Flood Training Guide Presented by District 65 Tropical Storm Allison “The RAIN of Terror” June 2001 The most devastating Rain and Flooding in the History of Houston, Texas Tropical Storm Allison “The RAIN of Terror” June 2001 View of the Tunnel System Downtown View of the Tunnel System Downtown Jet Sking in the flood waters on Interstate Highway I-10 Canoeing down HWY 59 near the Compaq Center A view of a 3-way Intersection located at Allen Parkway and Sanford Street One of hundreds of unfortunate family members within the greater metropolitan area trying to make their way to dry land. Key Contact Processing/ Claims: Underwriting and Service: Ph: 888-391-2810 Fax: 800-380-4783 Ph:888-391-2810 Fax:800-380-4783 Getting Started You will need: Flood Rating Software Forms and Applications Flood Zone Determination Maps Community Master Files Elevation Certificate ***Flood Insurance Manual available through the National Flood Insurance Program (NFIP) for $25.00 Definitions Flood Insurance: a product that provides coverage to insured buildings and insured contents when damage occurs due to direct physical loss by or from flood. Flood: A. A general temporary condition of partial or complete inundation of normally dry land areas from: 1) Overflow of inland or tidal areas. 2) The unusual and rapid accumulation of surface waters from any source. 3) Mudslides B. The collapse or sinking of land along the shore of a lake or other body of water as a result of erosion, waves or currents of water greater than the normal levels which result in flooding described in A-1. Definitions Cont.’ National Flood Insurance Program (NFIP): A federal program enabling property owners to purchase flood insurance. It provides an alternative to disaster assistance to meet the escalating costs of repairing damage to buildings and their contents caused by flood. The NFIP laws allow the federal government to make flood insurance available through private-sector insurance companies to communities that agree to implement protective measures to reduce future flood risks to new construction in special flood hazard areas. All About NFIP Congress established the NFIP and approved the National Flood Insurance Act of 1968. Then, in 1973 the Act was broadened and modified with the passage of the Flood Disaster Protection Act. It is administered by the Federal Insurance Administration (FIA), a component of FEMA. Congress established the NFIP as a proactive approach to mitigating future damage and providing insurance protection for property owners against potential losses. NFIP is subject to the rules and regulations of the FIA. FIA has elected to have state-licensed insurance companies’ agents and brokers sell flood insurance to consumers. Therefore, the agents and brokers are held accountable by their state regulators to provide NFIP customers with the same level of standards and service they would provide selling their own lines of insurance. NFIP Cont.’ “Write Your Own” (WYO) Program: Established in 1981 as an effort to reinvolve private-sector insurance companies. Goals of WYO program: 1. Increase the NFIP policy base and the geographic distribution of policies 2. Improve service to NFIP policyholders through the infusion of insurance industry knowledge 3. Provide the insurance industry with operating experience for flood insurance. Benefits of WYO: * no competition in rates * training programs *Personal Computer Software Program *Mapping Services Department NFIP Cont.’ The NFIP benefits property owners and taxpayers alike by protecting against devastating losses resulting from flood disasters. Also, community management of future construction and development of floodplains can reduce the probability of flood losses and the costs associated with flood disaster relief. NFIP Cont.’ Definitions Floodplain: Flood hazard areas are determined by using statistical analyses of records of riverflow, storm tides, and rainfall; information obtained through consultation with the community; floodplain topographic surveys; and hydrologic and hydraulic analyses. The Flood Insurance Study (FIS) covers those areas subject to flooding from rivers and streams, along coastal areas and lake shores, or shallow flooding areas. Floodplain Management: refers to an overall community program of corrective and preventive measures for reducing future flood damage. These measures take a variety of forms and generally include zoning, subdivision, or building requirements, and special- purpose floodplain ordinances. NFIP Cont.’ Definitions Community: any state, area or political subdivision; any Indian tribe, authorized tribal organization or Alaska native village or authorized native organization which has the authority to adopt and enforce floodplain management ordinances for the area under its jurisdiction. In most cases, it is either an incorporated city, town, township or village, or an unincorporated area of a county or parish. Some states have statutory authority that varies from this description, however. Participation in the NFIP is community-based rather than individual because the potential for loss cannot be reduced sufficiently to affect disaster relief costs unless the community as a whole is practicing adequate flood hazard mitigation. Insurance rates would also reflect a higher probability for flood losses without the communities participation. NFIP Cont.’ Community participation in NFIP is voluntary. If a community does not participate in NFIP and has been identified on a Flood Hazard Boundary Map (FHBM) or Flood Insurance Rate Map (FIRM) for a year and the community does not take the necessary steps to participate, federal financial assistance, will not be available for buildings in the Special Flood Hazard Area. If a Presidentially declared flood disaster occurs in a nonparticipating community, no federal financial assistance can be provided for the permanent repair or reconstruction of insurable buildings in Special Flood Hazard Areas. General Considerations: Policy Forms Policy Forms for the Special Flood Hazard Areas (SFHA): 1. Dwelling (Single-family, 2-4 family residential buildings, residential condominium units) 2. The General Property (Residential buildings of 4+ units, nonresidential buildings, non-household contents) 3. The Residential Condominium Building Association (Residential Condominium Association Buildings) Scheduled Buildings Scheduled building policy: a policy that requires a specific amount of insurance to be designated for each building and its contents. To qualify all buildings and/or their contents must: – Have the same ownership – Have the same location which is owned or leased by the insured; – Have the same occupancy type: (single-family dwelling, 2-4 family dwelling, other residential, nonresidential, or small business.) General Considerations: Policy Forms and Scheduled Buildings Definition – Small Business Any business having (with its affiliates) assets not in excess of $6 million, net worth not in excess of $2.5 million and an average net income, after federal income taxes, for the preceding two years not in excess of $250,000 (computed with carryover loss). Building Eligibility Insurance can be written only on walled and roofed buildings which are principally above ground and are permanently affixed to sites. Also eligible are silos and grain storage buildings. Special Considerations for the manufactured or mobile home will be addressed again in other sections. However, some of these considerations are: 1. Home must be on a permanent foundation; 2. Home must be affixed to a permanent site; 3. Home must be anchored. SECTION 13. Building Eligibility Buildings entirely over water also have special policy guidelines. Any building that is entirely over water and constructed before October 1, 1982, should follow instructions for a “submit for rate.” Buildings that are entirely over water and constructed after October 1, 1982 are not eligible for coverage. Buildings that are partially over water that were built or improved after October 1, 1982, must be submitted for underwriting and premium determination as well as eligibility. The Flood Insurance Application This section of your workbook will “walk you through” the Flood Insurance Application, section by section, so that you will gain a better understanding of the procedures and reasoning behind the required information or calculations. Keep in mind: the more accurate and complete the application, the more quickly the application will be processed. The Flood Insurance Application The application consists of several sections. The entire application must be completed when the structure to be insured is Post FIRM or Pre FIRM, using optional Post FIRM rates and is located in all zones except B, C, D, X, AO, and A99. Post- and Pre-Firm definitions are found in the Rating Information section of this training guide (page 26). A sample application can be found on page 11. Note that the application also serves as an Endorsement Form. Instructions for when and how to complete an Endorsement are covered in this workbook. The Flood Insurance Application The following sections consist of basic general information. Agent’s Name and Address Agent’s Number – the seven digit Farmers Agent code. (Important if you want to get paid)! Current Policy Number – filled out when you are using this form as an endorsement request or when you are moving another WYO or NFIP policy to Farmers at renewal. Agent’s Phone Number Policy Type – New or Renewal. The Flood Insurance Application General Information These sections must be filled in with the month, day, and year for policy effective date and expiration. **Effective Dates** To determine effective date of the policy, the date the premium is collected plus thirty days will equal the effective date. Flood insurance coverage, therefore, is effective Thirty days after the agent completes the application and collects the premium for the policy, provided that the application is received by the companies’ processing office within 10 days of the signature date on the application. **Important: If the application is received more than 10 days after the signature date, the effective date will be 30 days from the date companies’ processing office receives the application** The Flood Insurance Application Term – The policy can be written for a period of one year only. Wait Period – (Standard 30 Days) Check this box if the policy is being written with a 30 day waiting period, which is the standard 30 day waiting period. The Flood Insurance Application Exception to 30-day waiting period – Portfolio