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Flood Training Guide

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					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.

				
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