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NATIONAL FLOOD INSURANCE PROGRAM

FLOOD INSURANCE MANUAL October 2022 Risk Rating 2.0: Equity in Action Edition

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Message to National Flood Insurance Program Agents and Insurers

Dear User,

First, let me take the opportunity to say “Thank You” to all our partners who have supported us as we continue to transform the National Flood Insurance Program.

From the development and implementation of Risk Rating 2.0: Equity in Action, to our enhanced focus on providing exceptional customer care at every point of the customer journey, the NFIP set on a course in 2015 to modernize and professionalize our product, our processes, and the way we interact with every member of the NFIP universe.

But we’re not done yet.

We continue in our commitment to make our products and processes easier to understand from the agent, insurer, and policyholder’s point of view and to meet the needs of current and future policyholders. Increasing the amount of people covered by flood insurance in our Nation is even more important as we continue to see more extreme weather events.

Under the leadership of Administrator Deanne Criswell, FEMA has refocused operations around three key priorities: equity in the treatment of everyone with whom FEMA comes into contact; leading the whole of community in building climate resilience; and promoting and sustaining a ready FEMA and a more-prepared Nation. The NFIP plays a significant role in each objective.

FEMA and the NFIP are building equity by consciously reaching out to underserved audiences across the country who deserve to understand their specific flood risk and learn how to mitigate those risks. The NFIP understands that despite its best efforts, Flood Insurance is unaffordable for some. We’ve been tireless in our efforts to build and sustain a meaningful affordability program to ensure more Americans are protected financially from flood loss.

The NFIP is also an agency leader in considering climate data in helping America prepare for flooding. We’ve enhanced our messaging to include more climate change risk education. We’re using our new Risk Rating 2.0 data to encourage discussions with property owners about risks from intensifying storms. We are working with communities to help them understand evolving flood risks from climate change, sea level rise, increased development, and other factors.

Equity. Resilience. Prepared Nation.

Three simple objectives but a whole host of opportunities to build a more resilient and better Nation. Thank you for joining us on this journey!

Sincerely,

Paul P. Huang Deputy Associate Administrator for Federal Insurance and Mitigation (Acting)

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U.S. Department of Homeland Security Washington, DC 20472

October 1, 2022

Dear National Flood Insurance Program Flood Insurance Manual User:

FEMA’s regular updates to the National Flood Insurance Program (NFIP) Flood Insurance Manual reflect an ongoing effort to deliver clear guidance in an easy-to-understand format. This release clarifies existing guidance in the October 2021 Risk Rating 2.0: Equity in Action edition.

Most of the updates incorporated in this release were provided earlier to industry through the monthly Underwriting Guidance Updates (UGUs), issued November 2021 through June 2022. Those updates were effective on the date the UGU was issued.

For your reference and ease of use, the Change Record following this cover memo summarizes significant changes in the October 2022 Risk Rating 2.0: Equity in Action edition of the NFIP Flood Insurance Manual. Here are some highlights:

• Section 2 – Before You Start − Expanded the language about exclusions and limitations for Basement and Elevated Building

with Enclosure foundation types

• Section 3 – How to Write − Provided guidance for the standardization of street addresses − Updated guidance to use the flood zone at the time of loss to determine elevated building

coverage limitations − Updated Construction Type to apply to Two-to-Four Family Buildings

• Section 4 – How to Endorse − Added guidance on how to assign a policy when the policyholder is deceased

• Section 5 – How to Renew − Clarified that any coverage increase is exempt from the Annual Increase Cap

• Section 6 – How to Cancel − Provided guidance for documentation required to cancel a policy when the policyholder

is deceased.

• Appendix C – Quick Start Guide − Mirrored many of the Section 3 changes

• Appendix F – Severe Repetitive Loss − Updated the guidance and processing requirements for Severe Repetitive Loss properties

www.fema.gov

October 2022 RR 2.0: Equity in Action NFIP Flood Insurance Manual October 1, 2022 Page 2

• Appendix I – Policyholder Communications − Clarified that FEMA requires the Primary NAIC number to be used on the policy

declarations page − Updated the Severe Repetitive Loss Letters to be sent to affected policyholders

• Appendix K – Definitions and Acronyms − Added definitions for Loss Constant and Expense Constant

FEMA’s goal is to make NFIP products and processes easy to understand, enabling insurance professionals to provide policyholders with an excellent customer experience. Thank you for your continued support of the NFIP. Together we can make America more flood resilient and build a culture of preparedness by closing the nation’s insurance gap.

Sincerely,

Jeffrey Jackson Acting, Assistant Administrator for Federal Insurance Federal Insurance and Mitigation Administration

www.fema.gov

OCTOBER 2022 RISK RATING 2.0: EQUITY IN ACTION NFIP FLOOD INSURANCE MANUAL 1

Change Record October 1, 2022 NFIP Flood Insurance Manual

This change record presents a summary of significant changes to FIM sections and appendices.

Section Changes

Section 2: Before You Start

• Provided a reference for additional information about exclusions and limitations. See page 2.3.

• Expanded the language about exclusions and limitations for Basement and Elevated Building with Enclosure. See pages 2.12–2.13.

• Updated the guidance to indicate when a new quote must be obtained when the original payment is invalid. See page 2.15.

Section 3: How to Write

• Updated the guidance for the standardization of street addresses. See page 3.5.

• Updated guidance to reflect a recent program change to use the flood zone at the time of loss to determine elevated building coverage limitations. See pages 3.6–3.7.

• Updated Construction Type to apply to Two-to-Four Family Building as well as the Single Family building occupancy. See page 3.14.

• Clarified that the masonry construction type is based on the first full floor above a basement, walkout level or a crawlspace. See page 3.14.

• Updated the guidance to clarify that the First Floor Height (FFH) value from an Elevation Certificate, when combined or compared with the FEMA sourced elevation information, does not always produce the lowest premium. See pages 3.23 and 3.26–3.27.

• Clarified that datum conversion is no longer required for rating purposes. See page 3.26.

• Updated the instructions for submitting Floodproofing documentation for review. See pages 3.31 and 3.32.

• Revised Square Footage language to provide clarification and update an incorrect reference. See page 3.32.

• Clarified guidance on the building square footage calculation. See page 3.33.

• Updated the guidance to allow NFIP insurer to obtain the building Replacement Cost value using common industry practices they current use or based on information that they already may have. See page 3.34.

• Provided additional guidance to determine the number of floors in a building. See page 3.38.

• Inserted language that explained the premium cost base. See page 3.40.

• Updated the instructions to require the Primary NAIC number to be used for a new policy after Real Estate transactions. See pages 3.50–3.51.

• Added language to explain the application of a loss constant and an expense constant to each policy premium and clarified the potential impact of minimum and maximum rates on the premium. See page 3.53.

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October 1, 2022 NFIP Flood Insurance Manual Change Record

Section Changes

Section 3: How to Write

• Clarified how to determine the number of floors in the building for different condominium scenarios. The same guidance changes that appear in Table 36 (in the row “Number of Floors in Building”) also apply for that same row in Tables 37, 39, 40, and 41. See pages 3.56, 3.60, 3.64, 3.66 and 3.70.

• Clarified that Provisional Rates also can be used when directed by FEMA. See page 3.73.

Section 4: How to Endorse

• Clarified that any coverage increase is exempt from the Annual Increase Cap. See page 4.8.

• Updated Table 7. Examples of Other Premium-Bearing Endorsements to include Increasing Coverage and Decreasing Deductible. See page 4.14.

• Added guidance on how to assign a policy when the policyholder is deceased. See page 4.14.

Section 5: How to Renew

• Clarified that any coverage increase is exempt from the Annual Increase Cap. See pages 5.5–5.6.

Section 6: How to Cancel

• In Reason Code 1, provided guidance for Required Documentation when the policyholder is deceased. See page 6.3.

• In Reason Code 2, updated the conditions for canceling a contents-only policy to include when the policyholder is deceased. See page 6.3.

Appendix C: Quick Start Guide

• Provided guidance for the standardization of the street addresses. See page C-1.

• Updated Construction Type to include Two-to-Four Family Building in building occupancy. See page C.4.

• Clarified that the masonry construction type is based on the first full floor above a basement, walkout level or a crawlspace. See page C. 4.

• Clarified guidance on the building square footage calculation. See pages C.5–C.6.

• Updated language to clarify how to determine the number of floors in a building. See page C-6.

Appendix F: Severe Repetitive Loss Properties

• Updated the guidance and processes for the SRL properties. See pages F.1–F.6.

Appendix I: Policyholder Communications

• Clarified that FEMA requires the Primary NAIC number to be used on the policy declarations page. See page I-13.

• Updated the Severe Repetitive Loss Letters. See pages I.27–I.32.

Appendix K: Definitions and Acronyms

• Updated to include definitions for Loss Constant and Expense Constant. See pages K.4 and K.6.

Table of Contents

Message to National Flood Insurance Program Agents and Insurers

Cover Memo

Change Record

1. Introduction

I. Purpose and Audience .................................................................................................................. 1-1

II. NFIP Program and Operational Model ........................................................................................ 1-1

A. Program Overview ................................................................................................. 1-1

B. NFIP Operational Model ......................................................................................... 1-1

C. Legislative Reforms............................................................................................... 1-2

III. Organization of the Document ..................................................................................................... 1-3

IV. NFIP Resources .............................................................................................................................. 1-6

A . Policy-Specific Inquiries ......................................................................................... 1-6

B. General Assistance and Inquiries ........................................................................... 1-6

C. NFIP Topics and Contact Information ...................................................................... 1-6

2. Before You Start

I. Policy Forms....................................................................................................................................2-1

A. General Information .............................................................................................. 2-1

B. Insurable Interest.................................................................................................. 2-2

C. Duplicate Policies.................................................................................................. 2-3

D. Group Flood Insurance Policy ................................................................................. 2-4

II. Eligibility for NFIP Coverage..........................................................................................................2-4

A. Eligibility of Property Locations............................................................................... 2-5 1. Where the NFIP Offers Insurance....................................................................... 2-5 2. Where the NFIP Does Not Offer Insurance.......................................................... 2-5

B. Building Eligibility .................................................................................................. 2-6 1. General Information.......................................................................................... 2-6 2. Single and Multiple Buildings............................................................................. 2-7 3. Eligible Types of Buildings ................................................................................. 2-7 4. Ineligible Types of Buildings............................................................................... 2-10

C. Contents Eligibility................................................................................................. 2-11

D. NFIP Coverage Exclusions and Limitations .............................................................. 2-12

III. Effective Dates for New Policies and Endorsements................................................................2-13

A. Standard 30-day Waiting Period ............................................................................. 2-14 1. General Information.......................................................................................... 2-14 2. Insufficient Payment ......................................................................................... 2-15 3. Invalid Payment ................................................................................................ 2-15

B. Map Revision Exception (1-Day Waiting Period)........................................................ 2-15

C. Loan Exception (No Waiting Period) ........................................................................ 2-16

D. Post-Wildfire Exception (1-Day Waiting Period) .......................................................... 2-18

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2. Before You Start continued IV. Administrative Topics.....................................................................................................................2-18

A. Electronic Signatures............................................................................................. 2-18

B. Delivery of the Policy ............................................................................................. 2-19

C. Evidence of Insurance ........................................................................................... 2-19

V. Assignment and Transfer of Business.........................................................................................2-19

A. Assignment of a Policy to a New Building Owner...................................................... 2-19

B. Transfer of Any or All of a Policyholder’s or Agent’s Business to Another Insurer........ 2-20

C. Transfer of an Insurer’s Entire Book to Another Insurer ............................................ 2-20

VI. Reformation Due to Insufficient Premium or Rating Information........................................... 2-21

A. General Information .............................................................................................. 2-21

B. General Reformation Procedures............................................................................ 2-21

C. Exception When Reforming a Policy Due to an Incorrect Geolocation or Flood Zone ....................................................................................................... 2-25

3. How to Write

I. Introduction.....................................................................................................................................3-1

A. Snapshot of the Risk Rating 2.0 Methodology: Equity in Action ................................ 3-1

B. Process for Writing New Business .......................................................................... 3-3

II. General Rating Information ..........................................................................................................3-4

A. Policyholder and Mortgagee Information ................................................................. 3-4 1. Policyholder Information.................................................................................... 3-4 2. Mortgagee Information ..................................................................................... 3-4

B. Geographic Location Variables............................................................................... 3-4 1. Building Location .............................................................................................. 3-4

a. Property Address........................................................................................3-5 b. Geolocation................................................................................................3-5 c. Multiple Buildings at the Same Address .......................................................3-6

2. Community Map Information and Flood Zone...................................................... 3-6 3. Community Rating System (CRS) Discount ......................................................... 3-7

a. General Information....................................................................................3-7 b. Policies Ineligible for CRS Discounts ............................................................3-7 c. CRS Classes and Discounts ........................................................................3-8 d. CRS Community Status Information .............................................................3-8

C. Structural Variables............................................................................................... 3-8 1. Building Occupancy & Description...................................................................... 3-8

a. Building Occupancy.....................................................................................3-8 b. Building Description....................................................................................3-12 c. Manufactured/Mobile Homes......................................................................3-13

2. Construction Type............................................................................................. 3-14 3. Foundation Type ............................................................................................... 3-14

a. Non-Elevated Building .................................................................................3-15 b. Elevated Building ........................................................................................3-17 c. Elevated Building with an Enclosure .............................................................3-18

i. Definition of an Enclosure.......................................................................3-18 ii. Enclosure Wall Types..............................................................................3-18

d. Crawlspace – Elevated and Non-Elevated .....................................................3-20

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3. How to Write continued

4. First Floor Height .............................................................................................. 3-21 a. General Information....................................................................................3-21 b. FEMA Determined First Floor Height.............................................................3-22 c. Elevation Certificate/Land Survey ................................................................3-22 d. Additional Information on Elevation Certificates or Land Surveys.....................3-24

i. Documentation required .........................................................................3-24 ii. Other Elevation Information ....................................................................3-25 iii. Troubleshooting .....................................................................................3-25

e. First Floor Height Used................................................................................3-26 5. Mitigation Discounts......................................................................................... 3-26

a. Machinery and Equipment Above First Floor..................................................3-26 b. Proper Flood Openings................................................................................3-28

i. Proper Flood Openings Discount Requirements ........................................3-28 ii. Engineered Openings Certified by a Design Professional ............................3-29 iii. Engineered Openings Certified by the International Code Council

Evaluation Service..................................................................................3-29 6. Floodproofing ................................................................................................... 3-29

a. General Information....................................................................................3-29 b. Application Form.........................................................................................3-30 c. Documentation Requirements for Non-Residential Floodproofing....................3-31

7. Replacement Cost Value ................................................................................... 3-32 a. Square Footage..........................................................................................3-32 b. Building Replacement Cost Value.................................................................3-32

i. Occupancy Type: Single-Family Home, Residential Manufactured/ Mobile Home, Residential Unit, and Two-to-Four Family Building ................3-33

ii. Occupancy Type: Other Residential Building, Residential Condominium Building, Non-Residential Building, Non-Residential Manufactured/ Mobile Building, Non-Residential Unit ......................................................3-33

8. Claims History .................................................................................................. 3-33 a. Prior NFIP Claims........................................................................................3-33

i. General Information ...............................................................................3-33 ii. Correcting or Updating NFIP Claims History..............................................3-34

b. Severe Repetitive Loss Property ..................................................................3-35 9. Other Building Factors....................................................................................... 3-36

a. Date of Construction...................................................................................3-36 i. General Information ...............................................................................3-36 ii. Substantial Improvement Date................................................................3-36 iii. Date of Construction for Manufactured/Mobile Homes and

Travel Trailers ........................................................................................3-36 iv. Building Under Construction....................................................................3-37

b. Number of Detached Structures on Property ................................................3-37 c. Number of Elevators ...................................................................................3-37 d. Number of Floors in Building........................................................................3-38 e. Floor of Unit ...............................................................................................3-38 f. Total Number of Units in the Building ...........................................................3-38 g. Rental Property ..........................................................................................3-38 h. Building Over Water ....................................................................................3-38 i. Primary Residence Status ...........................................................................3-38

i. General Information ...............................................................................3-38 ii. Documentation of Primary Residence ......................................................3-39 iii. Primary Residence and Trusts.................................................................3-39

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3. How to Write continued D. Coverage and Deductibles ..................................................................................... 3-40

1. Maximum Coverage Limits ................................................................................ 3-40 2. Increased Cost of Compliance (ICC) Coverage .................................................... 3-41 3. Deductibles...................................................................................................... 3-42

E. Statutory Discounts .............................................................................................. 3-43 1. Pre-FIRM Discount ............................................................................................ 3-44

a. Eligibility ....................................................................................................3-44 b. Lapse in Coverage......................................................................................3-44 c. Application.................................................................................................3-45

2. Newly Mapped Discount.................................................................................... 3-46 a. Eligibility ....................................................................................................3-46 b. Documentation...........................................................................................3-47 c. Lapse in Coverage......................................................................................3-47 d. Application Form.........................................................................................3-48

3. Other Statutory Discounts................................................................................. 3-49 4. New Policy After a Real Estate Transaction......................................................... 3-49

F. Assessments, Fees, and Surcharges...................................................................... 3-49 1. Reserve Fund Assessment................................................................................ 3-49 2. HFIAA Surcharge............................................................................................... 3-50 3. Federal Policy Fee............................................................................................. 3-50 4. Probation Surcharge ......................................................................................... 3-51

G. Premium Considerations........................................................................................ 3-51

III. Condominium Rating Information ...............................................................................................3-51

A. Condominium Rating Scenarios.............................................................................. 3-51 1. Overview .......................................................................................................... 3-51 2. Condominium Association Coverage for Residential Condominium

Building (Scenario #1)....................................................................................... 3-52 3. Residential Unit Owner Coverage in Residential Condominium

Building (Scenario #2)....................................................................................... 3-57 a. General Information....................................................................................3-57 b. Assessment Coverage ................................................................................3-60

4. Residential Unit Owner Coverage in Non-Residential Condominium Building (Scenario #3)....................................................................................... 3-61

5. Condominium Association Coverage for Non-Residential Condominium Building (Scenario #4)....................................................................................... 3-64