Review: The 30 day waiting period does not apply when the lender requires flood insurance for a mortgage. The coverage is effective upon the completion of an application and the collection of the premium payment. Initial purchase of flood insurance related to – Loan no waiting: You will check this box only when the policy is being purchased in connection with a loan closing. When this box is checked, your effective date will be the same date as the closing date, and the 30 days standard waiting period mentioned previously can be waived. The Flood Insurance Application NOTE: If the policy is written in connection with making, increasing, extending, or renewing a loan, then the effective date is the same date of the closing, provided the premium is paid at or before closing. If the premium is paid after closing, then the 30 day waiting period applies. The Flood Insurance Application Emergency program – There is only a one day waiting period during the 30 day period which follows a community’s initial eligibility for flood insurance under the Emergency Program or conversion to the Regular Program. Map Revision – This box must be checked only when the policy is being purchased in connection with a map revision (zone changed from NSFHA to SFHA and policy is being obtained within 13 months of the map revision). When this box is checked, your effective date will be one day after the date the premium is collected and the 30 day waiting period is waived. The Flood Insurance Application Applicant’s: Name/ Mailing Address / Social Security # / Telephone # Direct Bill To – this section must be completed to ensure proper billing at renewal time; only one box can be checked. If you select Other or First Mortgagee, then you must provide the name, address, and loan number, if applicable. The Flood Insurance Application 1. If you write the application on Sept. 23 and receive the premium the same day, what is the effective date of the policy? Answer: October 23, provided the application and premium are received by the processing office within 10 days. The Flood Insurance Application 2. Your customers, Jack and Martha Hess, are buying a new home, and their lender has told them they must purchase flood insurance. You are writing their homeowners policy, and they write you a check for both the homeowners and flood insurance before their closing date so they can go to the closing with paid receipts. What is the effective date of the flood insurance policy? And, by the way, how do you instruct them to make out their check for the flood insurance? Answer: The effective date is the same date as the closing/purchase date (Loan no waiting). This is provided that the premium is paid at or before closing and the check is made payable to Farmers Insurance (the check should be separate from the Homeowners insurance premium payment). The Flood Insurance Application 3. If the lender in Question #2 requires an escrow account for insurance, what box do you check on the application? Answer: Check “Bill First Mortgagee.” 4. Your customer is refinancing their mortgage, and the lender has told them flood insurance is required. What will be the effective date of the policy? Answer: The date of the closing. The Flood Insurance Application 5. Your customer receives a letter from their lender advising them they need to purchase flood insurance on a property they have owned for five years. The letter goes on to say if they do not purchase flood insurance, the lender will force a policy. Your customer purchases a policy from you as a result of this letter. What will the effective date of the policy be? Answer: The date payment is received. Myths and Facts About the NFIP Myth: You can’t buy flood insurance if you are located in a high risk flood area. Fact: You can buy Federal flood insurance no matter where you live provided that your community belongs to the NFIP, except in Coastal Barrier Resources System (CBRS) areas. The Program was created in 1968 to provide affordable flood insurance to people who live in areas with the greatest risk of flooding, called Special Flood Hazard Areas (SFHAs). In fact, under the National Flood Insurance Act, lenders must require borrowers whose property is located within an SFHA to purchase flood insurance as a condition of receiving a Federally-backed mortgage loan. There is an exemption for conventional loans on properties within CBRS areas. Lenders should notify borrowers that their property is located in an SFHA and that affordable Federal flood insurance is available. Myths and Facts About the NFIP Myth – You can’t buy flood insurance immediately before or during a flood. Fact – You can purchase flood coverage at any time. There is a 30-day waiting period after you’ve applied and paid the premium before the policy is effective, with the following exception: 1) If the initial purchase of flood insurance is in connection with the making, increasing, extending, or renewing of a loan, provided application and collection of the premium is made at or prior to loan closing. 