Department of Emergency Management

 FLOOD INSURANCE INFORMATION FOR PROSPECTIVE BUYERS

Who may purchase a flood insurance policy?	What is a basement?
How can I find out if I am eligible to purchase flood insurance?	Are there limitations on the amount of insurance available for certain types of property?
How can a property owner determine if the property is in a Special Flood Hazard Area (SFHA)?	How many buildings or locations (and their contents) may be insured on each policy?
What types of property may be insured against flood loss?	What is the flood insurance policy term?
What kinds of property are not insurable under the NFIP?	Is there a minimum premium for a flood insurance policy?
Is coverage available for all insurable buildings?	Is there a waiting period for flood insurance to become effective?
How do I buy flood insurance?	What is "presentment of payment"?
How much flood insurance is available?	Is there any difference in the waiting period and presentment of payment for policies written with a Write Your Own company?
Is the purchase of flood insurance mandatory?	Is there a special rating procedure applicable to V zones (coastal high hazard areas)?
Why is there a requirement to purchase flood insurance as a condition of receiving federally related financial assistance in communities which have not suffered flooding in many years or ever?	Can flood insurance be cancelled at the request of the insured with a refund of premium?
What coverage is available in basements and enclosed areas beneath the lowest elevated floor?	Is there a "grace period" for an insured under the NFIP policy conditions?

 Who may purchase a flood insurance policy?

NFIP coverage is available to any owner of insurable property (a building or its contents), including condominium associations, owners of residential condominium units, and builders of buildings in the course of construction in participating communities. Residential condominium unit owners may purchase building and contents (personal property) flood insurance to supplement any insurance purchased by the condominium owners' association. Tenants living in participating communities may also insure their personal property against flood loss, as may owners of non-residential condominium units.

 How can I find out if I am eligible to purchase flood insurance?

Coverage is available only in participating communities. Almost all of the nation's communitites with serious flooding potential have joined the NFIP. To learn if a community is participating in the NFIP, contact a property insurance agent or broker or community officials.

 How can a property owner determine if the property is in a Special Flood Hazard Area (SFHA)?

FEMA publishes maps indicating communities' flood hazard areas and the degree of risk in those areas. Flood insurance maps are on file with the Department of Public Works Engineering Division. A property owner may consult these maps to determine if the property is in an SFHA.

 What types of property may be insured against flood loss?

Almost every type of walled and roofed building that is principally above ground and not entirely over water may be insured if it is in a participating community. In most cases, this includes manufactured (i.e., mobile) homes that are anchored to permanent foundations, but does not include travel trailers or converted buses or vans. Contents of insurable walled and roofed buildings also may be insured.

 What kinds of property are not insurable under the NFIP?

Buildings over water or principally below ground, gas and liquid storage tanks, animals, birds, fish, aircraft, wharves, piers, bulkheads, growing crops, shrubbery, land, livestock, roads, machinery or equipment in the open, motor vehicles, and most contents and finishing materials located in a basement or in enclosures below the lowest elevated floor are among the types of property which are uninsurable. Information on the insurability of any special property may be obtained by contacting a property insurance agent or a Write Your Own company agent. (See "What coverage is available in basements and enclosed areas beneath the lowest elevated floor?" for coverage limitations in basements and below lowest elevated floors.)

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 Is coverage available for all insurable buildings?

New and renewed flood insurance is not available for buildings which the Federal Insurance Administrator determines have been declared by a state or local zoning authority to be in violation of state or local floodplain management regulations or ordinances.

Since October 1, 1983, buildings constructed or substantially improved and located in designated undeveloped coastal barrier areas are not eligible for flood insurance. These areas are located in over 100 communities on the Atlantic and Gulf coasts.

 How do I buy flood insurance?

After a community joins the NFIP, a policy may be purchased from any licensed property insurance agent or broker who is in good standing in the state in which the agent is licensed or through any agent representing a Write Your Own company, including an employee of the company authorized to issue the coverage.

The steps leading to the purchase of flood insurance are:

 The property owner perceives a risk of flooding to an insurable building and elects to purchase flood insurance, or a lender making a mortgage informs the builder or buyer of a building that the property is in a Special Flood Hazard Area and that flood insurance must be purchased as required by the Flood Disaster Protection Act of 1973. The property owner contacts an insurance agent or broker or Write Your Own company.

 The insurance agent completes the necessary forms for the builder or buyer. In the case of a building constructed after the issuance of a Flood Insurance Rate Map (FIRM), the builder or buyer must obtain elevation certification from a licensed engineer, architect or surveyor when the property is in a Spceial Flood Hazard Area.

 The insurance agent submits the application, necessary certifications, and full premium to the NFIP or to a participating Write Your Own company.

 The property owner may choose to purchase a flood insurance policy through a company that sells property insurance (e.g., homeowners) if that company is participating in the Write Your Own program. In this case, the Write Your Own company's agent goes through the same process as an agent in obtaining coverage directly with the NFIP, except the property owner must submit the full premium to the company, not the NFIP. The policy is then serviced by the company under its customary business practices.

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 How much flood insurance is available?

* Higher limits of basic coverage are available under the emergency program in Hawaii, Alaska, U.S. Virgin Islands, and Guam.

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 Is the purchase of flood insurance mandatory?

The Flood Disaster Protection Act of 1973 mandates the purchase of flood insurance as a condition of receipt of federal or federally related financial assistance for acquisition and/or construction of buildings in Special Flood Hazard Areas (SFHAs) of any community. The purchase of flood insurance on a voluntary basis is frequently purdent even outside of SFHAs.