6. Non-Residential Unit Owner Coverage in Residential or Non-Residential Condominium Building (Scenario #5).................................................................. 3-66

B. Applying the Condominium Rating Scenarios........................................................... 3-69

IV. Provisional Rating Information.....................................................................................................3-73

A. General Information .............................................................................................. 3-73

B. Eligibility ............................................................................................................... 3-74

C. Rates ................................................................................................................... 3-74

D. Premium Adjustments ........................................................................................... 3-75

E. Notification ........................................................................................................... 3-75

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4. How to Endorse

I. Endorsement Process....................................................................................................................4-1

A. General Change Endorsement Form ....................................................................... 4-1

B. Signatures............................................................................................................ 4-1

C. Non-Premium and Premium-Bearing Changes ......................................................... 4-1 1. Non-Premium Changes ..................................................................................... 4-1

a. Process for Submitting a Non-Premium Change. ...........................................4-2 2. Premium-Bearing Changes ................................................................................ 4-2

a. Process for Submitting a Premium Change...................................................4-2 b. Statutory Annual Increase Cap ....................................................................4-2

D. Refund ................................................................................................................. 4-3 1. Prior Term Refunds (PTRs)................................................................................. 4-3

E. Insufficient Premium.............................................................................................. 4-3

II. Coverage and Deductible Changes..............................................................................................4-4

A. Adding or Increasing Coverage ............................................................................... 4-4 1. Effective Dates for Endorsements Adding or Increasing Coverage........................ 4-4

B. Reducing Coverage................................................................................................ 4-5 1. Reduction in Building Coverage ......................................................................... 4-5 2. Reduction in Contents Coverage........................................................................ 4-5 3. Effective Dates for Endorsements Reducing Coverage ........................................ 4-5

C. Removing Coverage............................................................................................... 4-5 1. Duplicate Coverage........................................................................................... 4-6 2. Condominium Coverage .................................................................................... 4-7

D. Changing Deductibles............................................................................................ 4-7 1. Deductible Increases ........................................................................................ 4-7 2. Deductible Decreases....................................................................................... 4-7

E. Coverage Changes During the Renewal Cycle.......................................................... 4-8 1. Adding or Increasing Coverage at Renewal ......................................................... 4-8 2. Reducing Coverage on a Future Renewal Effective Date ...................................... 4-8

III. Other Premium-Bearing Changes ................................................................................................4-8

A. Rating Adjustment................................................................................................. 4-8

B. Rating Correction .................................................................................................. 4-9

C. Adding an Elevation Certificate ............................................................................... 4-9

D. Community Information ......................................................................................... 4-10 1. Change in Program Status................................................................................. 4-10 2. Change in Community Rating System (CRS) Status............................................. 4-10

E. Construction Completed ........................................................................................ 4-10

F. Incorrect Policy Form ............................................................................................. 4-10

G. Property Address Corrections................................................................................. 4-11

H. Rate Category Change........................................................................................... 4-11

I. Examples of Other Premium-Bearing Changes......................................................... 4-12

IV. Assignment of a Policy...................................................................................................................4-14 A. Assignment with Building Purchase ........................................................................ 4-14

B. Assignment without Building Purchase ................................................................... 4-14

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5. How to Renew

I. General Information.......................................................................................................................5-1

II. Renewal Process............................................................................................................................5-1

A. Starting the Renewal Process ................................................................................ 5-1 1. Renewal Notice ................................................................................................ 5-1 2. Amounts of Insurance on the Renewal Notice..................................................... 5-2 3. Final Notice...................................................................................................... 5-2

B. Renewal Notification Requirements ........................................................................ 5-2

C. Premium Payment ................................................................................................. 5-3 1. Invalid Payment ................................................................................................ 5-3 2. Insufficient Payment ......................................................................................... 5-4

D. Determine the Renewal Effective Date.................................................................... 5-4

III. Additional Information...................................................................................................................5-4

A. Renewal by Application Form or Recertification Questionnaire.................................. 5-4

B. Nonrenewal .......................................................................................................... 5-5

C. Coverage Changes During the Renewal Cycle.......................................................... 5-5 1. Adding or Increasing Coverage at Renewal ......................................................... 5-5 2. Reducing Coverage on a Future Renewal Effective Date ...................................... 5-6 3. Other Premium-Bearing Endorsements at Renewal ............................................. 5-6

D. Transfer of Business at Renewal ............................................................................ 5-6

6. How to Cancel

I. General Information.......................................................................................................................6-1

II. Valid Cancellation Reason Codes ................................................................................................6-1

A. No Insurable Interest............................................................................................. 6-2

B. Establish a Common Expiration Date...................................................................... 6-4

C. Duplicate Coverage ............................................................................................... 6-5

D. Not Eligible for Coverage........................................................................................ 6-7

E. Lender No Longer Requires Insurance .................................................................... 6-10

F. Invalid Payment or Fraud........................................................................................ 6-10

G. Other Reason Codes ............................................................................................. 6-12

III. Processing a Cancellation or Nullification Request .................................................................. 6-14

A. Signatures............................................................................................................ 6-14 1. Policyholder’s Signature .................................................................................... 6-14 2. Agent Signature................................................................................................ 6-14

B. Premium Refunds.................................................................................................. 6-14

C. Cancellation Processing Outcomes ........................................................................ 6-15

Appendix A: Policy

Dwelling Form ........................................................................................................................................A-3

General Property Form .........................................................................................................................A-34

Residential Condominium Building Association Policy Form..........................................................A-62

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Appendix B: Forms

I. NFIP Flood Insurance Application Form......................................................................................B-1

II. NFIP Flood Insurance General Change Endorsement Form.....................................................B-4

III. NFIP Flood Insurance Cancellation/Nullification Request Form ............................................. B-6

IV. NFIP Residential Basement Floodproofing Certificate ............................................................. B-8

V. NFIP Floodproofing Certificate for Non-Residential Structures ............................................... B-12

VI. NFIP Elevation Certificate and Instructions ................................................................................B-16

Appendix C: Quick Start Guide

I. Agency Number/Agent Number ...................................................................................................C-1

II. Property Address............................................................................................................................C-1

III. Building Occupancy, Policy Form, and Coverage Amounts ......................................................C-1

IV. Building Description.......................................................................................................................C-2

V. Foundation Type .............................................................................................................................C-2

VI. Proper Flood Openings ..................................................................................................................C-3

VII. First Floor Height Determination..................................................................................................C-3

VIII. Building Characteristics.................................................................................................................C-4

A. Building Under Construction................................................................................... C-4

B. Date of Construction ............................................................................................. C-4

C. Has the Building Been Substantially Improved?....................................................... C-4

D. Construction Type ................................................................................................. C-4

E. Is Building Properly Floodproofed?.......................................................................... C-5

F. Is the Building Eligible for the Machinery and Equipment Mitigation Discount? .......... C-5

G. Building Square Footage........................................................................................ C-5

H. Number of Floors in Building .................................................................................. C-6

I. Floor of Unit.......................................................................................................... C-6

J. Total Number of Units in a Building......................................................................... C-6

K. Building Replacement Cost (Including Foundation)................................................... C-6

Appendix D: Flood Maps

I. Flood Map Service Center.............................................................................................................D-1

II. Flood Hazard Maps ........................................................................................................................D-1

III. Map Zones.......................................................................................................................................D-2

A. Special Flood Hazard Areas ................................................................................... D-2 1. Zone A ............................................................................................................. D-2 2. Zone AE and Zones A1–A30.............................................................................. D-3 3. Zone AH........................................................................................................... D-3 4. Zone AO........................................................................................................... D-3 5. Zone A99......................................................................................................... D-3 6. Zone AR........................................................................................................... D-3 7. Zones AR/AE, AR/AH, AR/AO, AR/A1–A30, AR/A ................................................ D-3

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Appendix D: Flood Maps continued 8. Zone V ............................................................................................................. D-3 9. Zone VE and Zones V1–V30 .............................................................................. D-3

B. Moderate or Minimal Hazard Areas ........................................................................ D-4 1. Zones B and X (Shaded).................................................................................... D-4 2. Zones C and X (Unshaded) ................................................................................ D-4 3. Zone D............................................................................................................. D-4

IV. Locating a Property on a Map......................................................................................................D-4

V. Changing or Correcting a Flood Map by a Letter of Map Change (LOMC) .............................D-5

A. Letter of Map Amendment ..................................................................................... D-5

B. Letter of Map Revision........................................................................................... D-6

C. Physical Map Revision ........................................................................................... D-6

Appendix E: Coastal Barrier Resources System

I. General Information.......................................................................................................................E-1

II. Determining Eligibility....................................................................................................................E-1

A. Determine If Community Has a System Unit or OPA................................................. E-1

B. Determine If the Property is Located in a System Unit or OPA .................................. E-2 1. Building Located in the CBRS Buffer Zone.......................................................... E-2

C. Determine Building Eligibility .................................................................................. E-2

D. Documentation of Eligibility.................................................................................... E-3 1. Buildings Not Located in a System Unit or OPA................................................... E-3 2. Buildings Located in a System Unit or OPA ......................................................... E-4

a. Proof of building permit date, as evidenced by either: ...................................E-4 b. Proof of building construction date, as evidenced by a written statement

from the community building permit official that: ...........................................E-4 c. Proof of building location in a System Unit or OPA: .......................................E-4

3. Buildings Eligible Based on Use......................................................................... E-4

Appendix F: Severe Repetitive Loss Properties

I. General Information.......................................................................................................................F-1

II. New Business .................................................................................................................................F-1

III. Notification Requirements for Transfer to SDF..........................................................................F-1

IV. Underwriting Requirements..........................................................................................................F-2

V. Process for Correcting or Updating a Property’s SRL Status...................................................F-2

A. Required Documentation ....................................................................................... F-2

B. SDF Process After FEMA Determination.................................................................. F-3

VI. Flood Mitigation Assistance (FMA) Program..............................................................................F-3

VII. Pivot Identification and Notification Process for SRL Properties............................................ F-4

A. Identification Steps of SRL .................................................................................... F-4

B. Notification Steps of SRL....................................................................................... F-5 1. New Business .................................................................................................. F-5 2. Policies in Force ............................................................................................... F-5

C. Additional Data Record Submission Steps .............................................................. F-6

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Appendix G: Leased Federal Properties

I. General Information.......................................................................................................................G-1

II. Requirements .................................................................................................................................G-1

III. Correcting an LFP Designation.....................................................................................................G-2

Appendix H: Claims

I. Information for Policyholders After a Flood ...............................................................................H-1

II. Claims Process...............................................................................................................................H-1

A. Damage Estimate.................................................................................................. H-1

B. Claim Payment...................................................................................................... H-2

III. Disputed Claims .............................................................................................................................H-2

IV. Appealing a Claim..........................................................................................................................H-2

A. Filing an Appeal..................................................................................................... H-2

B. Appeals Process ................................................................................................... H-3

V. Litigation..........................................................................................................................................H-4

VI. Increased Cost of Compliance (ICC) Claims...............................................................................H-4

Appendix I: Policyholder Communications

I. Underwriting-Related Policyholder Communications................................................................I-1

II. Declarations Page and Summary of Coverage..........................................................................I-3

A. Overview............................................................................................................... I-3

B. Sample Summary of Coverage Cover Letter ..............................................................I-3

C. Templates............................................................................................................. I-4 1. Declarations Page Template (New Business or Renewal), Page 1......................... I-4 2. Declarations Page Template (New Business or Renewal), Page 2......................... I-5 3. Declarations Page Template (Endorsement), Page 1 ........................................... I-6 4. Declarations Page Template (Endorsement), Page 2 ........................................... I-7

D. Sample Documents............................................................................................... I-8 1. Declarations Page Sample (New Business or Renewal), Page 1........................... I-8 2. Declarations Page Sample (New Business or Renewal), Page 2........................... I-9 3. Declarations Page Sample (Endorsement), Page 1.............................................. I-10 4. Declarations Page Sample (Endorsement), Page 2.............................................. I-11

E. Requirements ....................................................................................................... I-12

III. Replacement Cost Value Update Notice .....................................................................................I-24

A. Overview............................................................................................................... I-24

B. Sample Building Replacement Cost Value Notification ............................................. I-25

IV. Severe Repetitive Loss Property Notice......................................................................................I-26

A. Overview............................................................................................................... I-26

B. Sample Notifications ............................................................................................. I-27 1. Policyholder SRL Notification, Page 1................................................................. I-27 2. Policyholder SRL Notification, Page 2................................................................. I-28 3. Agent SRL Notification, Page 1 .......................................................................... I-29

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Appendix I: Policyholder Communications continued 4. Agent SRL Notification, Page 2 .......................................................................... I-30 5. Lender SRL Notification, Page 1 ........................................................................ I-31 6. Lender SRL Notification, Page 2 ........................................................................ I-32

V. FIRA Notice .....................................................................................................................................I-33

A. Overview............................................................................................................... I-33

B. Sample Documents............................................................................................... I-34 1. FIRA Introduction Letter .................................................................................... I-34 2. NFIP FIRA Property Claims History, Page 1 ......................................................... I-35 3. NFIP FIRA Property Claims History, Page 2 ......................................................... I-36 4. FIRA Acknowledgment Form, Page 1 .................................................................. I-37 5. FIRA Acknowledgment Form, Page 2 .................................................................. I-38

VI. Leased Federal Property Notice...................................................................................................I-39

A. Overview............................................................................................................... I-39

B. Sample LFP Notifications....................................................................................... I-40 1. Policyholder LFP Notification.............................................................................. I-40 2. Agent LFP Notification....................................................................................... I-41 3. Lender LFP Notification ..................................................................................... I-42

VII. Provisional Rating Notice..............................................................................................................I-43

A. Overview............................................................................................................... I-43

B. Sample Document ............................................................................................... I-43 1. Policyholder Provisional Rating Notification......................................................... I-43

VIII. Renewal Notice, Renewal Notice (This Is Not A Bill), and Final Notice ..................................I-44

A. Overview............................................................................................................... I-44

B. Sample Notifications (WYO Versions)...................................................................... I-45 1. Renewal Notice (WYO Version), Page 1 .............................................................. I-45 2. Renewal Notice (WYO Version), Page 2 .............................................................. I-46 3. Renewal Notice (WYO Version), Page 3 .............................................................. I-47 4. Renewal Notice (This Is Not A Bill) (WYO Version), Page 1 ................................... I-48 5. Renewal Notice (This Is Not A Bill) (WYO Version), Page 2 ................................... I-49 6. Renewal Notice (This Is Not A Bill) (WYO Version), Page 3 ................................... I-50 7. Final Notice (WYO Version), Page 1.................................................................... I-51 8. Final Notice (WYO Version), Page 2.................................................................... I-52 9. Final Notice (WYO Version), Page 3.................................................................... I-53

C. Sample Notifications (NFIP Direct Versions) ............................................................ I-54 1. Renewal Notice (NFIP Direct Version), Page 1 ..................................................... I-54 2. Renewal Notice (NFIP Direct Version), Page 2 ..................................................... I-55 3. Renewal Notice (NFIP Direct Version), Page 3 ..................................................... I-56 4. Renewal Notice (This Is Not A Bill) (NFIP Direct Version), Page 1.......................... I-57 5. Renewal Notice (This Is Not A Bill) (NFIP Direct Version), Page 2.......................... I-58 6. Renewal Notice (This Is Not A Bill) (NFIP Direct Version), Page 3.......................... I-59 7. Final Notice (NFIP Direct Version), Page 1........................................................... I-60 8. Final Notice (NFIP Direct Version), Page 2........................................................... I-61 9. Final Notice (NFIP Direct Version), Page 3........................................................... I-62

D. Requirements ....................................................................................................... I-63

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Appendix I: Policyholder Communications continued IX. Cancellation Verification Letter ....................................................................................................I-73

A. Overview............................................................................................................... I-73

B. Sample Document ................................................................................................ I-73

Appendix J: Sample Scenarios

I. Sample Scenarios ..........................................................................................................................J-1

Scenario 1. Post-FIRM, Single-Family Home with Basement.......................................... J-2

Scenario 2. Pre-FIRM, Single-Family Home, Elevated .................................................. J-3

Scenario 3. Post-FIRM, Single-Family Home, Elevated ................................................. J-4

Scenario 4. Post-FIRM, Residential Condo Unit Within a Residential Condominium Building, Elevated ................................................................................. J-5

Scenario 5. Post-FIRM, Residential Condominium Building Association Policy, Non-Elevated.................................................................................................. J-6

Appendix K: Definitions and Acronyms

I. Definitions .......................................................................................................................................K-1

II. Acronyms.........................................................................................................................................K-12

Tables 1. Introduction

Table 1. Major NFIP Reform Legislation...........................................................................1-2

Table 2. Organization of the NFIP Flood Insurance Manual ................................................1-4

Table 3. NFIP Topics and Contact Information .................................................................1-7

2. Before You Start Table 1. Standard Flood Insurance Policy Forms..............................................................2-1

Table 2. Where the NFIP Offers Insurance.......................................................................2-5

Table 3. Where the NFIP Does Not Offer Insurance..........................................................2-5

Table 4. Buildings the NFIP Insures ................................................................................2-7

Table 5. Buildings the NFIP Does Not Insure ...................................................................2-11

Table 6. Contents Eligibility Examples.............................................................................2-11

Table 7. NFIP Coverage Exclusions and Limitations..........................................................2-12

Table 8. Effective Date with a 30-Day Waiting Period .......................................................2-14

Table 9. Effective Date When Eligible for the Map Revision Exception ...............................2-16

Table 10. Effective Date When Potentially Eligible for the Loan Exception..........................2-17

Table 11. General Procedures to Reform a Policy ............................................................2-22

Table 12. Reformation Timeframes and Effective Dates...................................................2-23

Table 13. How to Handle a Claim Involving Policy Reformation..........................................2-24

Table 14. Reformation Timeframes and Effective Dates When the Geolocation or Flood Zone Is Incorrect ...............................................................................2-25

Table 15. How to Handle a Claim Involving Policy Reformation When the Geolocation or Flood Zone is Incorrect ...............................................................................2-26

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3. How to Write Table 1. NFIP Rating Information ....................................................................................3-2

Table 2. Requirements for Latitude and Longitude Coordinates ........................................3-5