2) If the initial purchase of flood insurance is made during the one-year period following the issuance of a revised flood map for a community, there is a one-day waiting period. Myths and Facts About the NFIP Continued – The policy does not cover a “loss in progress,” defined by the NFIP as a loss occurring as of 12:01 a.m. on the first day of the policy term. In addition, you cannot increase the amount of insurance coverage you have during a loss in progress. Myths and Facts About the NFIP Myth – Homeowners insurance policies cover flooding. Fact – Unfortunately, many homeowners do not find out until it is too late that their homeowners policy does not cover flood losses. Federal flood insurance protects your most valuable assets – your home and belongings! Myths and Facts About the NFIP Myth – Flood insurance is only available for homeowners. Fact – Flood insurance is available to protect homes, condominiums, apartments, and non residential buildings, including commercial structures. A maximum of $250,000 for building coverage is available for single family residential buildings; $250,000 per unit for multi-family residences. The limit for contents coverage on all residential buildings is $100,000, which is also available to renters! Commercial structures can be insured to a limit of $500,000 for the building and $500,000 for the contents. Myths and Facts About the NFIP Myth – You can’t buy flood insurance if your property has been flooded. Fact – It doesn’t matter how many times your home, apartment, or business has flooded. You are still eligible to purchase flood insurance, provided that your community is participating in the NFIP. Myths and Facts About the NFIP Myth – Only residents of high risk flood zones need to insure their property. Fact – Even if you live in an area that is not flood- proned, it’s advisable to have flood insurance. One third of the NFIP’s claims come from outside the high risk flood areas. The NFIP’s Preferred Risk Policy, available for as little as $80 per year, is designed for residential properties located in low to moderate flood risk zones. The Flood Insurance Application Property Location – Check “yes” if it is the same as the mailing address and “no” if it is different and provide the correct property location. Primary and Second Mortgagee/Loss Payee or Other Payor. Provide name, address, phone number, and loan number. The loan number is important for the lender to identify the policy with the property. The Flood Insurance Application Rating Information: You must identify the community the property is located in. This can be done in conjunction with ordering a flood zone determination, which can be done on-line at www.farmersflood.com or by calling flood customer service. A NFIP Community Status Book also has this information available. The Flood Insurance Application Program Participation – When a particular community wishes to participate in the NFIP, it applies to FEMA, the Federal Emergency Management Agency. FEMA then conducts a study using the Army Corps of Engineers. After the study is completed, Flood Hazard Boundary Maps are produced, and the community enters the initial phase of the program, the EMERGENCY PROGRAM. The Flood Insurance Application Emergency Program – The initial phase of a community’s participation in the NFIP and is designed to provide a limited amount of insurance at federally subsidized rates prior to the effective date of the community’s initial Flood Insurance Rate Map. A community participating in the emergency program is provided with a Flood Hazard Boundary Map and is required to adopt limited measures aimed at control of the future use of its floodplains. The Flood Insurance Application Emergency Program: During the Emergency Program, there is only limited coverage available: Building: Contents: Single Family $35,000 Residential: $10,000 Other Residential $100,000 Nonresidential:$100,000 Nonresidential $100,000 In Alaska, Guam, Hawaii, and U.S. Virgin Islands: $50,000 $150,000 The Flood Insurance Application After the Corps of Engineers has completed its detailed survey of the land, they establish zones according to the severity and probability of the frequency of flooding in these areas. After the zones are determined, maps are printed for the community, FLOOD INSURANCE RATE MAPS (FIRM). Once these maps are issued, the community can enter in to the REGULAR PROGRAM. The Flood Insurance Application Regular Program Total Insurance Available Building Coverage: Single-Family $250,000 2-4 Family Dwelling $250,000 Other Residential $250,000 Nonresidential $500,000 Contents Coverage (per unit): Residential $100,000 Nonresidential $500,000 **For Preferred Risk Policy coverages, see the PRP Section.** The Flood Insurance Application Once a community joins the program, there are certain rules they must follow to stay in the program, and if they do not comply, the policyholders can be affected. Probation – the formal notification to a community indicating that the floodplain management program does not meet NFIP criteria for compliance. It is an action authorized under Federal regulations. The Flood Insurance Application Probation, continued.. *Probation may be continued for up to one year after the community corrects all program deficiencies and remedies all violations to the maximum extension possible. While a community is on probation, there is a $50 fee added to every policy sold or renewed. The additional charge is effective for at least one year after the community probation period begins. Probation