acres of land then we need at least 2 of those acres to be inundated with water that is normally not there. The definition continues with 2 or more properties at least one of which is yours. Now, the water can come from various sources. It can come from an overflow of inland or tidal waters; unusual and rapid accumulation or runoff of surface waters from any source….let’s make sure we understand that one…it is telling us that the unusual and rapid accumulation or runoff of surface waters can come from other sources outside of rain or snow melting, so keep that in mind. The flooding can also be caused by mudflow or even 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 above.
4. When we talk about what flood covers we are talking about what was directly impacted by the flood waters. What was the direct physical loss by or from the flood to the insureds building and/or contents. We are not talking about additional living expenses, loss of use or loss of income. Those are not covered under the NFIP flood policy.
5. Pre-Firm is defined as buildings built or substantially improved prior to December 31, 1974 OR prior to the date the community entered the regular program. If an insured has a pre-firm building then they have the option of using Pre-FIRM or Post-FIRM rates, whichever provides the best rates. This means they will either use an elevation certificate or not. Keep in mind, they don’t have to have an elevation certificate if they are pre-firm, but if they do have one and it gives them a more beneficial rate then we would want to use it. If the building is post-firm then the building was built or substantially improved after the community entered the regular program. Zones must be determined from the FIRM. Rates for coverage are based on the zone. If the insured property is located in an A or V numbered, AE or VE zone, elevation certificates are required when they are post-firm.
6. 25-30% of our flood losses come from those low risk areas and most of these property owners are the ones that think they don’t need flood insurance. So, let’s find out a little more about the PRP.
7. The NFIP policy is for a 1 year term. A policy will renew without a lapse if the renewal premium payment is received within 30 days of the expiration date. If it is 31-90 days then it will have a 30 day lapse in coverage. After 90 days the agent must write a new policy. Fees: The Federal Policy fee is typically $40 and is not commissionable (the fee is higher on RCBAP policies). The flood policy is a “Cash with app” policy. No partial payments accepted. Insureds can pay via check or credit card.
8. There is a 30 day waiting period that applies to the flood policy when coverage is voluntarily purchased.
9. Some exceptions would be a loan closing, lender portfolio review or a map revision. For a loan closing the policy will become effective the date of the loan closing. If there is a lender portfolio review and it is discovered that the property is in a SFHA then the policy will become effective the date of the application and presentment of premium. If there is a map revision then the insured has a 13 month period to take advantage of a 1 day waiting period.
10. A flood policy may be cancelled at any time BUT A refund of premium money will only be made when a valid reason for cancellation is listed. There is a listing of these reasons in the NFIP manual so check out the manual.
11. To wrap us up, Everyone is in a flood zone, some properties are at a higher risk of flooding than others…,Run a zone determination on every risk, Offer the coverage, Document rejection with an Agency Responsibility Waiver form.