Table 3. CRS Premium Discounts By Class .....................................................................3-8

Table 4. Building Occupancy: Building or Contents Coverage for a Building or Units ...........3-9

Table 5. Building Occupancy: Contents Coverage on a Separate Policy..............................3-12

Table 6. Building Description Options .............................................................................3-12

Table 7. Construction Type Determination .......................................................................3-14

Table 8. Foundation Type – Slab on Grade (Non-Elevated) ................................................3-15

Table 9. Foundation Type – Basement (Non-Elevated) ......................................................3-16

Table 10. Foundation Type – Elevated Without Enclosure on Posts, Piles, or Piers .............3-17

Table 11. Foundation Type – Elevated With Enclosure on Posts, Piles, or Piers (With an Enclosure Below the Elevated Floor) ...................................................3-19

Table 12. Foundation Type – Elevated With Enclosure Not on Posts, Piles, or Piers (Solid Foundation Walls) .................................................................................3-19

Table 13. Foundation Type – Crawlspace (Elevated or Non-Elevated Subgrade Crawlspace)....................................................................................3-20

Table 14. First Floor Height Measurement by Foundation Type..........................................3-21

Table 15. Completing the Application Form Using Section C of the Elevation Certificate (EC) .......................................................................3-23

Table 16. Completing the Application Form Using Section E of the Elevation Certificate (EC) .......................................................................3-24

Table 17. M&E Location for Discount Eligibility.................................................................3-27

Table 18. Eligibility for a Floodproofing Discount..............................................................3-30

Table 19. Square Footage Calculation.............................................................................3-32

Table 20. Applying the Prior NFIP Claims Rating Factor.....................................................3-34

Table 21. Date of Construction – Manufactured/Mobile Homes and Travel Trailers ............3-37

Table 22. Maximum Coverage Limits in the Regular Program............................................3-40

Table 23. Maximum Coverage Limits in the Emergency Program.......................................3-41

Table 24. Deductible Options: Single-Family Home, Residential Manufactured/Mobile Home, Residential Unit, Two-to-Four Family Building.........3-42

Table 25. Deductible Options: Other Residential Building, Non-Residential Building, Non-Residential Manufactured/Mobile Building, Non-Residential Unit ................3-43

Table 26. Deductible Options: Residential Condominium Building .....................................3-43

Table 27. Impact of a Lapse on Pre-FIRM Discount Eligibility ............................................3-44

Table 28. Application Response on Lapse and Pre-FIRM Discount Eligibility ......................3-45

Table 29. Impact of a Lapse on Newly Mapped Discount Eligibility....................................3-47

Table 30. Application Response on Newly Mapped Discount Eligibility...............................3-48

Table 31. Reserve Fund Assessment..............................................................................3-50

Table 32. HFIAA Surcharge ............................................................................................3-50

Table 33. Federal Policy Fee ..........................................................................................3-51

Table 34. Probation Surcharge .......................................................................................3-51

Table 35. Methods for Insuring Condominiums................................................................3-52

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3. How to Write continued Table 36. Condominium Association Coverage for Residential Condominium

Association Building (Scenario #1) ..................................................................3-53

Table 37. Residential Unit Owner Coverage in Residential Condominium Building (Scenario #2) ....................................................................................

3-57

Table 38. Assessment Coverage After a Loss .................................................................3-60

Table 39. Residential Unit Owner Coverage in Non-Residential Condominium Building (Scenario #3) ....................................................................................3-61

Table 40. Condominium Association Coverage for Non-Residential Condominium Building (Scenario #4) ....................................................................................3-64

Table 41. Non-Residential Unit Owner Coverage in Residential or Non-Residential Condominium (Scenario #5) ............................................................................3-67

Table 42. Single-Family Residential Building or Individual Residential Townhouse or Rowhouse in a Condominium Complex .........................................................

3-69

Table 43. Residential Condominium Building with 2-4 Units, or a Unit in Such a Building (Non-Townhouse/Rowhouse) ...............................................................3-70

Table 44. Residential Condominium Building with Five or More Units, or a Unit in Such a Building (Non-Townhouse/Rowhouse) ................................................3-71

Table 45. Non-Residential Condominium Building, or Unit in Such a Building .....................3-72

Table 46. Provisional Rates for all Policy Types................................................................3-74

Table 47. Calculate Premium for a Provisional-Rated Policy...............................................3-75

4. How to Endorse Table 1. Procedures if a Premium-Bearing Endorsement Results in

Insufficient Premium.......................................................................................4-3

Table 2. Effective Dates for Endorsements Removing Coverage........................................4-6

Table 3. Endorsement Effective Date When Applying a Rating Adjustment.........................4-9

Table 4. Endorsement Effective Date When Applying a Rating Correction ..........................4-9

Table 5. Endorsement Effective Date When Using an EC ..................................................4-10

Table 6. Endorsement Effective Date for a Rate Category Change.....................................4-12

Table 7. Examples of Other Premium-Bearing Endorsements ............................................4-12

5. How to Renew Table 1. General Renewal Information ............................................................................5-1

Table 2. Renewal Notification Requirements....................................................................5-2

Table 3. Premium Payments...........................................................................................5-3

Table 4. Determine the Renewal Effective Date ...............................................................5-4

6. How to Cancel Table 1. Valid Cancellation Reason Codes ......................................................................6-1

Reason Code 01. Building sold, removed, or destroyed ...................................................6-2

Reason Code 02. Contents sold, removed, or destroyed..................................................6-3

Reason Code 07. Property closing did not occur ..............................................................6-4

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6. How to Cancel continued Reason Code 03. Policy canceled and rewritten to establish a common expiration

date with other insurance coverage for the same building ................................6-4

Reason Code 04. Duplicate NFIP policies .......................................................................6-5

Reason Code 10. Condominium unit or association policy converting to RCBAP.................6-6

Reason Code 26. Duplicate policy from source other than NFIP........................................6-7

Reason Code 06. Property not eligible for coverage.........................................................6-7

Reason Code 27. Property becomes ineligible for coverage during policy term...................6-8

Reason Code 29. Building physically altered and no longer eligible for NFIP coverage ........6-9

Reason Code 28. Insurance no longer required by lender.................................................6-10

Reason Code 05. Invalid payment ..................................................................................6-10

Reason Code 23. Fraud or Misrepresentation .................................................................6-11

Reason Code 30. Insufficient premium to retain coverage................................................6-11

Reason Code 13. Nullification prior to policy effective date ..............................................6-12

Reason Code 20. SRL written with incorrect insurer ........................................................6-13

Reason Code 21. Continuous lake flooding or closed basin lakes.....................................6-13

Reason Code 22. Cancel and rewrite due to administrative error......................................6-13

Appendix C: Quick Start Guide Table 1. Building Occupancy, Policy Form, and Coverage Amounts ....................................C-1

Appendix G: Leased Federal Properties Table 1. Requirements for LFPs......................................................................................G-1

Appendix I: Policyholder Communications Table 1. Underwriting Related Policyholder Communication .............................................. I-1

Table 2. Declarations Page Requirements....................................................................... I-12

Table 3. Renewal Notice, Renewal Notice (This Is Not A Bill), and Final Notice Requirements ................................................................................................ I-63

Figures 1. Introduction

Figure 1. NFIP Partners..................................................................................................1-2

Figure 2. How to Seek NFIP Technical Assistance............................................................1-6

3. How to Write

Figure 1. Overview of Risk Rating 2.0 Data Sources and Rating Factors ............................3-1

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Appendix A: Policy

Dwelling Form ...............................................................................................................A-3

General Property Form ..................................................................................................A-34

Residential Condominium Building Association Policy Form ..............................................A-62

Appendix B: Forms

NFIP Flood Insurance Application ...................................................................................B-1

NFIP Flood Insurance General Change Endorsement........................................................B-4

NFIP Flood Insurance Cancellation/Nullification Request Form ..........................................B-6

NFIP Residential Basement Floodproofing Certificate........................................................B-8

NFIP Floodproofing Certificate for Non-Residential Structures.............................................B-12

NFIP Elevation Certificate and Instructions........................................................................B-16

Appendix D: Flood Maps

Figure 1. Annotated Flood Insurance Rate Map (FIRM) .....................................................D-7

This page is intentionally left blank.

1. Introduction

OCTOBER 2022 RISK RATING 2.0: EQUITY IN ACTION NFIP FLOOD INSURANCE MANUAL 1 • 1

I. Purpose and Audience

The National Flood Insurance Program (NFIP) Flood Insurance Manual provides NFIP underwriting policies and processes to enable effective and consistent program implementation. The primary audience of the manual is NFIP agents and insurers. It covers every aspect of selling and servicing NFIP flood insurance policies.

II. NFIP Program and Operational Model

A. Program Overview Flooding has long been the nation’s most costly natural disaster. In the face of mounting flood losses and escalating disaster relief costs to the general taxpayers, Congress enacted the National Flood Insurance Act of 1968.

The NFIP is a federal program enabling property owners in participating communities to purchase insurance protection against losses from flooding. The Federal Emergency Management Agency (FEMA), which administers the NFIP, makes federal flood insurance available to residents in local communities that adopt and enforce floodplain management ordinances intended to reduce future flood damage. FEMA also provides certain properties with discounted premiums to encourage community and property owner participation.

B. NFIP Operational Model Today, the NFIP has approximately five million policyholders in more than 22,000 participating communities across the nation. Policyholders purchase NFIP flood insurance through licensed insurance agents who write with participating private insurance companies or directly with the NFIP through its servicing agent.

Under the Write Your Own (WYO) Program, private insurance companies (known as WYO companies) enter into an agreement with FEMA to sell NFIP policies next to their own insurance lines and adjust and pay claims arising under the NFIP policies. WYO companies are responsible for all aspects of servicing the policies they sell, including issuing, endorsing, underwriting, renewing, and canceling policies. WYO companies may withhold from written premiums administrative and operating expenses for selling and servicing NFIP policies. WYO companies must align their flood business with their normal business practices for their other insurance lines, subject to applicable legal and administrative requirements.

In addition to the WYO Program, FEMA directly sells and services NFIP policies through a contracted direct servicing agent, known as the NFIP Direct. Any prospective policyholder may seek coverage through NFIP Direct. NFIP Direct is also the sole entity servicing Group Flood Insurance Policies (GFIPs) and selling and servicing NFIP policies insuring buildings that have experienced severe repetitive losses.

Whether written with a WYO company or the NFIP Direct, all NFIP policies (with the exception of GFIPs) are subject to the same policies, rating methodology, and processes stated in the NFIP Flood Insurance Manual.

More broadly, the NFIP involves effective partnership between the Federal Government; the property and casualty insurance industry; state, local, tribal, and territorial governments; lending institutions; and property owners. Figure 1 below shows how each partner helps to implement the program.

Note: As used in the NFIP Flood Insurance Manual, the term FEMA typically includes the agency and its contractors.

OCTOBER 2022 RISK RATING 2.0: EQUITY IN ACTION NFIP FLOOD INSURANCE MANUAL 1 • 2

1. Introduction

Figure 1. NFIP Partners

C. Legislative Reforms In the more than 50 years since passage of the National Flood Insurance Act of 1968, Congress has enacted legislation seeking to improve the NFIP, as summarized in Table 1. Of special note is the Flood Disaster Protection Act of 1973, which mandated the purchase of flood insurance for certain properties in high flood-risk areas of NFIP-participating communities. This mandatory purchase requirement expanded the overall number of insured properties, including those that qualified for discounted premiums.

Table 1. Major NFIP Reform Legislation

ACT PROVISIONS

Established the flood insurance mandatory purchase requirement: • Prohibited federally backed lenders from making loans secured by buildings

located in a Special Flood Hazard Area (SFHA), unless the building is covered by Flood Disaster

Protection Act of 1973 (FDPA)

flood insurance. • Prohibited federal assistance for the acquisition or construction of structures

located in an SFHA, unless the community is participating in the NFIP (unless the assistance is related to disaster assistance provided during a non-flood event).

• Prohibited federal assistance for the acquisition or construction of a structure located in an SFHA unless the structure is covered by flood insurance.

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1. Introduction

Table 1. Major NFIP Reform Legislation continued

ACT PROVISIONS

National Flood Insurance Reform

Act of 19941

• Expanded and strengthened the FDPA’s mandatory purchase requirement. • Required FEMA to offer insurance covering the cost of complying with state

and local floodplain management ordinances, referred to as Increased Cost of Compliance (ICC) coverage.

• Established a grant program to fund activities designed to reduce the risk of flood damage to structures covered by an NFIP policy (referred to as the Flood Mitigation Assistance (FMA)) Program.

• Required a mandatory 30-day waiting period before a new NFIP policy becomes effective.

Bunning-Bereuter- Blumenauer Flood Insurance Reform

Act of 20042

• Required FEMA to create a process to enable policyholders to appeal claims decisions.

• Required FEMA to provide enhanced disclosure to policyholders explaining policy coverages and other terms.

Biggert-Waters Flood Insurance Reform Act of

2012 (BW-12)3

• Required FEMA to phase out premium discounts on an accelerated time frame. • Required establishment of a National Flood Insurance Reserve Fund to be

available to pay claims, repay debt owed to the U.S. Treasury, and meet the future obligations of the NFIP.

• Increased and adjusted the annual premium increase caps.

Homeowner Flood Insurance

Affordability Act of 2014 (HFIAA)4

• Repealed and limited many premium increases required by BW-12. • Imposed a surcharge based on occupancy and primary residence status (referred

to as the HFIAA surcharge). • With limited exceptions, reduced the cap on annual increases for flood insurance

premiums to 18 percent. • Authorized FEMA to secure reinsurance for the NFIP from the traditional

reinsurance and capital markets.

III. Organization of the Document

The NFIP Flood Insurance Manual is divided into six main sections and several appendices, as shown in Table 2. Table 2 provides the overall organization of the NFIP Flood Insurance Manual and briefly describes the content in each section.

1. National Flood Insurance Reform Act of 1994, Pub. L. No. 103-325, Title V, 108 Stat. 2255; 42 U.S.C. 4001 et seq.

2. Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004, Pub. L. No. 108-264, 118 Stat. 712; 42 U.S.C. 4001 et seq.

3. Biggert-Waters Flood Insurance Reform Act of 2012, Pub. L. No. 112-141, Div. F, Title II, Subtitle A, 126 Stat. 916; 42 U.S.C. 4001 et seq.

4. Homeowner Flood Insurance Affordability Act of 2014, Pub. L. No. 113-89, 128 Stat. 1020; 42 U.S.C. 4001 et seq.

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1. Introduction

Table 2. Organization of the NFIP Flood Insurance Manual

TITLE DESCRIPTION HIGH-LEVEL CONTENT

Section 1: Introduction

Overview of the NFIP, its operational model, and resources for agents, insurers, and other stakeholders

I. Purpose and Audience II. NFIP Program and Operational Model III. Document Organization IV. NFIP Resources

Section 2: Before You Start

Information needed before writing a NFIP flood insurance policy

I. Policy Forms II. Eligibility for NFIP Coverage III. Effective Dates for New Policies and

Endorsements IV. Administrative Topics V. Assignment and Transfer of Business VI. Reformation Due to Insufficient Premium or

Rating Information

Section 3: How to Write

Description of the information needed to rate a policy and applicable rating rules

I. Introduction II. General Rating Information III. Condominium Rating Information IV. Provisional Rating Information

Section 4: How to Endorse

Guidance on changing or correcting information on an existing NFIP flood insurance policy

I. Endorsement Process II. Coverage and Deductible Changes III. Other Premium-Bearing Changes IV. Assignment of a Policy

Section 5: How to Renew

Guidance and information on how to renew an existing NFIP flood insurance policy

I. General Information II. Renewal Process III. Additional Information

Section 6: How to Cancel

Guidance on valid cancellation/ nullification reason codes and associated effective date and refund rules

I. General Information II. Valid Cancellation Reason Codes III. Processing a Cancellation or Nullification

Request

Appendix A: Standard Flood Insurance Policy

The three Standard Flood Insurance Policy (SFIP) forms stating definitions, coverages, limitations, and exclusions for NFIP flood insurance policies, including terms and conditions unique to the NFIP.

I. Dwelling Form II. General Property Form III. Residential Condominium Building

Association Policy Form

Appendix B: Forms

Forms that collect the information needed to rate a NFIP flood insurance policy and process certain policy transactions

I. NFIP Flood Insurance Application Form II. NFIP Flood Insurance General Change

Endorsement Form III. NFIP Flood Insurance Cancellation/

Nullification Request IV. NFIP Residential Basement

Floodproofing Certificate V. NFIP Floodproofing Certificate for

Non-Residential Structures VI. NFIP Elevation Certificate and Instructions

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1. Introduction

Table 2. Organization of the NFIP Flood Insurance Manual continued

TITLE DESCRIPTION HIGH-LEVEL CONTENT

Appendix C: Quick Start Guide to Writing a Policy

A step-by-step reference guide on how to write a new NFIP flood insurance policy using the NFIP Flood Insurance Application Form

I. Agency Number/Agent Number II. Property Address III. Building Occupancy, Policy Form, and

Coverage Amounts IV. Building Description V. Foundation Type VI. Proper Flood Openings VII. First Floor Height Determination VIII. Building Characteristics

Appendix D: Flood Maps

General information about NFIP flood maps and flood zones

I. Flood Map Service Center II. Flood Hazard Maps III. Map Zones IV. Locating a Property on a Map V. Changing or Correcting a Flood Map by a

Letter of Map Change (LOMC)

Appendix E: Coastal Barrier

Resources System

Guidance on eligibility for NFIP coverage under the Coastal Barrier Resources System

I. General Information II. Determining Eligibility

Appendix F: Severe Repetitive Loss Properties

Information on procedures unique to servicing policies for Severe Repetitive Loss (SRL) properties

I. General Information II. New Business III. Notification Requirements IV. Underwriting Requirements V. Process for Correcting or Updating a

Property’s SRL Status VI. Flood Mitigation Assistance (FMA) Program VII. Pivot Identification and Notification Process

Appendix G: Leased Federal

Properties

Information on procedures unique to writing and servicing policies for leased federal properties

I. General Information II. Requirements III. Correcting an LFP Designation

Appendix H: Claims

General information on claims processing

I. Information for Policyholders after a Flood II. Claim Process III. Disputed Claims IV. Appealing a Claim V. Litigation VI. Increased Cost of Compliance

(ICC) Claims

Appendix I: Policyholder

Communications

Sample documents referenced in various Flood Insurance Manual sections and appendices, intended to guide how NFIP insurers communicate with policyholders around specific topics or types of transactions

I. Underwriting-Related Policyholder Communications

II. Declarations Page III. Replacement Cost Value Update Notice IV. Severe Repetitive Loss Property Notice V. FIRA Notice VI. Leased Federal Property Notice VII. Provisional Rating Notice VIII. Renewal Notice, Renewal Notice (This Is

Not A Bill), and Final Notice IX. Cancellation Verification Letter

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1. Introduction

Table 2. Organization of the NFIP Flood Insurance Manual continued

TITLE DESCRIPTION HIGH-LEVEL CONTENT

Appendix J: Sample Scenarios

Provides application scenarios for NFIP insurance

I. Sample Scenarios

Appendix K: Definitions and

Acronyms

Definitions of specific NFIP terms and frequently used acronyms

I. Definitions II. Acronyms

IV. NFIP Resources

A. Policy-Specific Inquiries Questions and requests for technical assistance regarding specific flood insurance policies and NFIP rules should generally follow the flow shown in Figure 2 below.