does not affect the availability of flood insurance. The Flood Insurance Application Suspension – If a community stays on probation and does not indicate its intent to work under NFIP guidelines, then the community can be suspended. This occurs when the community fails to adopt the required ordinances and is imposed by the Federal Insurance Administrator. If suspended, the community may not participate, and flood insurance policies cannot be written or renewed. Policies in force, at the time of suspension, continue to stay in force for the policy term or until the anniversary date of three-year policies. The Flood Insurance Application Original FIRM Date Flood Insurance Rate Map – The regular program phase is the period when a community’s participation in the NFIP is affected by more comprehensive floodplain management requirements with higher amounts of insurance limits based on risk zones and elevations, determined by the flood insurance study of the community. The Flood Insurance Rate Map is used in this phase of NFIP participation. The Flood Insurance Application Original FIRM Date The FIRM date can be found in the fourth column of the Community Status Book or the Flood Rating Software. The date on which a community enters the Regular Program is referred to as the FIRM date. It is very important that you understand the difference between Pre-FIRM and Post-FIRM construction. The Flood Insurance Application Original Firm Date – Pre-FIRM construction means construction or substantial improvement which started on or before December 31, 1974, or before the effective date of the initial Flood Insurance Rate Map (FIRM) of the community, whichever is later. – Post-FIRM construction means construction or substantial improvement which started after December 31, 1974, and on or after the effective date of the initial Flood Insurance Rate Map (FIRM) of the community, whichever is latter. Pre-FIRM = Before the FIRM Post-FIRM = After the FIRM And any construction before December 31, 1974, is Pre-Firm. The Flood Insurance Application 1. Construction on the single-family house to be insured was started in June of 1985, but the effective date of the FIRM is July 1980. Is the property Pre- or Post- FIRM construction? A- Post-FIRM. Construction was after the FIRM was issued. The Flood Insurance Application 2. The property to be insured was built either in 1964 or 1965; your clients are not sure. The community in which the property is located had January 15, 1980, as the FIRM effective date. Is this Pre- or Post-FIRM Construction? A. Pre-FIRM. Any construction before 12/31/74 is Pre- FIRM. The Flood Insurance Application 3. Construction on an office building was started on March 1, 1973. The FIRM date for the community in which the property is located is May 1, 1972. Is the property Pre- or Post-FIRM construction? A. Pre-FIRM. Any construction before 12/31/74 is Pre- FIRM. The Flood Insurance Application The Flood Insurance Rate Map (FIRM) is used for Regular Program Communities. (Remember that during the Emergency Program, a Flood Hazard Boundary Map is used.) FIRMs are drawn to show community boundaries and all flood zones. Each panel has a panel number and community number. The Flood Insurance Application Example: Monterey County, CA.. 060195-1025 The first two digits of the number identify the state, the next four digits identify the community. The last four digits identify the map panel. If there had been a letter after the last four digits, the letter would indicate the revision of the map. Most FIRMs also show: Actuarial Rate Zones; Base Flood Elevations; and/or Base Flood Depths. The Flood Insurance Application Remember: FIRMs provide community name, community number, suffix, and panel number. All of this information is needed to complete the Application. The most current effective map version for a community can be obtained by calling the appropriate community official or by calling the NFIP on the toll-free number. Maps can be ordered from the NFIP also. The FIRM is used to locate the zone of the subject property. The Flood Insurance Application Flood Hazard Zones The FIRM is used in Regular Program communities by lenders to determine the flood insurance requirements and by insurance agents to help determine flood insurance premium rates for specific properties. The map includes areas within the 100-year flood boundary, which are termed “Special Flood Hazard Areas” (SFHAs). A “100-year flood” does not refer to a flood that occurs once every 100 years, but refers to a flood level with a 1% or greater chance of being equaled or exceeded in any given year. The Flood Insurance Application Special Flood Hazard Areas Areas between the 100-year and 500-year flood boundaries are termed “moderate or minimal flood hazard areas,” or “Preferred Flood Hazard Areas” (PFHAs). Historically, about 1/3 of the claims paid by the NFIP are for flood damage in areas identified as having only “moderate” and “minimal” risk of flood. The Flood Insurance Application Community Number, Panel Number, Suffix This information can be found in the first column of the Community Status Book or the flood rating software. The suffix is the letter at the end of the community number. The letter indicates the last revision of the flood map: A – First Revision