Coverage Under The Standard Flood Insurance Policy

What flood insurance coverages are available?

There are two layers of coverage available. The first layer of coverage is emergency coverage and is available to residents of flood-prone communities as soon as the community enters the program. The rates for this emergency coverage are partially subsidized by the federal government.

Once a flood rate map is completed, a second layer of coverage is available at actual rather than subsidized rates. Insurance under the regular program is only available to communities that have passed required ordinances and have undergone studies by the Army Corps of Engineers.

Does the National Flood Insurance Program (NFIP) apply a deductible to losses?

A minimum deductible is applied separately to a building and its contents, although both may be damaged in the same flood. Higher deductibles are available. Contact your insurance agent for more information on specific amounts of available deductibles. Higher deductibles are available, please note that choosing a higher deductible will reduce your premium, but must be approved by your mortgage lender. For more information about deductibles, contact your insurance agent or company.

Flood Insurance Coverages

The following coverage limits are available under the Dwelling Form and the General Property Form of the Standard Flood Insurance Policy. Coverage limits under the Residential Condominium Building Association Policy are listed in the NFIP Flood Insurance Manual.

Flood Insurance Coverages

Emergency Program Flood Insurance Coverages
Building Coverage
Single Family$  35,000
Other Residential100,000
Non-residential100,000
Contents Coverage
Residential10,000
Non-residential100,000

Regular Program Flood Insurance Coverages
Building CoverageBasic
Insurance
Limits
Additional
Insurance
Limits
Total
Insurance
Available
Single Family Dwelling$  50,000$200,000$250,000
2-4 Family Dwelling50,000200,000250,000
Other Residential150,000100,000250,000
Non-residential or
Small Business
150,000350,000500,000
Contents Coverage
Residential20,00080,000100,000
Non-residential or
Small Business
130,000370,000500,000

What is the Preferred Risk Policy (PRP)?
(http://www.floodsmart.gov/floodsmart/pages/flood_policies/preferred_risk_policies.jsp)

A policy offering nine coverage combinations for both building and contents (or contents-only for renters) at a fixed premium. As of May 1, 2004, Preferred Risk Policies are available for residential or commercial buildings located in B, C, and X Zones that meet eligibility requirements based on entire flood loss history.

Does insurance under the program provide coverage at replacement cost?

Only for single-family dwellings and residential condominium buildings, if several criteria are met. Replacement cost coverage is available for a single-family dwelling, including a residential condominium unit that is the policyholder's principal residence and is insured for at least 80% of the unit's replacement cost at the time of the loss, up to the maximum amount of insurance available at the inception of the policy term.

Replacement cost coverage does not apply to manufactured (i.e., mobile) homes smaller than certain dimensions specified in the policy. Losses are adjusted on a replacement cost basis for residential condominium buildings insured under the Residential Condominium Building Association Policy (RCBAP).

The principal residence and the 80% insurance to value requirements for single-family dwellings do not apply to the RCBAP. However, coverage amounts less than 80% of the building's full replacement cost value at the time of loss will be subject to a coinsurance penalty.

Contents losses are always adjusted on an actual cash value basis. If the replacement cost conditions are not met, the building loss is also adjusted on an actual cash value basis. Actual cash value means the replacement cost of an insured item of property at the time of loss, less the value of physical depreciation as to the item damaged.

Are there limitations on the amount of insurance available for certain types of property?

Items such as artwork, photographs, collectibles, memorabilia, rare books, autographed items, jewelry, watches, gems, articles of gold, silver, or platinum and furs are limited to $2,500 coverage in the aggregate. This limitation does not apply to other items that are personal property or household contents usual or incidental to the occupancy of the building as a residence. For other limitations under the Standard Flood Insurance Program see the current policy or contact a property insurance agent.

Does a flood insurance policy reimburse me for any actions I take to prevent flood damage?

A flood insurance policy also reimburses you for actions you take to prevent flood damage. For example, costs for moving insured contents, in imminent danger of flooding, to a safe location are reimbursed up to $1,000 with no deductible. Other costs, such as for sandbags, plastic sheeting and lumber, pumps, fill for temporary levees, and wood to save the building can be reimbursed up to a limit of $1,000 with no deductible.

Does the flood insurance dwelling policy provide additional living expenses, if the insured dwelling is flood damaged and cannot be occupied while repairs are being made?

No. The policy only covers direct physical flood damage to the dwelling and does not provide additional living expenses.

NOTE: Loss or damage occurring as a result of a flood, such as explosion, fire, theft, looting, etc., may be covered under your existing property insurance policy. You should contact your agent should such loss occur as a result of a flood.

What is covered in my basement?

Flood insurance covers your home's foundation elements and equipment that is necessary to support the structure (for example: a furnace, water heaters, circuit breakers).

It is important to note that some items in your basement are covered under building coverage (like a furnace, hot water heater and circuit breaker), and others are covered under contents coverage (for example: your washer and dryer, or your freezer and the food in it).

The NFIP encourages people to purchase both building and contents coverage for the most complete protection. Flood insurance does not cover basement improvements, such as finished walls, floors, ceilings, or personal belongings that may be kept in a basement. See the Standard Flood Insurance Policy (SFIP) Forms (http://www.fema.gov/business/nfip/sfip.shtm) for a complete list of what's covered.