Figure 2: How to Seek NFIP Technical Assistance

Policyholders who have questions about their policy should first contact their flood insurance agent. If the agent is unable to answer the question, they may direct it to the NFIP insurer (either a WYO company or the NFIP Direct) that issued the policy. The insurer may elevate complex questions to FEMA as needed.

B. General Assistance and Inquiries For general assistance and inquiries (or for policy-specific issues after speaking with the agent or insurer), contact the FEMA entities noted below:

• The FEMA Mapping and Insurance eXchange (FMIX) can answer general inquiries about mapping and flood insurance; call 1-877-336-2627 (1-877-FEMA-MAP) or visit https://www.floodmaps.fema.gov/fhm/fmx_main.html to access the chat and email functions.

• Contact FEMA’s Ask the Expert at [email protected] if you have questions about the NFIP, your flood insurance, or the flood risk your property may face.

If you need additional assistance regarding a flood insurance policy after using the above resources and those listed in Table 3 below, contact FEMA’s Office of the Flood Insurance Advocate (OFIA). The OFIA advocates for the fair treatment of policyholders and property owners by providing education and guidance on all aspects of the NFIP, identifying trends affecting the public, and making recommendations for program improvements to FEMA leadership. Contact the OFIA by visiting http://www.fema.gov/flood-insurance-advocate and clicking on the “Ask the Advocate” button.

C. NFIP Topics and Contact Information Table 3 provides links and contact information for various topics of interest to NFIP stakeholders.

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1. Introduction

Table 3. NFIP Topics and Contact Information

Topic Mail and Website Address Telephone

Agent Marketing, Selling, Servicing Information

https://agents.floodsmart.gov N/A

Claims & Underwriting Forms

https://www.fema.gov/flood-insurance/ find-form

N/A

Coastal Barrier Resources System (CBRS)

https://www.fws.gov/CBRA N/A

Community Status Book https://www.fema.gov/flood-insurance/ work-with-nfip/community-status-book

N/A

FEMA Guidance https://www.fema.gov/about/reports-and-

data/guidance N/A

Flood Maps and Related Products

FEMA Flood Map Service Center https://msc.fema.gov/portal/home

N/A

Flood Zone Determination Companies

https://nfipservices.floodsmart.gov/flood- zone-determination-companies

N/A

General Information for Agents & Consumers

https://www.floodsmart.gov N/A

General Mapping and Flood Insurance Inquiries

FEMA Mapping and Insurance eXchange (FMIX)

https://www.floodmaps.fema.gov/fhm/ fmx_main.html

[email protected]

Phone: 1-877-336-2627

(1-877-FEMA-MAP)

NFIP Regional Support Offices

https://nfipservices.floodsmart.gov/NFIP- Regional-Support-Offices

See link

Outreach Publications and Resources

https://www.fema.gov/flood-insurance/ outreach-resources

N/A

NFIP Publications Order Form

https://agents.floodsmart.gov/puborderform Phone:

1-800-480-2520

Training https://nfipservices.floodsmart.gov/training N/A

WYO Companies https://nfipservices.floodsmart.gov/wyo-

program-list N/A

This page is intentionally left blank.

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This section provides important information that agents and insurers must be familiar with before writing an NFIP flood insurance policy. The section covers eligibility rules, when coverage becomes effective, and other information relevant to delivery and maintenance of policies. Application of this knowledge will reduce or eliminate issues that may arise at various stages of the policy lifecycle.

I. Policy Forms A. General Information NFIP insurers may only use the Standard Flood Insurance Policy (SFIP) established by FEMA in federal regulation to sell and service NFIP flood insurance policies. The SFIP defines the coverages, limitations, and exclusions for NFIP flood insurance policies and includes terms and conditions that are unique to the NFIP. The SFIP outlines flood insurance coverage for a one-year policy term under three different forms: the Dwelling Form, the General Property Form, and the Residential Condominium Building Association Policy (RCBAP) Form (see Appendix A: Policy).

FEMA updated the Standard Flood Insurance Policy Forms in conformance with the requirements stipulated in the final rule FEMA published in July 2020 “Conforming Changes To Reflect the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) and the Homeowners Flood Insurance Affordability Act of 2014 (HFIAA), and Additional Clarifications for Plain Language,” available on the Federal Register.

Note: There are regulatory changes in the rule and the majority of the changes are clarifications and changes that codify existing practice, policy or processes and improve readability and uniformity.

The effective date of the SFIPs is October 1, 2021.

Table 1 shows when to use the three SFIP forms to insure a variety of residential and non- residential building and contents risks. See the Building Occupancy heading in Section 3: How to Write for definitions of the building occupancies referenced here. See the Maximum Coverage Limits heading in Section 3: How to Write for information on the building and contents coverage available for different building occupancies under these SFIP forms.

Table 1. Standard Flood Insurance Policy Forms

SFIP FORM ELIGIBLE POLICYHOLDERS ELIGIBLE BUILDING OCCUPANCIES

Dwelling Form

Available to the following types of policyholders:

• Homeowner • Unit owner • Building owner • Residential renter

Note: In some cases a condominium association may purchase a Dwelling Form policy for a Residential Unit on behalf of the unit owner, who is the policyholder.

In a Regular Program or Emergency Program community provides building and/or contents coverage for:

• Single-Family Home • Residential Manufactured/Mobile Home • Residential Unit • Two-to-Four Family Building

Note: The Dwelling Form also covers residential contents in a non-residential building insured under a separate policy from the building.

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Table 1. Standard Flood Insurance Policy Forms continued

SFIP FORM ELIGIBLE POLICYHOLDERS ELIGIBLE BUILDING OCCUPANCIES

General Property

Form

Available to the following types of policyholders:

• Building owner • Unit owner • Building or unit lessee

In a Regular Program or Emergency Program community:

• Other Residential Building • Non-Residential Building • Non-Residential Manufactured/Mobile Building • Non-Residential Unit

Note: The General Property Form also covers non- residential contents in a residential building insured under a separate policy from the building.

RCBAP Issued to a residential condominium association on behalf of the association and unit owners

In a Regular Program community only: • Residential Condominium Building

See the Condominium Rating Information heading in Section 3: How to Write for more information on RCBAP eligibility and what policy form to use if ineligible.

B. Insurable Interest To be eligible for an NFIP policy, the individual or entity (a property owner, tenant, or mortgagee) must have an insurable interest in the subject property. An insurable interest is an interest in property to the extent that the owner of the interest derives a benefit from the preservation of the property and will suffer a loss from its destruction. Principal examples are:

• Mortgagee Interest – A mortgagee has an insurable interest in the mortgaged property, and therefore, can obtain an NFIP insurance policy.

• Shareholder Interest – A shareholder with an insurable interest in a non-residential property may obtain NFIP insurance to protect its financial interest in the property from loss.

• Limited Liability Corporation – An individual listed as an owner of an LLC that owns a residential building, and who resides there, may obtain NFIP insurance to protect their financial interest in the property from loss.

• Interest in Estate – An individual or entity with a financial interest in an estate holding insurable property may obtain NFIP insurance to protect that interest from loss.

• Rent-to-Own Agreement – If a tenant has sufficient interest in the property under a rent-to-own agreement, then the landlord and owner and the tenant both have an insurable interest. Each of them may be named insureds1 under the flood insurance policy.

• Lease Requirement to Purchase Building Coverage – If a lease agreement requires a tenant to purchase building coverage, the building owner must be named on the policy but the tenant may also be named on the policy (although they do not have an insurable interest themselves). Coverage for contents owned by the tenant must be

1. “Policyholder” refers specifically to the individual or business named in the policy itself, whereas “insured” refers to the policyholder as well as anyone who submits payment on behalf of the policyholder and who has the right to a claim payment under the policy (for example, the mortgagee). The Flood Insurance Manual uses each term when appropriate to the specific context.

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2. Before You Start

written on a separate policy in the name of the tenant only. Tenants may not purchase building coverage if the owner or another party has purchased NFIP coverage on the same building, except as noted under the Duplicate Policies heading below.

Note: NFIP rules disallowing duplicate coverage apply. See the Duplicate Policies heading in this section.

Complex questions of insurable interest can arise involving mixed-use buildings with multiple forms of ownership. The NFIP can cover such a building under either a single policy or multiple policies, depending in part on whether a single SFIP form or multiple forms apply. If writing a single policy, the insurer must list all building owners as named insureds on the policy. If writing multiple policies for buildings at the same location, the insurer is responsible for maintaining detailed information describing the ownership and insurable interest that pertains to each policy. This prevents issues of duplicate coverage or claim payments above the statutory limits.

C. Duplicate Policies Only one policy may be effective for the same named or different named policyholder for the same building with building coverage. If an insurer determines that the policyholder(s) has a duplicate policy, the insurer must provide written notice to the policyholder(s) of duplicate coverage. The notice must advise the policyholder(s) of the following:

• In general, the policy with the earlier effective date will continue (see specific exceptions under the Duplicate Coverage heading in Section 6: How to Cancel).2

The insured may increase coverage up to the coverage limits of the policy with a later effective date. The endorsement effective date for increased coverage is the effective date of the later policy.

• If both policies have the same effective date, the policyholder may choose which policy will remain in effect.

There are two exceptions allowing duplicate building policies on a single building.

• Residential Condominium Building. The insurer may issue a Dwelling Form policy with building coverage to a residential condominium unit owner in a residential building. If the building is covered by an RCBAP, the combined building coverage between the Dwelling Form policy and the RCBAP cannot exceed $250,000 for the unit. Policyholders may not claim damaged items under more than one policy. The NFIP will only pay for damaged items under one policy.

2. 44 CFR § 62.5(e)

Contents Coverage for Tenants Under the Dwelling Form and General Property Form, tenants may purchase contents coverage, which includes coverage for building improvements and betterments. The maximum amount payable for improvements and betterments in the building occupied by the policyholder is 10 percent of the contents coverage amount shown on the declarations page. Improvements and betterments include fixtures, alterations, installations, and additions that become part of the tenant-occupied building, if acquired or made solely at the tenant’s expense. Use of this option does not provide an additional amount of insurance over the amount of contents coverage shown on the declarations page. Coverage for contents solely owned by the tenant must be on a separate policy in the name of the tenant only. Refer to the SFIP Article III.B.6.

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• Mixed Use Buildings with Multiple Forms of Ownership. When writing multiple policies for buildings at the same location, the insurer should maintain detailed information describing the ownership and insurable interest that pertains to each policy. This prevents issues of duplicate coverage or claim payments above the statutory limits.

If duplicate coverage occurs, see Section 4: How to Endorse and Section 6: How to Cancel for additional information.

D. Group Flood Insurance Policy A Group Flood Insurance Policy (GFIP) is a policy covering all individuals named by a State as recipients under Section 408 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act3 of an Individuals and Households Program award for flood damage as a result of a major disaster declaration by the President. The amount of coverage is equivalent to the maximum grant amount established under Section 408. The term of the GFIP is for 36 months and begins 60 days after the date of the presidential disaster declaration. Coverage for individual grantees begins on the thirtieth day after the NFIP receives the required data for individual grantees and their premium payments. A GFIP recipient has a legal requirement to obtain and maintain flood insurance after receiving disaster assistance even when the GFIP expires.

The GFIP is comparable to the Dwelling Policy Form. Coverage is broken down as building or contents at the time of a flood loss, and is dependent on flood damage and ownership (owner or tenant). A $200 deductible applies separately to building coverage and contents coverage. The GFIP does not provide Increased Cost of Compliance (ICC) coverage.

The Flood Insurance Manual does not provide guidance on writing and servicing GFIPs. As described above, FEMA provides GFIPs through grants under the post-disaster Individuals and Households Program; only NFIP Direct issues the GFIP Certificates of Flood Insurance to individual recipients and services the policies.

A certificate holder may cancel a GFIP at any time and secure a regular SFIP through the NFIP. The amount of coverage purchased must be at least the same amount of assistance that was awarded. If the certificate holder purchases an SFIP within 30 days after the GFIP’s expiration date then no waiting period applies, (consistent with the NFIP’s grace period for renewals). The GFIP and the SFIP cannot be stacked or combined. Even though the GFIP becomes void after a purchase of an SFIP; the GFIP recipient should notify NFIP Direct at 800-638-6620 once they purchase an SFIP.

II. Eligibility for NFIP Coverage An individual property’s eligibility for NFIP coverage depends on:

1. The location of the building;

2. Whether the building meets certain insurability requirements; and

3. Whether the contents meet certain insurability requirements.

While FEMA’s system conducts certain eligibility checks, NFIP insurers remain responsible for ensuring eligibility for NFIP coverage.

3. Pub. L. No. 93-288, 88 Stat. 143; 42 U.S.C. 5174

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A. Eligibility of Property Locations 1. Where the NFIP Offers Insurance

The NFIP offers insurance for buildings and contents located within participating NFIP communities or located on federal land.

Table 2 explains what an NFIP participating community is and provides a description of the stages of a participating community.

Table 2. Where the NFIP Offers Insurance

LOCATION DESCRIPTION

NFIP Participating Community

The NFIP insures buildings and contents located within participating NFIP communities or on federal land.

For a community to participate in the NFIP, it must adopt a floodplain management ordinance that meets or exceeds the minimum NFIP criteria and have a Flood Insurance Rate Map (FIRM) or a Flood Hazard Boundary Map (FHBM). Check with the insurer to determine the community status or see the NFIP Community Status Book.

Emergency Program

The Emergency Program represents the initial phase of a community’s participation in the NFIP. In this phase, limited amounts of coverage are available.

Note: Participating communities in the Emergency Program remain in the Emergency Program if an FHBM is rescinded.

Regular Program The Regular Program is the final phase of a community’s participation in the NFIP. In this phase, the completed FIRM is in effect and full coverage limits are available.

NFIP Participating Community on

Probation

FEMA may place a participating NFIP community on probation when it does not comply with the NFIP’s floodplain management requirements. Probation ends when the community remedies all deficiencies. Insurance is available while the community is on probation.

FEMA applies a $50 Probation Surcharge to all policies in the community, issued on or after the probation effective date. The NFIP exempts the GFIP from the surcharge.

Note: FEMA may suspend the community (see Table 3) if it does not remedy the violations during the probationary period.

Federal Land

NFIP flood insurance is available on land owned by the Federal Government when the local community meets the floodplain management requirements. The NFIP records all federal land under a local community number, even if that local community does not have jurisdiction.

2. Where the NFIP Does Not Offer Insurance

Table 3 shows the locations where the NFIP does not offer insurance.

Table 3. Where the NFIP Does Not Offer Insurance

LOCATION DESCRIPTION

Non-Participating Community

The NFIP may not sell or renew flood insurance in a community that does not participate in the NFIP. Once FEMA provides a community with an FHBM or a FIRM delineating its flood-prone areas, the community has one year from that date to qualify as an NFIP participating community before this prohibition becomes effective. Check with the insurer to determine the community status or see the NFIP Community Status Book.

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Table 3. Where the NFIP Does Not Offer Insurance continued

LOCATION DESCRIPTION

Suspended NFIP Community

The NFIP may not sell or renew flood insurance in a community suspended from the NFIP. Current policies in the suspended community remain in effect until policy expiration.

• The NFIP may not renew a policy while the community is suspended. • Insurers must cancel any policies issued in error or any policy renewed after

the date of a community suspension. • To obtain coverage after the NFIP reinstates a community, property owners

should contact their agent or insurer to submit a new Flood Insurance Application Form.

• Insurers must use the applicable waiting period required to obtain coverage.

Areas Covered by the Coastal Barrier

Resources Act

Flood insurance may not be available in System Units or Otherwise Protected Areas (OPAs) identified under the Coastal Barrier Resources System (CBRS). Such areas designated under the CBRS are typically undeveloped coastal barriers within the boundaries of areas established under federal, state, or local law, or that are held by a qualified organization, primarily for wildlife refuge, sanctuary, recreational, or natural resource conservation purposes. See Appendix E: Coastal Barrier Resources System for additional information.

B. Building Eligibility 1. General Information

The NFIP will insure a building that:

• Is affixed to a permanent site;

• Has two or more outside rigid walls with a fully secured roof;

• Resists flotation, collapse, and lateral movement; and

• Has at least 51 percent of the Actual Cash Value (ACV) of the building, including machinery and equipment that are a part of the building, above ground level, unless the lowest level of the affixed structure is at or above the Base Flood Elevation (BFE) and is below ground, using earth as insulation material in conjunction with energy-efficient building techniques.4

Base Flood Elevation

BFE is the elevation of surface water resulting from a flood that has a 1 percent chance of equaling or exceeding that level in any given year. It is shown on the FIRM for Zones AE, AH, A1–A30, AR, AR/A, AR/AE, AR/A1–A30, AR/AH, AR/A0, V1–V30 and VE. BFE is no longer an NFIP rating factor to determine premium. However, the SFIP policy forms still reference BFE in defining a building’s eligibility for NFIP coverage when partially underground or under construction. Moreover, BFE continues to be a key factor determining compliance with NFIP floodplain management regulations. Such compliance affects eligibility for Community Rating System discounts and floodproofing discounts. The Flood Insurance Manual continues to reference BFE in these instances. While BFE remains relevant to NFIP insurers’ administration of certain NFIP policies, insurers are no longer responsible for reporting the information to FEMA’s system.