B – Two Revisions C – Three Revisions The Flood Insurance Application FIRM ZONES – Special Flood Hazard Areas (SFHAs) are Zone Designation Descriptions where: ZONE DESCRIPTION A Areas of special flood hazards where the Base Flood Elevations (BFEs) are not provided. A1-A30 Areas of special flood hazards where the Base Flood Elevations (BFEs) are provided. The Flood Insurance Application FIRM ZONES –Special Flood Hazard Areas (SFHAs) are Zone Designation Descriptions where: ZONE DESCRIPTION AE The new designation for A1-A30 zones. AH Shallow water depths (ponding) and/or unpredictable flow paths between one and three feet occur. BFEs are provided. The Flood Insurance Application FIRM ZONES – Special Flood Hazard Areas (SFHAs) are Zone Designation Descriptions where: ZONE DESCRIPTION AO Shallow water paths (sheet flow) and/or unpredictable flow paths between one and three feet occur. BFEs are not provided. Base flood depths may be provided. A99 Where enough progress has been made on a protective system such as dikes, dams and levees, to consider it complete for insurance rating purposes. No BFEs are provided. The Flood Insurance Application FIRM ZONES – Special Flood Hazard Areas (SFHAs) are Zone Designation Descriptions where: ZONE DESCRIPTION V An area which is inundated by tidal floods with velocity (coastal high hazard area). No BFEs are provided. V1-V30 Identical to V zone but BFEs are provided. VE The new designation for V1-V30 zones. The Flood Insurance Application Moderate Minimal Hazard Areas/Preferred Flood Hazard Areas: ZONE DESCRIPTION B,C,X Areas of moderate or minimal hazard subject to flooding from severe storm activity or local drainage problems. These zones may be lightly shaded or unshaded on the FIRM. Historically, almost 33% of all claims paid have been in these zones! D An area where the flood hazard is undetermined and is usually very sparsely populated. The Flood Insurance Application Failure to use the correct zone may delay the issuance of the insured’s policy. Also, if a claim arises from a policy rated incorrectly using the wrong zone, then the following may occur: – 1. The policy limits could be reduced to match the premium paid; or – 2. The insured will have to pay the additional premium appropriate for the correct zone. The Flood Insurance Application Sources For Correct Zone: – www.farmersflood.com – City Hall – Surveyor or Appraiser – Elevation Certificate (to be discussed later) – Flood Map – Property Survey – Previous Policy – Escrow Office – Mortgagee – Builder/Developer – Farmers Flood Service Center 1-888-391-2810 – Local Look-up Service The Flood Insurance Application True or False 1. During the Emergency Program: 1. Flood insurance is not available for purchase. 2. Single-Family coverage is available up to any amount. Answer: 1. False. 2. False, single-family coverage is limited to $35,000 for the building, $10,000 for contents (except in Alaska, Guam, Hawaii and the U.S. Virgin Islands, where $50,000 is the building maximum coverage). The Flood Insurance Application 2. A homeowner wishes to purchase flood coverage, and his home was built in 1970. You consult the Community Master File and see that the effective date of the Community is 8/3/84. Is the construction Pre- or Post-FIRM? Answer: Pre-FIRM. ALL construction is Pre-FIRM if it is before 12/31/74 OR prior to the date of the FIRM effective date. The Flood Insurance Application True or False 3. A. While a community is on probation, homeowners can buy flood insurance. Answer: True, but a $50 fee is added to each policy written. B. Policies in force at the time of community suspension are immediately cancelled. Answer: False, however, they will not be renewed while the community is suspended. C. If a property is NOT in a Special Flood Hazard Zone, the homeowner should not buy flood insurance. Answer: False. Homeowners should be encouraged to purchase coverage even if home is not in a SFHA, since 33% of all claims paid are for properties in “moderate” or “minimal” risk areas. The Flood Insurance Application 4. What happens to the insured’s policy if the agent has indicated the incorrect zone for the property and the rating thus is wrong? A. The policy limits could be changed to match the premium paid. B. The policy can be immediately cancelled upon receipt by the processing department. C. The insured may have to pay additional money to reach the correct premium for the correct zone. D. Both A. and C. are correct. Answer: D is correct, both A and C are correct. The Flood Insurance Application Community Rating System (CRS) The CRS was developed to provide incentives for communities to go beyond the minimum floodplain management requirements and develop extra measures to provide protection from flooding. All Communities will start out with a Class 10 rating (which provides no discount). Once a community applies to the appropriate FEMA region for inclusion in the program, implementation is verified and FIA sets the credits that will result in a premium discount for policyholders. The Flood Insurance Application Community Rating System (CRS) This is a voluntary program for communities. These discounts can range between 5% for a Class 9 rating to a 45% for a Class 1 rating, and are applied to every policy written in the participating