The Act prohibits federal agencies such as the Federal Housing Administration, the Veterans Administration, or the Small Business Administration from making or guaranteering a loan secured by a building in an SFHA unless flood insurance has been purchased. The prohibition applies even if the community in which the building is located is not participating in the NFIP. Flood insurance cannot be purchased for building in non-participating communities.

The prohibition of the Act applies to lending institutions regulated, or whose deposits are insured by, a federal instrumentality, but does not apply for conventional loans when the community in which the building is located is not participating in the NFIP. The lending institution is required to notify the borrower that, in the event of a Presidentially declared major disaster caused by flood, federal disaster assistance will not be available for the permanent repair or restoration of the building. Federally regulated lending institutions are required in all cases to notify the borrower when the building being used to secure a loan is in an SFHA.

The amount of insurance required by a lending institution should not exceed the amount of NFIP insurance coverage which the Congress has made available or the insurable value of the building, whichever is less. The lending institution is not required by statute to make the borrower purchase flood insurance for more than the amount of the loan or for more than twice the amount of insurance available under the Emergency Program, whichever is less. A lending instituition may, as part of its lending policy, require the borrower to purchase flood insurance in a greater amount than required by statute, and for buildings outside SFHAs.

 Why is there a requirement to purchase flood insurance as a condition of receiving federally related financial assistance in communities which have not suffered flooding in many years or ever?

A major purpose of the NFIP is to alert communities to the danger of flooding and to assist them in reducing potential property losses before a flood occurs, not after it is too late. Therefore, FEMA determines flood risk zones through the use of all available information for each community. Historical flood data are only one element used in determining flood risk. More critical conclusions can be made by evaluating the community's hydrologic data, topography, wind velocity, tidal surge, flood control measures, development (existing and planned), and community maps.

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 What coverage is available in basements and enclosed areas beneath the lowest elevated floor?

Coverage is provided for foundation elements, including posts, pilings, piers, or other support systems for elevated buildings. Coverage also is available for basement and enclosure utility connections, mechanical equipment necessary for the habitability of the building, such as furnaces, hot water heaters, clothes washers and dryers, food freezers, air conditioners, heat pumps, electrical junctions and circuit breaker boxes. The Standard Flood Insurance Policy has a complete list of covered elements and equipment.

 What is a basement?

The NFIP's definition of "basement" includes any part of a building where all four sides of the floor are located below ground level. Even though a room may have windows and constitute living quarters, it is still considered to be a basement if the floor is below ground level on all sides, and contents items such as rugs, furniture, and the like are not covered.

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

General coverage limitations are shown above in the answer to question "How much flood insurance is available?". In addition, items such as paintings, etchings, pictures, tapestries, other works of art, jewelry, articles of gold, silver or platinum, and furs are limited to $250 coverage in the aggregate. This limitation does not apply to 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 Policy, see the policy or contact a property insurance agent or broker.

 How many buildings or locations (and their contents) may be insured on each policy?

Normally, only one building and its contents can be insured on each policy. The Dwelling Form of the Standard Flood Insurance Policy does provide coverage for up to 10 percent of pollicy amount for appurtenant garages and carports. In addition, up to 10 buildings and/or their contents may be insured on one policy on a scheduled building basis if the application to schedule buildings under one policy is presented on a form or in a format approved by the Federal Insurance Administrator.

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 What is the flood insurance policy term?

Flood insurance coverage written directly with the NFIP is available only on a one-year, prepaid basis. Write Your Own companies may offer three-year policies at their descretion.

 Is there a minimum premium for a flood insurance policy?

There is a minimum premium for all flood insurance policies. Property insurance agents will know the current minimum premium.

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

There is normally a five-day waiting period. During the 30-day period following a community's initial entry into the emergency program and/or following the community's conversion to the regualr program, the effective date and time of any new or added amount of flood insurance coverage is 12:01 a.m. of the day following the application date and the presentment of payment of premium.

When title to property is conveyed, any new or added coverage on the property is effective when the title is transferred.

 What is "presentment of payment"?

"Presentment of payment" is the receipt of premium and is considered to be the time payment is actually received by the NFIP. Delivery to an insurance agent or broker or mailing a premium by ordinary mail with placement of a postmark does not constitute presentment to the NFIP.

Is there any difference in the waiting period and presentment of payment for policies written with a Write Your Own company?

The waiting period for policies written with Write Your Own companies is the same as detailed in the above question "What is "presentment of payment?". The presentment of payment is determined from the time the agent or authorized employee of the Write Your Own company received the application and premium, or from the time the application and premium are received in a central office or processing facility. Property owners should check with individual Write Your Own company agents for details about specific companies.

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Is there a special rating procedure applicable to V zones (coastal high hazard areas)?

In calculating the applicable rates for buildings which were constructed or substantially improved in V zones after October 1, 1981, the actuarial formula takes into account the ability of the building to withstand the impact of wave action. The agent must follow the special instruction in the Flood Insurance Manual in preparing an application for coverage for buildings located in any V zone. (See mapping section for a further explanation of V zones.)

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

Yes, but only in certain specified circumstances, since 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.

There are other limited cancellation provisions for the refunding of premium. Policyholders wishing to cancel a policy should contact the insurance agent who sold the policy to discuss cancellation criteria.

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