4. 44 CFR Part 61, Appendix A(1)-(3), II.C.6 & IV.11

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2. Single and Multiple Buildings

To qualify as a single building, subject to the single-building limits of coverage, a building must be:

• Separated from other buildings by intervening clear space; or • Separated into divisions by solid vertical load-bearing walls.

– Division walls must divide the building from its lowest level to its highest ceiling and have no openings.

– If there is access through the division wall by a doorway or other opening, the structure must be insured as one building unless it meets one of the following criteria: > It is a separately titled building contiguous to the ground; > It has a separate legal description; or > It is regarded as a separate property for other real estate purposes,

meaning that it has most of its own utilities and may be deeded, conveyed, and taxed separately.

Note: If writing multiple policies for multiple buildings at the same location, the insurer must maintain detailed information describing the ownership and insurable interest that pertains to each policy. Insurers can submit requests to FEMA seeking single- building determinations for complex structures with multiple building owners or mixed ownership types.

Where there are multiple separate buildings located at a single address (for example, a single-family residence and a guest house on the same property) and the property owners want to insure both buildings, the insurer should write two separate policies and use the property description field on each Application Form to distinguish the buildings.

Where there are multiple buildings on the same property connected by means of rigid exterior walls, solid load-bearing interior walls, stairways, an elevated walkway, or roof, the insurer may write a policy covering them as a single building or multiple policies covering them as separate buildings.

3. Eligible Types of Buildings

Table 4 describes the types of buildings the NFIP insures.

Table 4. Buildings the NFIP Insures

BUILDING TYPE DESCRIPTION

Additions and Extensions

When insuring a building with one or more additions, the applicant must choose between purchasing one policy or separate policies for the building and each addition and extension. Additions and extensions attached to and in contact with the building by the following methods may be insured under a separate policy:

• Rigid exterior wall

• Solid load-bearing interior wall

• Stairway

• Elevated walkway

• Roof

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Table 4. Buildings the NFIP Insures continued

BUILDING TYPE DESCRIPTION

Additions and Extensions continued

The NFIP requires an Application Form for each addition and extension insured separately. The Application Form must:

• Clearly describe the separately insured addition and extension; • Contain the rating information specific to the addition and extension; and • Request building and/or contents coverage for the addition and extension.

The Additional Information portion of the Application Form for the main building should reference the policy number or quote number for the policy separately insuring the addition or extension.

Note: Additions and extensions cannot be excluded from building coverage under the main building’s policy, unless the additions and extensions are insured separately.

Agricultural Building

A building used exclusively in connection with the production, harvesting, storage, raising, or drying of agricultural commodities. Examples of eligible agricultural buildings include barns, silos, and grain storage buildings.

Boathouse Located Partially Over Water (Non- Boathouse Parts)

The NFIP insures the non-boathouse parts of a building into which boats are floated, if the building is partly over land and also used for residential, commercial, or municipal purposes and is eligible for flood coverage. The NFIP does not insure boat repair docks or boat storage over water.

The NFIP will insure the area above the boathouse used for purposes unrelated to the boathouse use (for example, a residential use) from the floor joists to the roof, including walls. The NFIP will also insure a common wall between the boathouse area and other parts of the building.

The following items are not insured (see the SFIP for the limitations on coverage):

• The ceiling and roof over the boathouse portions of the building into which boats are floated;

• Floors, walkways, decking, etc., within the boathouse area, or outside the area, but pertaining to boathouse use;

• Exterior walls and doors of the boathouse area not common to the rest of the building;

• Interior walls and coverings within the boathouse area; and • Contents located within the boathouse area, including furnishings and equipment,

relating to the operation and storage of boats and other boathouse uses.

Building Becomes Entirely

Over Water

A building originally constructed on land or partially over water that later becomes entirely over water because of erosion is eligible for coverage if the building has had continuous coverage. Coverage must have been in place for at least one year before the building being located entirely over water (regardless of any changes in the ownership of the building), or from the date of construction if that was less than one year before the building became located entirely over water.

The property owner must establish eligibility for NFIP coverage by submitting all of the following documentation:

• A letter from the community official stating that the building originally was constructed on land or only partially over water;

• Photographs of the building over land, if available; • The approximate date when the building became located entirely over water; and • Proof of continuous flood insurance coverage from the period beginning 1 year

prior to the building being located entirely over water (regardless of any changes in the ownership of the building), or from the date of construction if less than 1 year.

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Table 4. Buildings the NFIP Insures continued

BUILDING TYPE DESCRIPTION

Building Entirely Over Water before October 1, 1982

The NFIP will insure a building located entirely in, on, or over water, or seaward of mean high tide that was not constructed or substantially improved after September 30, 1982.

Building Partially Over Water

The NFIP may insure a building not “entirely” over water; for example, if part of the exterior perimeter walls and foundation of the building are on land or on the landward side of mean high tide (mean high water).

Note: When the exterior perimeter walls of the building are completely over water, but the support system or foundation underneath the building extends onto land, or the extension of any mechanism for access into the building (including, but not limited to, stairs, decks, walkways, piers, posts, pilings, docks, or driveways) is fully or partially on land, the building and the access are ineligible for coverage.

Building Partially Underground

The NFIP insures buildings or units and eligible contents if 49 percent or less of the ACV, including machinery, is below ground when an energy-efficient building technique uses earth as an insulator. The lowest floor must be at or above the BFE.5

Building Under Construction

The NFIP will insure a building under construction, alteration, or repair before it is walled and roofed, using the NFIP-issued rates based on the construction designs and the intended use of the building.

A building under construction that is not walled and roofed is not eligible for coverage if construction stops for more than 90 days or the lowest floor, including the basement floor, of a non-elevated building or the lowest elevated floor of an elevated building is below the BFE.6 The NFIP will not insure materials or supplies intended for use in such construction, alteration, or repair unless they are contained within an enclosed building on the premises or adjacent to the premises.

For information on rating, see the Building Under Construction heading in Section 3: How to Write.

Condominium Building

A condominium is a building or a complex of buildings containing a number of individually owned apartments or houses where each unit owner has an undivided interest in common elements of the building. Residential condominium buildings eligible for the RCBAP must be insured under the RCBAP. See the Building Occupancy heading in Section 3: How to Write for additional information.

Cooperative Building

Corporations own and manage cooperative buildings, and their ownership differs from the condominium form of ownership. Residents within cooperative buildings buy shares of the corporation, rather than the real estate (building, land, or both building and land). A cooperative building must have at least 75 percent of the total floor area used for residential purposes to qualify as a residential occupancy. Cooperative buildings are not eligible for the RCBAP.

Detached Garage

In general, the SFIP can only insure one building. However, the Dwelling Form includes limited coverage for a detached garage servicing a one-to-four family dwelling. Coverage is limited to no more than 10 percent of the limit of liability on the one-to-four family dwelling. This coverage does not apply to garages used for residential, commercial, or agricultural purposes.

5. 44 CFR Part 61, Appendix A(1)-(3), IV.11 6. 44 CFR Part 61, Appendix A(1)-(3), III.A.5

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Table 4. Buildings the NFIP Insures continued

BUILDING TYPE DESCRIPTION

Homeowners’ Association (Non-

Condominium)

A Homeowners’ Association not in the condominium form of ownership owns the common areas, and individual building owners have a right to use and enjoy the common areas. A Homeowners’ Association can purchase a policy for an individual building in the building owner’s name when the Association’s by-laws require the Association to purchase flood insurance building coverage for its members. A Homeowners’ Association not in the condominium form of ownership is not eligible for the RCBAP.

Manufactured/ Mobile Home or Manufactured

Building or Travel Trailer Without

Wheels

A manufactured home (also known as a mobile home) or manufactured building is a structure built on a permanent chassis, transported to a site in one or more sections, and affixed to a permanent foundation.

A travel trailer without wheels, built on a chassis and affixed to a permanent foundation, is eligible for flood coverage where regulated under the community’s floodplain management and building ordinances or laws.

Manufactured/mobile homes and travel trailers must meet the following requirements to be eligible for NFIP coverage:

• Be affixed to a permanent foundation that may be a poured masonry slab, foundation walls, piers, or blocks, so that the wheels and axles of the mobile home do not support its weight; and

• Be anchored to a permanent foundation to resist flotation, collapse, or lateral movement: – By providing over-the-top or frame ties to ground anchors; – In accordance with manufacturer’s specifications; or – In compliance with the community’s floodplain management requirements.

Manufactured/mobile homes continuously insured since September 30, 1982, can renew under the previously existing requirements if they meet the following conditions:

• Are affixed to a permanent foundation in compliance with the foundation and anchoring requirements at the time of placement; and

• Are adequately anchored, which means the foundation support system must secure the manufactured or mobile home into the ground sufficiently to resist flotation, collapse, and lateral movement caused by flood forces, including wind forces in coastal areas.

Note: All references in this manual to manufactured/mobile homes are specific to manufactured/mobile homes and travel trailers without wheels, when affixed to a permanent foundation.

Timeshare Building

A timeshare is an arrangement where several joint owners have the right to use a property under a time-sharing agreement and where the corporation owns the building. The NFIP insures individual units in a timeshare building in the condominium form of ownership under the Dwelling Form. These buildings are eligible for coverage under the RCBAP if 75 percent of the total floor area of the building is for residential purposes. If the 75 percent criteria is not met, see the Condominium Rating Information heading in Section 3: How To Write.

4. Ineligible Types of Buildings

NFIP does not insure the buildings shown in Table 5.

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Table 5. Buildings the NFIP Does Not Insure

BUILDING TYPE DESCRIPTION

Building Declared in Violation

of Floodplain Management Requirements

The NFIP may not insure buildings (or their contents) declared to be constructed or altered in violation of state or local floodplain management, mudflow, or flood-related erosion area management or control laws, regulations, or ordinances. Section 1316 of the National Flood Insurance Act of 1968 (NFIA) allows state or local governments to make this declaration. Insurance becomes available when the owner corrects the violation and the state or local government rescinds the Section 1316 declaration.

Building Entirely Over Water On

or After October 1, 1982

The NFIP does not insure buildings constructed or substantially improved on or after October 1, 1982, located entirely in, on, or over water, or seaward of mean high tide.

Building Used for the Manufacture or Distribution of a Controlled

Substance

The NFIP may not knowingly insure a building or its contents used for the manufacture or distribution of a controlled substance in violation of federal law. Doing so would directly promote, effectuate, or encourage a violation of the law, which would violate public policy and general principles of insurance. This restriction includes buildings or contents used to grow or dispense marijuana in locations where this activity is legal under state law, because governing federal law makes it unlawful to use any place for the manufacture or distribution of a controlled substance. FEMA can provide additional information on the application of this guidance to specific circumstances.

Container-Type Building

The NFIP does not insure containers used to store gas and liquids, chemical or reactor container tanks or enclosures, brick kilns, and similar units, and their contents.

Water Treatment Plant

The NFIP does not insure a water treatment plant unless 51 percent or more of its ACV is above ground.

C. Contents Eligibility The NFIP only insures contents located in a building that is eligible for building coverage.

• Dwelling Form: Contents must be located inside a building at the described location. If the building is not fully enclosed, contents must be secured to prevent flotation out of the building.

• General Property Form: Contents must be located inside the fully enclosed insured building.

• RCBAP Form: Contents must be located inside the fully enclosed insured building.

Table 6. Contents Eligibility Examples

ELIGIBILITY EXAMPLES

Eligible Contents

• Personal property inside a building at the described location, if: – The property is owned by the policyholder or the policyholder’s household

family members; or – At the policyholder’s option, the property is owned by guests or servants.

• Equipment. • Self-propelled vehicles or machines, not licensed for use on public roads, and

– Used mainly to service the described location; or – Designed and used to assist handicapped persons while the vehicles or

machines are inside a building at the described location.

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Table 6. Contents Eligibility Examples continued

ELIGIBILITY EXAMPLES

Eligible Contents continued

• Parts and equipment as open stock, not part of a specific vehicle or motorized equipment.

• Contents located in silos, grain storage buildings, and cisterns. • Commercial contents. • Contents within units in a cooperative building:

– Residents of a unit within a cooperative building may purchase contents coverage under the Dwelling Form.

– Shareholders may apply 10 percent of the contents coverage for betterments and improvements at the time of loss.

• Contents in a non-residential condominium unit. • Personal property removed to safety at another location to protect it from flood

or the imminent danger of flood, for a period of 45 days.

Ineligible Contents

• Automobiles including assembled and unassembled dealer’s stock. • Motorcycles including assembled and unassembled dealer’s stock. • Motorized equipment including assembled and unassembled dealer’s stock. • Bailee customer’s goods including contractors, cleaners, repair shops,

processors of goods belonging to others, and similar risks.

D. NFIP Coverage Exclusions and Limitations Table 7 shows examples of NFIP coverage exclusions and limitations. Refer to the SFIP for information about exclusions and limitations.

Table 7. NFIP Coverage Exclusions and Limitations

TYPES OF EXCLUSION AND LIMITATIONS COMMENT

Basement

The SFIP limits coverage for basement such as finished walls, floors, ceilings, or personal property kept in a basement. Personal property coverage in a basement is limited to:

• Air conditioning units, portable or window type; • Clothes washers and dryers; and • Food freezers, other than walk-in, and food in any freezer.

Building Coverage for a Unit in a Cooperative Building

The NFIP does not provide building coverage for shareholder units in a cooperative building.

Residents or tenants of a cooperative building may purchase contents coverage under the Dwelling Form.

Deck The SFIP limits coverage for decks except for steps and landings to a maximum landing area of 16 square feet.

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Table 7. NFIP Coverage Exclusions and Limitations continued

TYPES OF EXCLUSION AND LIMITATIONS COMMENT

Elevated Building with Enclosure

The SFIP limits coverage for enclosed, walled-in areas below the lowest floor of a Post-FIRM elevated building located in Zone A1–A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1–A30, V1–V30, or VE, or in a basement regardless of the zone, including finished walls, floors, ceilings, or personal property kept in an enclosure.7 Personal property coverage in these types of enclosures is limited to:

• Air conditioning units, portable or window type; • Clothes washers and dryers; and • Food freezers, other than walk-in, and food in any freezer.

Flood in Progress

The SFIP will not pay for a loss caused by a flood that was a continuation of a flood that existed:

• On or before the date the waiting period for coverage began; or

• If the coverage became effective as of the time of a loan closing (under the loan exception to the 30-day waiting period), before coverage became effective.8

In other words, the SFIP does not insure damage from a flood that began before a new policy’s waiting period (or coverage, if no waiting period) began, even if the flood did not damage the insured property, until after the waiting period (or coverage) began. If a flood was already in progress before a policyholder requested an increase in coverage on an existing policy, the SFIP will only insure damage that occurred to the insured property from that same flood event after the waiting period (or increased coverage, if no waiting period) began, under the lesser policy limits.

See the NFIP Claims Manual for additional guidance.

Hot Tub or Spa The SFIP excludes coverage for hot tubs or spas, except where used as bathroom fixtures.

Non-Residential Condominium Unit

The NFIP does not provide building coverage for owners of non-residential units in residential or non-residential buildings.

Swimming Pool The SFIP excludes coverage for indoor or outdoor swimming pools.

Timeshare Unit in a Multi-Unit Building

The NFIP does not provide coverage for these units unless they are in a condominium form of ownership.

III. Effective Dates for New Policies and Endorsements In general, new flood insurance policies and endorsements adding or increasing coverage become effective following a 30-day waiting period. However, there are three exceptions listed below and detailed later in this section:

1. Map Revision Exception: Coverage becomes effective after a 1-day waiting period during the first 13 months following a flood map revision newly identifying a building as located within an SFHA when it was previously identified as outside of an SFHA.9

7. 44 CFR Part 61, Appendix A(1)-(2), III.A.8 & B.5; 44 CFR Part 61, Appendix A(3), III.A.8 & B.4 8. 44 CFR Part 61, Appendix A(1)-(3), V.B “Flood in Progress” 9. 42 USC 4013(c)(2)(C); 44 CFR § 61.11(a)

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2. Loan Exception: If the initial purchase of new, additional, or increased flood insurance coverage is in connection with making, increasing, extending, or renewing a loan secured by the insured property (for example, a mortgage loan) – and if the NFIP receives the Application Form or endorsement request and full amount due within specified timeframes as noted in Table 10 – then no waiting period applies and coverage becomes effective as of the time of the loan closing.10

3. Post-Wildfire Exception: Coverage becomes effective after a 1-day waiting period11 if:

a. The insured property is privately-owned (property not owned by a federal, state, local, territorial, or tribal government) and experiences damage caused by a flood that originated on federal land;

b. Post-wildfire conditions on federal lands caused or worsened the flooding; and

c. The policyholder purchased the new, additional, or increased coverage either:

i. On or before the fire containment date; or

ii. During the 60-calendar day period following the fire containment date.

Insurers must follow the applicable waiting period and effective date rules for all policies, including policies issued in conjunction with a community’s initial entry into the Regular Program or conversion from the Emergency Program to the Regular Program.

A. Standard 30-day Waiting Period

1. General Information

A 30-day waiting period applies to new policies and endorsements to add or increase coverage that are not otherwise eligible for the exceptions provided above. The date the waiting period begins varies based on:

• The date of the Application Form (or endorsement request); • The method of sending the Application Form (or endorsement request) and

payment; and • The date the insurer receives the Application Form (or endorsement request) and

full amount due (including applicable premiums, surcharges, and fees).

For the purposes of determining a waiting period start date, “certified mail” includes certified mail sent through the U.S. Postal Service or a reputable third-party delivery service that provides proof of the actual mailing date and delivery date to the insurer.

Table 8 shows how to determine the effective date of a new policy or endorsement adding or increasing coverage that is subject to the 30-day waiting period.