community. This can be used as a powerful marketing tool, to encourage communities to exceed floodplain management rules and regulations, as well as to make the flood insurance more attractive to potential buyers. The Flood Insurance Application Building Occupancy Building Type – number of floors in building, including basement. Basement Coverage is for – Condominium Unit: This box must be checked if this policy is being written on an individual unit. – Condominium Association on one building: This box must be checked if this policy is being written for the entire building under the name of the association. The Flood Insurance Application Condominium Master Policy As of October 1, 1994, there is a new Condominium Master Policy which is referred to as RCBAP (Residential Condominium Building Association Policy). This new product is designed to provide replacement cost. The maximum amount of building coverage that can be purchased is replacement cost value of the building or the total number of units in the building times $250,000, whichever is less. Should the building be insured to less than 80% of the replacement cost, coinsurance penalties will apply. The Flood Insurance Application Eligibility RCBAP for condo association residential buildings with one or more units and at least 75% of total floor area is residential. High rise and low rise are eligible. High-Rise (Vertical) Condo Building: – Containing: at least 5 units at least 3 floors The Flood Insurance Application Eligibility – Low Rise Condo Building With less than 5 units Less than 3 floors Including townhouses/rowhouses regardless of the number of floors or units, including detached single-family units. • Community must be in regular program. • Emergency Program not eligible / Time Share not eligible. Flood Insurance Application For Condo Association Policy – High Rise – Low Rise Based on the information above, you will check either high or low rise. Is Insured Property Owned by State Government? – There are special requirements if a property is owned by the state government. Call the WYO Flood Service Center for more information if this situation occurs. Is this Building in the Course of Construction? – Coverage is available while the building is under construction. If construction stops for more than 90 days, the coverage will cease until construction resumes. – If there is a claim during construction, the policy deductible will be doubled. Farmers Flood Application Is Building Insured’s Principal Residence? – If the building is a single-family dwelling or row house type condominium unit which is the primary residence of the insured, and it is insured for 80% of its replacement value, then there will be replacement cost coverage on the building if there is a claim. If the insured property is not a primary residence, all claims will be adjusted on an actual cash value basis. Farmers Flood Application Estimated Replacement Cost of the Building – Replacement cost is applicable to building coverage only when the insured structure is: Single Family Principal Residence Insured to at least 80% of RCV or the maximum under the Flood Insurance program Available for Residential Condominium Building Association Policies Farmers Flood Application Contents Location – Contents in the insured building. Contents in a single occupancy dwelling are considered to be located throughout the entire dwelling. – A single family building has a basement and one floor. The contents are rated on both floors. The contents are considered to be on both levels of the house. Flood Application There is only limited coverage for contents contained in a basement which, in general, is limited to: – Foundation elements, required utility connections, unfinished structural elements. – Sump pumps, well water tanks and pumps, oil tanks and the oil in them, cisterns and the water in them, natural gas tanks and the gas in them. – Pumps and/or tanks used in conjunction with solar energy systems, furnaces, water heaters, clothes washers and dryers, food freezers and the food in them, air conditioners, heat pumps, electrical junction and circuit breaker boxes, stairways, elevators and related equipment. Flood Application There are restrictions related to Base Flood Elevation and the lowest elevated floor of a Post FIRM elevated building, consult flood manual or service center for details. 2-4 family dwellings – if the insured lives on the second floor of a 2-4 family building, it is considered that all the contents are above the ground floor. In this case, the rates would be less expensive because there is less exposure to flood. Flood Application Are contents household? If not a Single Family, indicate # of occupancies and the use of building Building is Post FIRM construction or substantial improvement – Remember the definition of post FIRM, - any construction after December 31, 1974, or on or after the effective date of the initial Flood Insurance Rate Map of the community, whichever is later. Flood Application Substantial improvement – any reconstruction, rehabilitation, addition, or other improvement of a building, the cost of which equals or exceeds 50% of the market value of the building before the “start of construction” of the improvement. This includes buildings that have incurred “substantial damage,” regardless of the actual repair work performed. However, the term does not include either any project or improvement of a building to correct existing state or local code violations or any alteration to an “historic building,” provided that the alteration will not preclude the building’s continued designation as an “historic building.” Flood Application Building Permit Date or Start of Construction Date – If manufactured (mobile) home located in a mobile home park, enter the date the facilities were constructed for servicing the home sites, or the date of the permit, provided that construction began within 180 days of the permit date. – If manufactured/mobile home is on private property, the construction date is the date the home was permanently placed on the site or the permit date if affixed to the site within 180 days of the date of the permit. – The building permit date or date construction started must be listed. For buildings in the course of construction, the date the building was issued is used as the date of construction. – Emergency Program – You must still enter a date of construction. Flood Application Is building flood proofed? Lowest Floor Elevation – the measured distance of a building’s lowest floor above the National Geodetic Vertical Datum (NGVD) or other datum specified on the FIRM for that location. (i.e...The actual elevation of the lowest floor of the building.) Flood Application Elevation Certificate – an important source of information, and a necessity for rating Post-FIRM properties located in zones A1-A30, AE, A (with estimated BFE), V1-V30, VE and V (with estimated BFE). This is a form certifying specific elevations for a given structure. The Certificate identifies adjacent grades, lowest floor elevation and Base Flood Elevation. Flood Application Elevation Certificate – required for Post-FIRM construction in SFHA. The certificate is optional under the Regular Program for elevation rates structures which are Pre-FIRM construction. The form is completed by a City Engineer, Professional Engineer, Surveyor, or Architect, and is used for rate determination for elevation rated and floodproofed structures. Flood Application Base Flood Elevation – the elevation shown on the FIRM for Zones A1-A30, AE, AH, V1-V30, and VE that indicates the water surface elevation resulting from a flood that has a 1% chance of equaling or exceeding that level in any given year. Elevation Certificates give us the required information for rating, and can also determine: – Previous Flood Policy – Survey of the Property – City Planning Department – Builder/Developer The Lowest Floor Elevation and the Base Flood Elevation can be found on an Elevation Certificate. Flood Application A house has two stories and a basement. How many floors does it have for rating purposes? Answer: Three Floors You will be writing a RCBAP and the condo building has 15 units. What is the maximum amount of building coverage that can be purchased? Answer: Maximum coverage is $3,750,000 ($250,000 maximum coverage per unit X 15 units +$3,750,000 OR Replacement cost value of the building , whichever is less. Flood Application For a Residential Condominium Building Association Policy, the insured value should be at least 80% of replacement cost of the building. True or False? Answer: True No insurance claims can be paid for buildings under construction – True or False? Answer: False, however, the deductible is doubled. Flood Application List at least two requirements that must be met by a manufactured/mobile home in order to be eligible for flood insurance. Answer: Must be on a permanent foundation, be affixed to a permanent site, and be anchored. What type of policy form is used for coverage on a residential building of more than four units? Answer: General Property Form Flood Insurance Wind driven rain is not considered flooding. Rain entering through wind-damaged windows, doors, or a hole in a wall or roof, resulting in standing water or puddles, is considered windstorm, rather than flood damage. This is actually covered on a homeowners policy. Coverage and Rating This will be discussed when finished with this presentation. Submit for Rate Specific rates involve the procedure of the agent submitting the application and supporting documentation for rating. The agent then receives a “specific” rate. Items that should be included when “submitting for rate” to the Service Center are: – Completed Application – Elevation Certificate, if required. – Variance Letter issued by local community stating that permission was granted to construct the building; or a statement from the applicant indicating that a variance was not given. – Documentation pertaining to construction and rating of the building. – Square footage of enclosure(s) below elevated floor. – List of machinery and equipment located in the enclosure. Note: No money should be collected, no coverage until rate established and premium received. Preferred Risk Policy Available only in Zones B, C, and X. There is a simplified application, as no elevation certificates are required and location of property is not in the Emergency Program of SFHAs. – Only available for 1-4 family residential dwellings. – See Page 70 for rates. Note: No coverages can be modified for this type of policy.