Is sewer backup covered under a flood insurance policy?

Flood insurance does not cover sewer backup since flooding is defined as the inundation of normally dry land by the overflow or rise of inland waters or the accumulation of stormwater runoff. Sewer backup is also not covered under your homeowner's insurance policy.

Sewer backup coverage is an endorsement available through most insurance companies, but it may not be offered to property owners when purchasing coverage if you don't ask for it.

What is the flood insurance policy term?

Flood insurance coverage is available for a 1-year term.

Is there a minimum premium for a flood insurance policy?

There is a minimum premium for all flood insurance policies. Because the minimum premium is subject to change, anyone interested in purchasing a flood insurance policy should contact a local property insurance agency or company that writes flood insurance coverage to obtain the current minimum premium amount.

Is there a waiting period for flood insurance to become effective?

There is normally a 30-day waiting period before flood insurance goes into effect. There are two basic exceptions:

  • If the initial purchase of flood insurance is in connection with the making, increasing, extending, or renewing of a loan, there is no waiting period. The coverage becomes effective at the time of the loan, provided the application and presentment of premium are made at or prior to loan closing.
  • If the initial purchase of flood insurance is made during the 13-month period following the revision or update of a Flood Insurance Rate Map for the community, there is a 1-day waiting period.

In addition to the two basic exceptions, the Federal Emergency Management Agency (FEMA) has issued a policy decision specifying the following four exceptions:

  • The 30-day waiting period will not apply when there is an existing insurance policy and an additional amount of flood insurance is required in connection with the making, increasing, extending, or renewing of a loan, such as a second mortgage, home equity loan, or refinancing. The increased amount of flood coverage will be effective as of the time of the loan closing, provided the increased amount of coverage is applied for and the presentment of additional premium is made at or prior to the loan closing.
  • The 30-day waiting period will not apply when an additional amount of insurance is required as a result of a map revision. The increased amount of coverage will be effective at 12:01 a.m. on the first calendar day after the date the increased amount of coverage is applied for and the presentment of additional premium is made.
  • The 30-day waiting period will not apply when flood insurance is required as a result of a lender's determining a loan that does not have flood insurance coverage should be protected by flood insurance. The coverage will be effective upon the completion of an application and the presentment of payment of premium.
  • The 30-day waiting period will not apply when an additional amount of insurance offered in the renewal bill is being obtained in connection with the renewal of a policy.

What is the maximum that can be collected for a loss under the NFIP policy?

An insured will never be paid more than the value of the covered loss, less deductible, up to the amounts of insurance purchased. Therefore, purchasing insurance to value is an important consideration. The amount of insurance you need should be discussed with your insurance agent or broker.

Can flood insurance be canceled at the request of the insured with a refund of premium?

Flood insurance can be canceled, and a refund can be issued, only in certain circumstances, because all of the premium is fully earned on the first day of the policy term. Premium will be refunded on a pro-rata basis when the policyholder no longer owns or has an insurable interest in the insured property, provided no claim has been paid or is pending. There are other limited cancellation provisions for the refunding of premium. To discuss cancellation criteria and procedures, policyholders should contact the insurance agent who wrote the policy or call the NFIP toll-free at 1-888-379-9531, TTY: 1-800-427-5593.

Is there a "grace period" for an insured under the NFIP policy conditions?

All policies expire at 12:01 a.m. on the last day of the effective term, but you remain covered for 30 days after the expiration of the policy. Claims for losses that occur in this grace period will be honored, provided that the full renewal premium is paid by the end of the 30-day period. Coverage also remains in force for any mortgagee named in the policy for 30 days after written notice to the mortgagee of the expiration of a policy.

What is the requirement for purchasing flood insurance after receiving disaster assistance?

The National Flood Insurance Reform Act requires individuals in SFHAs who receive disaster assistance after September 23, 1994, for flood disaster losses to real or personal property to purchase and maintain flood insurance coverage for as long as they live in the dwelling. If flood insurance is not purchased and maintained, future disaster assistance will be denied. If the structure is sold, the current owner is required to notify the buyer of the house of the need to purchase and maintain flood insurance. If the buyer is not notified, suffers uninsured flood losses, and receives federal disaster assistance, the seller may be required to repay the federal government any federal disaster assistance the buyer received.

Will damage-preventing measures I've taken in my home be reimbursed by my flood insurance policy?

Some will be. When your insured home is in eminent danger of being flooded, you may receive up to a $1,000 reimbursement for your damage-preventing expenses. Things like renting storage space to protect your belongings, buying sandbags and lumber to make a barricade, and renting pumps are all things that qualify for reimbursement. No deductible is applied to this coverage.

When is flood insurance required by law?

Flood insurance is required by law in some instances. To get federally secured financing to buy, refinance, build, repair, reconstruct or improve structures in Special Flood Hazard Areas (SFHAs) you will be required to purchase flood insurance. This includes most types of mortgage loans, as well as FHA and VA loans.

May a lender purchase flood insurance coverage on behalf of the borrower?

Yes. If after a lender notifies a borrower of the need for flood insurance and the borrower refuses to respond, the lender must purchase the coverage on behalf of the borrower and may pass the costs of obtaining the coverage on to the borrower.