Table 8. Effective Date with a 30-day Waiting Period

RECEIPT DATE EFFECTIVE DATE EXAMPLE

If the insurer receives the Application Form (or endorsement request) and full amount due within 10 calendar days from the application date (application date plus 9 days)

The effective date will be 12:01 a.m. (local time) on the 30th calendar day after the application date.

If the application date is May 13 and the insurer receives the Application Form (or endorsement request) and full amount due on May 17, then the earliest effective date is June 12.

10. 42 USC 4013(c)(2)(C); 44 CFR § 61.11(b) 11. 42 USC 4013(c)(2)(C); 44 CFR § 61.11(c)

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Table 8. Effective Date with a 30-day Waiting Period continued

RECEIPT DATE EFFECTIVE DATE EXAMPLE

If the Application Form (or endorsement request) and full amount due are mailed by certified mail within 4 calendar days from the application date (application date plus 3 days), regardless of when the insurer receives them

The effective date will be 12:01 a.m. (local time) on the 30th calendar day after the application date.

If the application date is May 13, the Application Form (or endorsement request) and full amount due are mailed by certified mail on May 15, and the insurer receives the Application Form and full amount due on May 26, then the earliest effective date is June 12.

If the insurer receives the Application Form (or endorsement request) and full amount due after 10 calendar days from the application date (application date plus 9 days) and the Application Form (or endorsement request) and full amount due were NOT mailed by certified mail within 4 calendar days from the application date (application date plus 3 days)

The effective date will be 12:01 a.m. (local time) on the 30th calendar day after the insurer’s receipt date.

If the application date (or endorsement request) is May 13, the insurer receives the Application Form (or endorsement request) and full amount due on May 25, then the earliest effective date is June 24.

2. Insufficient Payment

If a policyholder pays less than the full amount due to purchase the amount of coverage requested, see the Reformation Due to Insufficient Premium or Rating Information heading in this section for the applicable procedures and effective date rules.

3. Invalid Payment

The insurer may not use the receipt date of an invalid payment to determine the effective date of a policy transaction. A payment is invalid if it cannot be negotiated because there are non-sufficient funds (NSF) in the account, a reversal (dispute) is successfully completed on an electronic payment, or the payment is non-negotiable for any other reason. Upon notification that the payment is invalid, the insurer must:

• Cancel or nullify the transaction associated with that payment; and • Send notification of the cancellation or nullification to the policyholder, agent,

and lender(s), if applicable.

If the insurer receives a valid payment, the insurer must process the transaction based on the valid premium receipt date. The insurer must determine the effective date of the transaction based on the valid payment receipt date, subject to the effective date rules.

Note: A new Application Form or endorsement request is not required for this transaction as long as the insurer still has the original request; however, a new quote needs to be requested from the FEMA rating engine.

B. Map Revision Exception (1-Day Waiting Period) A 1-day waiting period applies when the NFIP revises an FHBM or a FIRM to show that the building is now in an SFHA when it was not previously. The 1-day waiting period only applies if the insurer receives the Application Form (or endorsement request) and full amount due within 13 months from the effective date of the map revision. If the insurer receives the

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Application Form (or endorsement request) and full amount due after 13 months from the effective date of the map revision, the 30-day waiting period applies.12 The 1-day waiting period rule applies for all buildings, including those owned by condominium associations.

Table 9 shows how to determine the effective date of a new policy or endorsement adding or increasing coverage that is eligible for the map revision exception.

Table 9. Effective Date When Eligible for the Map Revision Exception

RECEIPT DATE EFFECTIVE DATE EXAMPLE

If the insurer receives the Application Form (or endorsement request) and full amount due within 10 calendar days from the application date (application date plus 9 days)

The effective date will be 12:01 a.m. (local time) on the next calendar day after the application date.

If the FIRM was revised on January 5, the application date is May 13, the insurer receives the Application Form (or endorsement request) and full amount due on May 17, then the earliest effective date is May 14.

If the Application Form (or endorsement request) and full amount due are mailed by certified mail within 4 calendar days from the application date (application date plus 3 days), regardless of when the insurer receives them

The effective date will be 12:01 a.m. (local time) on the next calendar day after the application date.

If the FIRM was revised on January 5, the application date is May 13, the Application Form (or endorsement request) and full amount due mailed by certified mail on May 15, and the insurer receives the Application Form (or endorsement request) and full amount due on May 26, then the earliest effective date is May 14.

If the insurer receives the Application Form (or endorsement request) and full amount due after 10 calendar days from the application date (application date plus 9 days) and the Application Form (or endorsement request) and full amount due were NOT mailed by certified mail within 4 calendar days from the application date (application date plus 3 days)

The effective date will be 12:01 a.m. (local time) on the next calendar day after the insurer’s receipt date.

If the FIRM was revised on January 5, the application date is May 13, the Insurer receives the Application Form (or endorsement request) and full amount due on May 28, then the earliest effective date is May 29.

C. Loan Exception (No Waiting Period) New, additional, or increased flood insurance coverage purchased in connection with making, extending, increasing, or renewing a loan secured by the insured property (for example, a mortgage loan) is not subject to the 30-day waiting period if the NFIP receives the Application Form (or endorsement request) and full amount due within specified timeframes. If a policy or endorsement is eligible for this exception, then the coverage becomes effective as of the time of the loan closing.13 Condominium association policies or endorsements purchased in conjunction with loan transactions in the name of the condominium association can be eligible for this exception. Contents-only policies and endorsements can only be eligible for the loan exception if the contents are part of the security for a loan.

12. 42 USC 4013(c)(2)(C); 44 CFR § 61.11(a) 13. 42 USC 4013(c)(2)(C); 44 CFR § 61.11(b)

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The policyholder must apply for flood insurance (or request an endorsement to add or increase coverage) on or before the closing date of the loan transaction. If the policyholder requests the coverage after the closing date, the 30-day waiting period applies. A valid Application Form (or endorsement request) includes all the information necessary to calculate the NFIP policy premium.

In determining eligibility for the loan exception, the insurer may rely on an agent’s representation on the Application Form (or endorsement request) that the purchase is in connection with making, extending, increasing, or renewing a loan secured by the insured property but must confirm timely receipt of the Application Form (or endorsement request) and full amount due. If a loss occurs during the first 30 days of the policy or additional or increased coverage, the insurer must obtain documentation of the loan transaction (such as settlement papers) to validate that a loan transaction occurred before paying the loss.

Table 10 shows how to determine the effective date of a new policy or endorsement to add or increase coverage that may be eligible for the loan exception. If the effective date is the date and time of the loan closing, the declarations page should state the effective date and specify that the coverage is effective “at the time of loan closing” (versus 12:01 a.m.). The insurer only needs to obtain documentation of the specific time of the loan closing if a loss occurred on the loan closing date, to determine whether the loss occurred after the new, additional, or increased coverage began (see additional guidance in the NFIP Claims Manual).

Table 10. Effective Date When Potentially Eligible for the Loan Exception

RECEIPT DATE EFFECTIVE DATE EXAMPLE

If the lender, title company, or settlement attorney pays the premium

If the policyholder requests the policy (or additional or increased coverage) on or before the loan transaction closing and the insurer receives the Application Form (or endorsement request) and full amount due within 30 calendar days from the closing (closing date plus 29 days)

The effective date will be the date and time of the loan closing.

If the loan transaction date is on April 3 and the application date is April 3; and the insurer receives the Application Form (or endorsement request) and full amount due, paid by the lender, title company, or settlement attorney on April 20; then the policy effective date is April 3 at the time of loan closing.

If the policyholder requests the policy (or additional or increased coverage) on or before the loan transaction closing, and the insurer receives the Application Form (or endorsement request) and full amount due after 30 calendar days from the closing (closing date plus 29 days or more)

The effective date will be 12:01 a.m. (local time) on the 30th calendar day after the insurer’s receipt date.

If the loan transaction date is on April 3 and the application date is April 3; and the insurer receives the Application Form (or endorsement request) and full amount due, paid by the lender, title company, or settlement attorney on May 10; then the earliest policy effective date is June 9.

If the policyholder or another party not listed above pays the premium

If the policyholder requests the policy (or additional or increased coverage) on or before the loan transaction closing, and the insurer receives the Application Form (or endorsement request) and full amount due within 10 calendar days from the loan transaction closing (closing date plus 9 days)

The effective date will be the date and time of the loan closing.

If the loan transaction date is on April 3, the application date is April 3, and the insurer receives the Application Form (or endorsement request) and full amount due paid by the policyholder on April 7, then the policy effective date is April 3 at the time of loan closing.

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Table 10. Effective Date When Potentially Eligible for the Loan Exception continued

RECEIPT DATE EFFECTIVE DATE EXAMPLE

If the policyholder requests the policy (or additional or increased coverage) on or before the loan transaction closing, and the insurer receives the Application Form (or endorsement request) and full amount due after 10 calendar days from the closing (closing date plus 9 days or more)

The effective date will be 12:01 a.m. (local time) on the 30th calendar day after the insurer’s receipt date.

If the loan transaction date is on April 3, the application date is April 3, and the insurer receives the Application Form (or endorsement request) and full amount due paid by the policyholder on April 15, then the earliest policy effective date is May 15.

Note: When an agent submits an agency check, it must be accompanied by settlement paperwork or a photocopy of the original check from the lender, title company, or settlement attorney to be eligible for the waiting period exception.

D. Post-Wildfire Exception (1-Day Waiting Period) The 30-day waiting period may not apply to new policies (or endorsements to add or increase coverage) for privately-owned property (building or contents) affected by flooding from federal land caused by post-wildfire conditions. Coverage becomes effective at 12:01 a.m. (local time) on the first calendar day after the Application Form (or endorsement request) date:14

1. The insured property is privately-owned (property not owned by a federal, state, local, territorial, or tribal government) and experiences damage caused by a flood that originated on federal land;

2. Post-wildfire conditions on federal lands caused or worsened the flooding; and 3. The policyholder purchased the new, additional, or increased coverage either:

a. On or before the fire containment date; or b. During the 60-calendar-day period following the fire containment date.

Given the eligibility criteria for this post-wildfire exception, the policyholder had to already have NFIP coverage in place at least one day before the triggering flood loss occurred. Therefore, this exception is relevant when a new policy (or additional or increased coverage) is within the standard 30-day waiting period and experiences a loss qualifying it for the post-wildfire exception and resulting 1-day waiting period. The insurer cannot endorse the policy to change its effective date, so must cancel and rewrite the policy.

For the purposes of the post-wildfire exception, the federal agency responsible for the land on which the post-wildfire conditions existed determines the fire containment date. FEMA supports the application of the post-wildfire exception by tracking containment dates for wildfires occurring on federal lands and consulting, when necessary, with appropriate federal agencies to determine whether post-wildfire conditions caused or worsened a flood. NFIP insurers may request assistance with the proper application of the post-wildfire exception by contacting [email protected].

IV. Administrative Topics

A. Electronic Signatures NFIP insurers must sell and service NFIP policies in a customer-centric manner as part of their normal business practices. To improve the policyholder’s experience and to reduce administrative burden, FEMA approves and encourages the use of electronic signatures

14. 42 USC 4013(c)(2)(C); 44 CFR § 61.11(c)

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on NFIP transactions. FEMA will not deny the legal effect, validity, or enforceability of a signature solely because it is in electronic form. Insurers should accept electronic signatures in accordance with their general business practices and applicable laws. Electronic signatures must comply with the following requirements.

• The signer must use an acceptable electronic form of signature; • The electronic form of signature must be executed or adopted by a person with the

intent to sign the electronic document; • The electronic form of signature must be attached to or associated with the

electronic document being signed; • There must be a means to identify and authenticate a particular person as the

signer; and • There must be a means to preserve the integrity of the signed document.15

B. Delivery of the Policy The insurer must send:

• The policy form (contract) to the policyholder at the time of policy issuance or after any change made to the policy contract; and

• The policy declarations page to the policyholder, agent, and, if applicable, lender(s); and • The NFIP Summary of Coverage; and • A cover letter to reference these enclosures.

See Appendix A: Policy for copies of the SFIP policy forms. See Appendix I: Policyholder Communications for declarations page samples and requirements.

Note: The insurer may send these documents via postal or electronic delivery in accordance with their usual business practice. FEMA recommends that the insurers use an opt-in approach to electronic communication with policyholders.

C. Evidence of Insurance A copy of the Application Form and premium paid receipt or a copy of the declarations page is sufficient evidence of proof of purchase for new policies.

V. Assignment and Transfer of Business

A. Assignment of a Policy to a New Building Owner The owner of an insured building may provide written consent to assign a flood insurance policy with building coverage to the purchaser of the building. Owners may not assign contents-only policies or policies on buildings under construction. The seller must sign the assignment endorsement on or before the closing date, and the new building owner has up to 30 days beyond the closing date to submit the endorsement form to the insurer for processing.

If the building is a primary residence, the insurer must validate the primary residence status at the time of assignment for the assignee to be eligible for the primary residence status and associated HFIAA surcharge. If the previous owner received a Pre-FIRM discount and used the building as a primary residence but it is not a primary residence for the new owner, the new owner may receive the same discounted premium as the previous owner. However, the annual increase cap (which is a component of the discounted premium) is based on

15. Nothing stated herein removes or waives the explicit requirements found at Pt. 61 App. A(1–3) VII General Conditions G. 4, Requirements in Case of Loss. Any Proof of Loss must be signed and sworn to by the policyholder.

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the information provided by the new owner. The discounted premium does not include assessments, fees, or surcharges.

See Section 4: How to Endorse for information on endorsement procedures to accomplish assignment of a policy.

New Policy After a Real Estate Transaction Under certain conditions, the new owner of an NFIP-insured building can buy a new NFIP policy and, if eligible, receive any statutory discount the prior policyholder received. For additional information, see the New Policy After a Real Estate Transaction heading under Statutory Discounts in Section 3: How to Write.

B. Transfer of Any or All of A Policyholder’s or Agent’s Business to Another Insurer One kind of transfer of business occurs when a policyholder or agent moves any or all their existing business from one insurer to another. Such a transfer occurs through a renewal notice issued by the receiving insurer but otherwise resembles the process for new business.

The receiving insurer must collect the NFIP policy number of the existing policy, policyholder name, property address, and all underwriting information to verify the correct rating and issuance of the policy, including the following as applicable:

• Prior insurer’s declaration page; • Documentation of primary residence status (if property address and mailing

address differ); • Documentation to support mitigation discounts being applied to policy; • Elevation Certificate if available; • Documentation of building replacement cost value, if applicable, for an Other

Residential Building, Residential Condominium Building, Non-Residential Building, or Non-Residential Unit;

• Photographs, if applicable (the NFIP will accept photographs from the previous insurer if there is no evidence of structural changes that affect rating).

The receiving insurer must validate the information when there is a discrepancy between the building descriptions in the policy underwriting file and the prior insurer’s declarations page. The receiving insurer submits the existing NFIP policy number, policyholder name, property address, and all the underwriting information to FEMA requesting a policy transfer quote. FEMA calculates the total amount due and sends the quote back to insurer.

If the policy is within 90 days of its expiration date, then the receiving insurer can immediately generate a renewal notice to accomplish the transfer. If the policy is not within 90 days of its expiration date, then the insurer must wait to generate a renewal notice within 90 days of the expiration date. In this latter case, the insurer must request an updated quote reflecting the most recent data available (for instance, Building Replacement Cost Value) and the rating plan in effect at the time of the renewal.

C. Transfer of an Insurer’s Entire Book to Another Insurer Another kind of transfer of business occurs when a WYO company moves all of its existing business to another WYO company or to NFIP Direct. The transferring WYO company can move its existing business either all at once or policy-by-policy as they come up for renewal, consistent with a transfer plan submitted to and approved by FEMA.16

16. See the latest WYO Arrangement for the applicable requirements

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The transferring WYO company must collect all the policy and underwriting information for its book of NFIP business (or those policies approaching their expiration dates) and submit that information to the receiving NFIP insurer. When each policy comes within 90 days of its expiration date, the receiving insurer asks FEMA to calculate the renewal premium. FEMA generates the quote and the receiving insurer uses the FEMA quote to send the renewal notice.

VI. Reformation Due to Insufficient Premium or Rating Information A. General Information A policy can provide only the amount of coverage that the premium received will purchase for a full policy term (or the applicable portion of the policy term). An NFIP insurer must reform a policy if it discovers at any time (at writing, endorsement, renewal, or before or after a loss) that the:

• Premium the insurer received for the policy (or endorsement) is insufficient to buy the amount of building or contents coverage requested; or

• Rating information is insufficient and, when complete, indicates that the premium paid is insufficient.17

Examples of situations that require reformation include:

• Underpayment of a bill (though not an invalid payment, such as a check returned by the bank for non-sufficient funds) to purchase an initial policy, policy renewal, or endorsement;

• A rating adjustment requiring additional premium after a mid-term event (for example, a renovation or damage from another peril) changes one or more rating characteristics;

• A rating correction requiring additional premium;

• Discovery that an incorrect SFIP form was used (or a different SFIP form is needed now) and the premium paid is insufficient to purchase the originally requested coverage amount under the correct policy form; and

• Endorsement of a policy from a provisional rate to a rating engine rate, if the premium paid is insufficient under the rating engine rate.

Reformation does not apply when renewing by Application Form or recertification questionnaire a policy otherwise subject to non-renewal. See the Renewal by Application Form or Recertification Questionnaire heading in Section 5: How to Renew.

Note: See Section 4: How to Endorse for general guidance on rating adjustments and rating corrections, including those that result in premium refunds.

B. General Reformation Procedures The insurer must bill the additional premium required to restore the originally requested amount of coverage. If the rating information is insufficient to determine the correct premium amount, the insurer must request additional information. To restore the originally requested amount of coverage without a waiting period, the insurer must receive the additional rating information, if applicable, within 60 days of the request, and the additional premium within 30 days from the date of the bill. If the policyholder provides the additional premium (and additional information, if applicable) but not within the specified timeframes, the insurer must increase the coverage to the originally requested amount by endorsement with a 30-day waiting period.18 Table 11 describes the general procedures an insurer

17. 44 CFR Part 61, Appendix A(1)-(2), VII. D; 44 CFR Part 61, Appendix A(3), VIII. D 18. 44 CFR Part 61, Appendix A(1)-(2), VII. D; 44 CFR Part 61, Appendix A(3), VIII. D

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must follow when it discovers – either before or after a loss – that the premium paid is insufficient to purchase the amount of coverage requested.

Table 11. General Procedures to Reform a Policy

STEP DESCRIPTION

1. Calculate Coverage and

Premium Amounts

The insurer must calculate:

• The amount of coverage that the premium received can purchase after deducting the costs of all applicable fees and surcharges; and

• The additional premium required to restore the originally requested amount of coverage, including adjusting the total amount of the bill as needed if the initial amount charged for any fees or surcharges was incorrect.

2. Request Additional Information If the

Rating Information Is Insufficient

If the rating information is insufficient the insurer must request the required information and receive it within 60 days.

After receiving the requested information, the insurer will:

• If the premium is insufficient, determine the reduced amount of coverage and calculate the additional premium due; or

• If the premium was overpaid, follow the guidance on refunds in Section 4: How to Endorse.

If the insurer does not receive the required information within 60 days, the insurer must contact FEMA Underwriting for additional guidance.

3. Reduce the Coverage to

the Amount the Payment Received

Will Purchase

In accordance with its standard business practice, the insurer must then reduce the coverage to the lower amount by either:

• Immediately reducing the coverage; or • Preparing to reduce the coverage to that same amount if it does not

receive the additional premium (or rating information) within the timeframes specified in this table.

In either case, the guidance in Table 12 below determines the effective date of this reduction in coverage (see Table 14 in the case of an incorrect geolocation or flood zone).

4. Bill the Additional Premium

Due

The insurer must send the payor an underpayment letter (copying all other parties listed on the declarations page) billing them for the additional premium required to restore the originally requested coverage amount.

5. Increase Coverage to the Originally

Requested Amount

• If the insurer receives the additional premium within 30 days from the date of the bill (and additional rating information, if applicable, within 60 days of the request), the insurer must increase coverage to the originally requested amount (but not any higher amount) without applying any waiting period.

• If the insurer receives the additional premium (and additional information, if applicable) but not within the specified timeframes, the insurer must increase the coverage by endorsement with a 30-day waiting period.

• If the policyholder requests to increase coverage above the originally requested amount, the insurer must follow the standard endorsement procedures including effective date rules (see Section 4: How to Endorse).

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Table 11. General Procedures to Reform a Policy continued

STEP DESCRIPTION

6. Consequences If Additional Premium

(or Additional Information) Not

Received

• If the insurer does not receive the required rating information, it may not increase coverage. The insurer must contact FEMA Underwriting for additional guidance.

• If the insurer has or receives complete rating information but does not receive the additional premium due, the reduction in coverage amount applies (see Table 12 to determine the effective date of this reduction) and the insurer may only increase coverage through the standard endorsement procedures (see Section 4: How to Endorse).

6. Consequences If Additional Premium

(or Additional Information) Not

Received continued

• If the premium received, after deducting the costs of all applicable fees and surcharges, is insufficient to buy any amount of coverage, and the policyholder does not pay the additional amount of premium owed to increase coverage to the originally requested amount or to a lesser amount, the insurer must cancel the policy and refund the payment. However, if a claim was paid on a policy in this situation before discovery of the insufficient premium, the insurer must contact FEMA for additional underwriting and claims guidance.

Table 12 provides guidance on when to apply the initial reduction in coverage, the timeframe when additional premium is due, and the effective date of the increase to the originally requested coverage amount.19 In this table, “within specified timeframes” refers to receipt of additional rating information, if applicable, within 60 days and the additional premium within 30 days, as specified in Table 11.

Table 12. Reformation Timeframes and Effective Dates

Timeframe When the Premium Paid Is Insufficient

Scenario 1: Full Policy Term

(for example, underpayment of a renewal bill, a rating

correction, or endorsement from a provisional rate to a rating

engine rate)

Scenario 2: Portion of the Policy Term (after an endorsement that

increased coverage or other mid- term event affecting premium)

Effective Date of Reduced Coverage

Beginning of the policy term • Effective date of the

endorsement; or • Date of the event

Timeframe When Additional Premium Applies

Full policy term

Remainder of the policy term after the:

• Effective date of the endorsement; or

• Date of the event

19. 44 CFR Part 61, Appendix A(1)-(2), VII.D “Insufficient Premium or Rating Information”; 44 CFR Part 61, Appendix A(3), VIII.D “Insufficient Premium or Rating Information.”

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Table 12. Reformation Timeframes and Effective Dates continued

Timeframe When the Premium Paid Is Insufficient

Scenario 1: Full Policy Term

(for example, underpayment of a renewal bill, a rating

correction, or endorsement from a provisional rate to a rating

engine rate)

Scenario 2: Portion of the Policy Term (after an endorsement that

increased coverage or other mid- term event affecting premium)

Effective Date of Increased Coverage

Premium (and Rating Information) Received Within Specified Timeframes

Beginning of the policy term • Effective date of the

endorsement; or • Date of the event

Received But NOT Within Specified Timeframes

Only by endorsement with a 30-day waiting period

Only by endorsement with a 30-day waiting period

Table 13 describes how the insurer must handle a claim when there is insufficient premium or rating information, whether it discovers the issue before or after a loss.20 Again, “within specified timeframes” refers to receipt of additional rating information, if applicable, within 60 days and the additional premium within 30 days, as specified in Table 11.

Table 13. How to Handle a Claim Involving Policy Reformation

ADDITIONAL PREMIUM (and Rating Information) GUIDANCE

Received Within Specified Timeframes

• The insurer must settle the claim based on the originally requested coverage amount

Note: If the policyholder provides the insurer notice within 30 days of the underpayment notice, they may request that the insurer deduct the additional premium due from the claim payment.

Received But NOT Within Specified Timeframes

• If the rating information is insufficient, the insurer may not pay the claim until it receives complete rating information or additional guidance from FEMA Underwriting.

• If the rating information is sufficient, the insurer must settle the claim based on the reduced amount of coverage.

Note: After 30 days has elapsed since the underpayment notice, the policyholder may still request that the insurer deduct the additional premium due from the claim payment but the claim payment will be based on the reduced amount of coverage. Restoration of the original coverage amount is subject to the 30-day waiting period.

20. 44 CFR Part 61, Appendix A(1)-(2), VII.D “Insufficient Premium or Rating Information”; 44 CFR Part 61, Appendix A(3), VIII.D “Insufficient Premium or Rating Information.” FEMA can provide additional underwriting and claims guidance if a claim was already paid based on incorrect underwriting information.

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Table 13. How to Handle a Claim Involving Policy Reformation continued

ADDITIONAL PREMIUM (and Rating Information) GUIDANCE

Not Received

• If the insurer does not receive the required rating information, it may not pay the claim until it receives complete rating information or additional guidance from FEMA Underwriting.

• If the insurer has or receives complete rating information but does not receive the additional premium due, it must settle the claim based on the reduced coverage amount (see Table 12 to determine the effective date of this reduction).

• If the premium received, after deducting the costs of all applicable fees and surcharges, is insufficient to buy any amount of coverage, and the policyholder does not pay the additional amount of premium owed to increase coverage to the originally requested amount within 30 days of the underpayment notice, the insurer must cancel the policy, refund the payment, and withhold payment on the claim. However, if a prior claim was paid on a policy in this situation before discovery of the insufficient premium, the insurer must contact FEMA for additional underwriting and claims guidance.

C. Exception When Reforming a Policy Due to an Incorrect Geolocation or Flood Zone

There is an exception to the general reformation guidance when an error in geolocating a property or an incorrect flood zone resulted in insufficient premium.21 In this case, the insurer must:

• Reduce the amount of coverage effective the date of discovery; and

• Calculate the additional premium due (to restore the original coverage amount for the remainder of the policy term) prospectively from the date of discovery.

For the portion of the policy term before the date the insurer discovered the incorrect geolocation or flood zone (the “date of discovery”), the policyholder receives the originally requested coverage amount without paying additional premium (or providing additional rating information, if insufficient).

For the remainder of the policy term after the date of discovery, the general reformation procedures described in Table 11 apply.22 Refer to Table 14 to determine when to apply the initial reduction in coverage, the timeframe when additional premium is due, and the effective date of the increase to the originally requested coverage amount. Again, “within specified timeframes” refers to receipt of additional rating information, if applicable, within 60 days and the additional premium within 30 days, as specified in Table 11.

21. 42 U.S.C. 4015(f). 22. However, if the premium received is insufficient to buy any amount of coverage, the policyholder does not

restore the originally requested limits, and a loss occurred before discovery of an incorrect geolocation or flood zone, the insurer must contact FEMA for additional underwriting and claims guidance.

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Table 14. Reformation Timeframes and Effective Dates When the Geolocation or Flood Zone Is Incorrect

GUIDANCE

Effective Date of Reduced Coverage Date of discovery

Timeframe When Additional Premium Applies Remainder of the policy term after the date of discovery

Effective Date of Increased

Coverage

Additional Premium (and Rating Information) Received Within Specified Timeframes

Date of discovery

Received But NOT Within Specified Timeframes

Only by endorsement with a 30-day waiting period

Table 15 describes how the insurer must handle any claim when there is insufficient premium due to an incorrect geolocation or flood zone.23

Table 15. How to Handle a Claim Involving Policy Reformation When the Geolocation or Flood Zone Is Incorrect

TIMING OF LOSS

Before Discovery of Insufficient Premium After Discovery of

Insufficient Premium

The insurer must settle the claim without delay based on the originally requested coverage amount, regardless of whether:

• The rating information is sufficient; or • It receives additional premium for the remainder of the

policy term. However, the insurer may, at the policyholder’s option, deduct the additional premium due from the claim payment.

Follow the guidance in Table 13 above.

If the flood zone was incorrect, the insurer must use the correct flood zone for the building location when applying the SFIP’s coverage limitations by building type and flood zone.24 For example, if a policy for a Post-FIRM elevated building was written incorrectly in a non- SFHA (for example, Zone X) and at the time of loss the property was determined to be located in an SFHA (for example, Zone AE), then the insurer must pay the claim in accordance with the coverage limitations applicable to the correct SFHA zone.

23. 42 U.S.C. 4015(f). FEMA can provide additional claims guidance if a claim was already paid based on incorrect underwriting information.

24 44 CFR Part 61, Appendix A(1)-(3), III.A.8 and III.B.5

3. How To Write

The focus of this section is how to write new business. The Introduction overviews the NFIP rating methodology and the process for new business. General Rating Information provides guidance on the information and rating variables that FEMA’s system uses to generate premium quotes. Condominium Rating Information elaborates on that guidance by explaining how the policy forms and rating variables apply to various scenarios when insuring condominium buildings. Provisional Rating Information addresses situations when FEMA’s system is unavailable to provide premium quotes.

I. Introduction

A. Snapshot of the Risk Rating 2.0 Methodology: Equity in Action FEMA has updated the NFIP risk rating methodology through the implementation of a new pricing methodology called Risk Rating 2.0. FEMA developed the Risk Rating 2.0 methodology through years of collaboration with catastrophe modeling companies to incorporate industry best practices, technology, and modeling to inform a new and better way of identifying and pricing flood risk. The new methodology brings several benefits to individual property owners and their communities:

• Using expert technical capability and tools allows FEMA to better assess a property’s unique flood risk.

• This individualized, more accurate picture of risk enables FEMA to provide individuals with easy-to-understand information about what drives their rates.

• Property owners can now make better-informed decisions on purchasing flood insurance and reducing flood risk.

• This new methodology also provides states and local governments with a better understanding of risk to help communities and individuals take action and mitigate.

Figure 1: Overview of Risk Rating 2.0 Data Sources and Rating Factors

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The Risk Rating 2.0 methodology calculates a rate based on a series of unique variables and flood hazards for each building, rather than relying on flood zones and Base Flood Elevations to evaluate flood risk for broad classes of properties. The Risk Rating 2.0 rating variables can be grouped into several broad categories, outlined in Table 1 and discussed in detail under General Rating Information below. Table 1 also outlines the other main content in this section.

Table 1. NFIP Rating Information

CATEGORIES INFORMATION

General Rating Information

Policyholder and Mortgagee Information

• Policyholder Information

• Mortgagee Information

Geographic Location Variables

• Building Location

• Community Map Information and Flood Zone

• Community Rating System Discount

Structural Variables

• Building Occupancy and Description

– Building Occupancy

– Building Description

• Construction Type

• Foundation Type

• First Floor Height

• Mitigation Discounts

– Machinery & Equipment Above First Floor

– Proper Openings

• Floodproofing

• Replacement Cost Value

– Square Footage

– Building Replacement Cost Value

• Claims History – Prior NFIP Claims

– Severe Repetitive Loss Property

• Other Building Factors

– Date of Construction

– Number of Detached Structures on Property

– Number of Elevators

– Number of Floors in Building

– Floor of Unit

– Total Number of Units in Building

– Rental Property

– Building Over Water

– Primary Residence Status

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Table 1. NFIP Rating Information continued

CATEGORIES INFORMATION

Coverages and Deductibles

• Maximum Coverage Limits • Increased Cost of Compliance (ICC) Coverage • Deductibles

Statutory Discounts • Newly Mapped Discount • Pre-FIRM Discount • Other Statutory Discounts

Assessments, Fees, and Surcharges

• Reserve Fund Assessment • HFIAA Surcharge • Federal Policy Fee • Probation Surcharge

Condominium Rating Information

Condominium Rating Scenarios

• Condominium Rating Scenarios – Condominium Association Coverage for Residential

Condominium Building (Scenario #1)

– Residential Unit Owner Coverage in Residential Condominium Building (Scenario #2)

– Residential Unit Owner Coverage in Non-Residential Condominium Building (Scenario #3)

– Condominium Association Coverage for Non- Residential Condominium Building (Scenario #4)

– Non-Residential Unit Owner Coverage in Residential or Non-Residential Condominium Building (Scenario #5)

• Applying the Condominium Rating Scenarios

Provisional Rating Information

Provisional Rating • Provisional Rating

B. Process for Writing New Business Here is a high-level summary of the process for writing new business:

• Agent – Using the insurer system, work with the prospective policyholder to complete the Flood Insurance Application Form, determine eligibility for NFIP coverage, and submit the information to FEMA for a quote.

• FEMA – Validate eligibility for NFIP coverage, apply geospatial and relevant third-party data, calculate the premium, and send the quote to the insurer system.

• Agent – Apprise the prospective policyholder of the total amount due and, if they want to proceed, collect the premium and any supporting documentation and submit it to the insurer.

• Insurer – Validate the payment, determine the policy effective date, issue the policy and declarations page, and report policy data to FEMA.

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II. General Rating Information

A. Policyholder and Mortgagee Information

1. Policyholder Information

The Application Form asks several questions about the individual or entity insuring the property. Some help ensure the correct type of coverage and policy form; others satisfy federal reporting requirements. The information below will help to indicate the correct “yes or no” answers to these questions.

• Is the policyholder a tenant? Does the policyholder own the building or are they a renter? This question may help to avoid duplicate coverage by a renter/lessee and the owner of a building. A building can have only one policy with building coverage, which means that the tenant/lessee and owner must be named on the same policy if the tenant/lessee has an insurable interest in the building (see the Insurable Interest heading in Section 2: Before You Start for more information). A tenant must always purchase contents coverage separately.

• Is the policyholder a condominium association? A condominium association is an entity made up of condominium unit owners, responsible for the maintenance and operation of common elements owned in undivided shares by unit owners and other buildings, in which the unit owners have use rights, and where membership in the entity is a required condition of ownership.

• Is the policyholder a small business? For reporting purposes, a small business is a commercial (for-profit) enterprise having less than 100 employees total at all locations.

• Is the policyholder a non-profit entity? For reporting purposes, a non-profit entity is an organization that has been granted tax-exempt status by the Internal Revenue Service (IRS) because it furthers a social cause and provides a public benefit.

• Is the policy force-placed by a lender? Is this a policy that a lender obtained (force- placed) on a building that is subject to the mandatory purchase of flood insurance requirement but did not have flood insurance coverage? The mandatory purchase requirement applies to buildings that have federally backed mortgages and are located in Special Flood Hazard Areas (SFHAs).

2. Mortgagee Information

Applicants must provide the name, mailing address, and loan number for the first mortgagee and, as applicable, provide any second mortgagee, loss payee, or other information such as disaster assistance.

For condominium association applicants, do not enter the mortgagees for the individual condominium unit owners when applying for coverage under an RCBAP. Individual condominium unit owners submit their individual mortgagee information when applying for unit coverage under the Dwelling Form.

B. Geographic Location Variables 1. Building Location

The building’s location informs its eligibility for NFIP flood insurance coverage, beginning with its location in a participating NFIP community. Identifying the precise location of a building is also essential to determining its unique flood hazards.

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a. Property Address

A property address is required for every policy, which is usually a street address but may be a descriptive address:

• Street Address is the best and preferred method; it includes the street number and street name (Address Line 1), unit or apartment number (Address Line 2), city or county name, state, and zip code (Address Line 3). Use standard United States Postal Service (USPS) abbreviations.

• Other (Descriptive Address) – If a street address is unavailable, a descriptive address in the form of a rural route or a legal description is acceptable. This field also may be used when more information is needed to distinguish between multiple buildings at the same address (see II.B.1.c. below).

– A rural route is one established and recognized by the USPS for mail delivery in a country (non-urban) free delivery area.

– A legal description is a method of locating or describing land in relation to the public land survey system. It should be used only for buildings or subdivisions under construction or where a street address is not available. Legal descriptions also may include the lot and block number as provided by the community; some use metes and bounds to identify the boundaries of a property.

b. Geolocation

Typically, FEMA will successfully geolocate the provided property address. Insurers also have the option to provide the building’s latitude and longitude. FEMA will prompt the insurer (or agent) to submit the building’s latitude and longitude (or use the values they already provided) to enable geolocation if either:

• FEMA cannot geocode the street address or descriptive address; or

• FEMA’s geocoding tool is unavailable.

Latitude and Longitude – Latitude denotes the north and south coordinates of the location, and longitude measures the east and west coordinates. The insurer (or agent) can obtain the latitude and longitude for a property from an Elevation Certificate (EC), a flood zone determination, or one of the free geolocation services available on the Internet. Insurers are responsible for reviewing and validating latitude and longitude coordinates entered by agents.

Table 2. Requirements for Latitude and Longitude Coordinates

Latitude: (decimal degrees*, at least 5 decimal places, leading minus sign (−) for south values)

Longitude: (decimal degrees*, at least 5 decimal places, leading minus sign (–) for west values)

Datum: WGS 84 (common for phones, mapping websites, GPS) NAD 83 (less common)

• Location should be near the center of the structure or near the front door.

• Coordinates from the EC are preferred if they are available and can be supplied in the above manner.

Example: Latitude: 38.88948 Longitude: –77.03523 Datum: WGS 84

Note: If the agent needs to clarify which of multiple buildings at the address the policyholder wants to insure, see c. Multiple Buildings at the Same Address below.

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Latitude and longitude coordinates are not a means for distinguishing between multiple buildings at one address.

Using the property geolocation derived from street address or latitude and longitude, FEMA can systematically determine certain rating variables, including specific flood hazards based on the building’s distance from various flooding sources. In the rare event that FEMA’s system is unavailable (see the latitude and longitude guidance above for situations when only FEMA’s geocoding capability is unavailable), then the insurer can still issue the policy using provisional rates. For more information see the Provisional Rating Information heading later in this section.

c. Multiple Buildings at the Same Address

Specific property location information helps to ensure coverage of the correct building when there are multiple buildings at the same address. Correct identification of the building is especially important for proper claim adjustment following a flood loss.

If there is more than one building at the location of the insured property, use the Application Form’s Building Location section to clearly identify the building being insured under this policy. For example, five buildings with the same property location may be insured with separate policies. If necessary, use identifiers such as Building A, B, or C, or “Smith Hall”, in the second line of the street address to distinguish the buildings. Also select the Building Description that best corresponds to the insured building. If there are multiple buildings at the same address and the specific building identification is not clear, a photo of the building or a sketch showing the location of the building on the property to be insured should be retained in the policy file. This will help in proper identification of the insured building for the adjustment of claims, especially for multiple non-residential buildings at the same location.

2. Community Map Information and Flood Zone

The community in which a property is located can affect certain aspects of both coverage and rating, so it is important to obtain accurate community information. The Application Form requires current community map information including the community number and map panel, current flood zone shown on the map, the map date, and whether the community is in the NFIP’s Regular or Emergency Program. See Appendix D: Flood Maps for more detailed information on flood maps and flood zones.

FEMA expects insurers to provide map and flood zone information and validate it at the next renewal following a map change. Although flood zones are no longer a rating element for NFIP rates, they remain relevant to NFIP coverage and rating for several reasons:

• Federally-regulated lenders enforce the flood insurance mandatory purchase requirement for properties located in SFHAs.1

• Communities document and enforce compliance with local floodplain management ordinances and laws tied to flood zones.2

• Eligibility for Newly Mapped discounts is based in part on location inside or outside an SFHA.3

• Eligibility for Zone AR and Zone A99 discounts4 is based on the process of restoration of non-accredited flood protection systems in those zones.

1. 42 U.S.C. § 4012a 2. 44 CFR Subpart A 3. 42 USC § 4015(i) 4. 4014(e)&(f) and Biggert-Waters Flood Insurance Reform Act of 2012, Pub. Law No. 112-141, Div. F., Title II

100230; 126 Stat. 946-949 (2012), as amended

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• Eligibility for residential and non-residential floodproofing discounts is based in part on flood zone.5

• When using an EC to provide a First Floor Height value, FEMA’s guidance on which data fields to provide on the Application Form varies depending on the flood zone.

• The NFIP insures an enclosure under a Post-FIRM elevated building if located outside an SFHA but not if located within an SFHA.6 The flood zone at the time of loss determines how elevated building coverage limitations are applied.

• While flood zones do not directly affect eligibility for Community Rating System discounts, rules around floodplain management violations tied to location inside or outside an SFHA can make a property ineligible for a CRS discount.

3. Community Rating System (CRS) Discount

a. General Information

The Community Rating System (CRS) is a voluntary incentive program for communities participating in the NFIP. The CRS offers NFIP premium discounts in communities that develop and execute extra measures beyond minimum floodplain management requirements to provide protection from flooding. The CRS discount applies uniformly across the community, with the exceptions noted below.

b. Policies Ineligible for CRS Discounts

The following policies are not eligible for CRS discounts:

• Emergency Program Policies • Group Flood Insurance Policies • Provisionally Rated Policies • Buildings not in compliance with community floodplain management regulations

or that have known floodplain management violations are ineligible for the CRS premium discount. In particular, this ineligibility applies to policies for Post- FIRM buildings located in an SFHA where the elevation difference used for rating is at least 1 foot or more below the BFE, with the following exceptions: – Post-FIRM V-Zone buildings with unfinished breakaway wall enclosures and

machinery or equipment at or above the BFE. – A building with a subgrade crawlspace with certification from a community

official. The letter signed by the community official that certifies a subgrade crawlspace exception must contain the following statement: “I certify that the building located at has a crawlspace that was built in compliance with the NFIP requirements for crawlspace construction as outlined in FEMA Technical Bulletin 11-01, Crawlspace Construction for Buildings Located in Special Flood Hazard Areas.”

FEMA maintains a list of properties that are in violation of floodplain management standards. These properties are ineligible for the CRS discount. A policyholder can request a change to their CRS discount eligibility status by contacting their community Floodplain Administrator (FPA) to determine the appropriate documentation required to show compliance (details can be found here). Upon review of the documentation and determination that the structure is compliant with the floodplain management standards, the community FPA contacts their State NFIP Coordinator or FEMA Regional office to remove the property from the CRS Discount

5. 42 USC § 4014(a)(1)(A)(ii); 42 U.S.C. § 4102(d); 44 CFR § 60.6(c) 6. 44 CFR Part 61, Appendix A(1)-(2), III.A.8 & B.5; 44 CFR Part 61, Appendix A(3), III.A.8 & B.4

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Exclusion list. Once the FEMA Regional office concurs with the community’s determination on the violation resolution, the FEMA Regional office will contact FEMA headquarters Floodplain Management Division to request an update to the property’s CRS discount eligibility status.

c. CRS Classes and Discounts

The CRS recognizes measures for flood protection and flood loss reduction. The four main activity categories include Public Information, Mapping and Regulation, Flood Damage Reduction, and Flood Preparedness.

To participate in the CRS, a community must complete and submit an application to FEMA. Subsequently, FEMA reviews the community’s floodplain management efforts and assigns the appropriate CRS classification based on credit points earned for various activities. A community’s classification may change depending on the level of continued floodplain management efforts. Classifications range from 1 to 10 and determine the premium discount for eligible flood insurance policies (see Table 3 below). All community assignments begin at Class 10 with no premium discount. Communities with a Class 1 designation receive the maximum 45 percent premium discount.

Note: If, midway through a policy term, a community’s CRS class changes or a policy’s eligibility for a CRS discount changes, any resulting adjustment to the CRS discount applies only at the next policy renewal.

Table 3 shows the available CRS premium discounts based on community CRS class.

Table 3. CRS Premium Discounts By Class

CLASS DISCOUNT

1 45%

2 40%

3 35%

4 30%

5 25%

CLASS DISCOUNT

6 20%

7 15%

8 10%

9 5%

10 –

d. CRS Community Status Information

A list of all current CRS eligible communities and their status can be found at: https://www.fema.gov/flood-insurance/rules-legislation/community-rating-system.

C. Structural Variables

1. Building Occupancy & Description

a. Building Occupancy

Building occupancy is a key factor that determines which policy form to use, which specific rating factors apply, as well as the policy’s maximum coverage limits and deductible options. The NFIP recognizes nine different building occupancies, discussed in Tables 4 and 5. Table 4 explains which building occupancy to select when buying building or contents coverage for a building or unit.

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Table 4. Building Occupancy: Building or Contents Coverage for a Building or Unit

OCCUPANCY DEFINITION

Single-Family Dwelling

Single-Family Home

A single-family building, townhouse, or rowhouse that is residential (or mixed-use with non-residential uses limited to less than 50 percent of the building’s total floor area) and not in condominium ownership (or not eligible for the RCBAP Form).

Notes:

• This building occupancy should not be used for a residential unit in any building or any manufactured/mobile home or travel trailer. These occupancies are listed separately below.

• The NFIP defines a townhouse or rowhouse as a unit of a building, divided from similar units by solid, vertical, load-bearing walls dividing the building from its lowest level to its highest ceiling and having no openings in the walls between units and with no horizontal divisions between any of the units. For more information, see the Single and Multiple Buildings heading in Section 2: Before You Start.

• Examples of non-residential uses within a residential single-family building include an office, private school, studio, or small service operation.

• See RCBAP eligibility rules under the Condominium Rating Information heading in this section (Scenario #1).

Residential Manufactured/ Mobile Home

A single-family residential building (or mixed-use building with non-residential uses limited to less than 50 percent of the building’s total floor area) that meets one of the following definitions:

• A manufactured home (also known as a mobile home) built on a permanent chassis, transported to a site in one or more sections, and affixed to a permanent foundation; or

• A travel trailer without wheels, built on a chassis, affixed to a permanent foundation, and regulated under the community’s floodplain management and building ordinances or laws.

Residential Unit

A single-family residential unit (or mixed-use unit with non-residential uses limited to less than 50 percent of the unit’s total floor area) located within a:

• Residential or non-residential condominium building; or

• Residential or non-residential building not in condominium ownership (for example, an apartment building or cooperative building); or

• Townhouse or rowhouse in condominium ownership (if insured as a unit as opposed to an entire building). If insuring as an entire building, see the Residential Condominium Building row below for additional information.

Multifamily Building

Two-to-Four Family Building

A residential building (or mixed-use building with non-residential uses limited to less than 25 percent of the building’s total floor area) containing 2–4 units. This category includes the following buildings (but excludes buildings where the normal occupancy of a guest or resident is less than 6 months):

• Apartment buildings • Assisted-living facilities • Condominium buildings (if not eligible for the RCBAP) • Cooperative buildings • Dormitories • Hotels and motels

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Table 4. Building Occupancy: Building or Contents Coverage for a Building or Unit continued

OCCUPANCY DEFINITION

Two-to-Four Family Building

continued

• Rooming houses • Tourist homes

Note: See RCBAP eligibility rules under the Condominium Rating Information heading in this section (Scenario #1).

Other Residential

Building

A residential building (or mixed-use building with non-residential uses limited to less than 25 percent of the building’s total floor area) containing 5 or more units. This category includes the following buildings (but excludes buildings where the normal occupancy of a guest or resident is less than 6 months):

• Apartment buildings • Assisted-living facilities • Condominium buildings (if not eligible for the RCBAP) • Cooperative buildings • Dormitories • Hotels and motels • Rooming houses • Tourist homes

Note: See RCBAP eligibility rules under the Condominium Rating Information heading in this section (Scenario #1).

Residential Condominium Building

Residential Condominium

Building

Select this building occupancy if all the following are true:

• The policyholder is a condominium association; • The policy will insure a residential condominium building (or mixed-use

condominium building with non-residential uses limited to less than 25 percent of the building’s total floor area) with one or more units; and

• The building is in a Regular Program community. Notes:

• The criteria for RCBAP eligibility define the Residential Condominium Building occupancy. The RCBAP Form must be used to insure a building that meets the Residential Condominium Building definition. See additional information under the Condominium Rating Information heading (Scenario #1), including what building occupancy to select if ineligible for the RCBAP.

• When determining non-residential uses, exclude the common areas of the building from the building’s total floor area. Exclude areas such as garages, lobbies, recreation rooms, storage/utility rooms, and hallways when determining residential use of a condominium building.

Non-Residential

Non-Residential Building

A building where the primary use is commercial or non-habitational. This category includes, but is not limited to the following:

• A building in which the policyholder is a commercial enterprise primarily carried out to generate income, and the coverage is for:

– A building used as an office, retail space, wholesale space, factory, hospitality space, or for similar uses; or

– A building not used for habitation or residential uses.

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Table 4. Building Occupancy: Building or Contents Coverage for a Building or Unit continued

OCCUPANCY DEFINITION

Non-Residential Building continued

• A mixed-use building in which the total floor area devoted to non-residential uses is:

– 50 percent or more of the total floor area within the building, if a single-family building; or – 25 percent or more of the total floor area within the building for all other buildings.

• The following buildings where the normal occupancy of a guest or resident is less than 6 months:

– Apartment buildings – Assisted-living facilities – Condominium buildings (if not eligible for the RCBAP) – Cooperative buildings – Dormitories – Hotels and motels – Rooming houses – Tourist homes

• Other buildings not used for habitation including, but not limited to the following:

– Agricultural buildings – Detached garages – Non-residential condominium buildings – Houses of worship – Recreation buildings (including pool houses and clubhouses) – Schools – Storage or tool sheds – Strip malls

• A non-residential townhouse or rowhouse.

Note: If insuring a non-residential townhouse or rowhouse in the condominium form of ownership as a unit, select the Non-Residential Unit occupancy.

Non-Residential Manufactured/ Mobile Building

A single-unit non-residential building (or mixed-use building in which non-residential uses are 50 percent or more of the building’s total floor area) that meets one of the following definitions:

• A manufactured/mobile building built on a permanent chassis, transported to a site in one or more sections, and affixed to a permanent foundation; or

• A travel trailer without wheels, built on a chassis, affixed to a permanent foundation, and regulated under the community’s floodplain management and building ordinances or laws.

Non-Residential Unit

A single non-residential unit (or mixed-use unit in which non-residential uses are 50 percent or more of the unit’s total floor area) within a:

• Residential or non-residential building (whether or not in condominium ownership); or

• Townhouse or rowhouse in the condominium form of ownership (if insured as a unit as opposed to an entire building).

Note: If insuring a non-residential townhouse or rowhouse in the condominium form of ownership as an entire building, select the Non-Residential Building occupancy.

Table 5 explains which building occupancy to select when insuring residential or non- residential contents on a separate policy.

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Table 5. Building Occupancy: Contents Coverage on a Separate Policy

Type of Contents Residential Building Non-Residential Building

Residential Contents

Building Occupancy to Select: (see guidance in Table 4 above)

• Single-Family Home • Residential Manufactured/

Mobile Home • Residential Unit • Two-to-Four Family Building • Other Residential Building • Residential Condominium Building

Applicable Policy Form: (based on the building occupancy selected)

• Dwelling Form • General Property Form

Building Occupancy to Select: (select the residential building occupancy that best characterizes the physical form of the non-residential building or unit the contents are located in)

• Single-Family Home • Residential Manufactured/Mobile

Home • Residential Unit

Applicable Policy Form: • Dwelling Form

Non-Residential Contents

Building Occupancy to Select: (select the non-residential building occupancy that best characterizes the physical form of the residential building or unit the contents are located in)

• Non-Residential Building • Non-Residential Manufactured/

Mobile Building • Non-Residential Unit

Applicable Policy Form: • General Property Form

Building Occupancy to Select: (see guidance in Table 4 above)

• Non-Residential Building • Non-Residential Manufactured/

Mobile Building • Non-Residential Unit

Applicable Policy Form: • General Property Form

b. Building Description

When completing the Application Form, select the Building Description that best corresponds to the building to be insured by this policy. This is important in specifying what type of Residential Unit is being insured, identifying whether a non- residential building is commercial, and distinguishing multiple buildings at the same address. Table 6 below lists the different types of buildings and includes a brief description of each. Please reference Table 4 above for additional details related to the building description.

Table 6. Building Description Options

Building Type Description

Residential

Entire Apartment Building A residential building containing multiple residential units that is not in condominium or cooperative ownership.

Apartment Unit A single residential unit within an apartment building.

Entire Cooperative Building A residential building owned by a corporation; residents buy shares of the corporation, rather than the real estate (building, land, or both building and land).

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Table 6. Building Description Options continued

Building Type Description

Cooperative Unit A shareholder’s residential unit within a cooperative building.

Detached Guest House A secondary house that shares the building lot of a larger, primary house.

Main Dwelling A residential building that is the main dwelling on the property, as opposed to any secondary dwelling such as a detached guest house.

Entire Residential Condominium Building

A residential building in that form of ownership in which each unit owner has an undivided interest in common elements.

Residential Condominium Unit (in Residential Building)

A residential condominium unit in a residential condominium building.

Residential Condominium Unit (in Non-Residential Building)

A residential condominium unit in a non-residential condominium building.

Other Dwelling Type Please describe on the Application Form.

Non-Residential

Agricultural Building A building used exclusively in connection with the production, harvesting, storage, raising, or drying of agricultural commodities and livestock.

Commercial A non-habitational building, manufactured/mobile building, or unit used as an office, retail space, wholesale space, hospitality space, or for similar uses.

Detached Garage

A non-habitational, accessory building at the same property location as a main dwelling or other building but insured separately. Designed for storage of a motorized vehicle and used only for parking and storage.

Government-Owned A building owned by any government entity.

House of Worship

A church, temple, synagogue, mosque, or other building set apart primarily for the purpose of worship in which religious services are held and the main body of which is kept for that use and not put to any other use inconsistent with its primary purpose.

Recreation Building A building designed for non-habitational uses and that does not qualify as a commercial building. Examples include clubhouses and poolhouses.

Storage/Tool Shed A non-habitational, accessory building designed for storage at the same property location as the main building, and the use of which is incidental to the use of the main building.

Other Non-Residential Type Please describe on the Application Form.

c. Manufactured/Mobile Homes As described in Table 4 above, the Building Occupancy for manufactured/mobile homes (including travel trailers) eligible for NFIP coverage (see the Building Eligibility heading in Section 2: Before You Start) may be residential or non- residential, depending on their use. Table 4 “Buildings the NFIP Insures” in Section 2 provides

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eligibility criteria for manufactured/mobile homes, including specific anchoring requirements and installation standards. In addition, the insurer must:

• Record the identification number (serial number) of the manufactured/mobile home on the Application Form; and

• When providing the square footage of the manufactured/mobile home in the appropriate section of the Application Form, include the square footage of any permanent additions or extensions.

2. Construction Type

If the building occupancy is a Single-Family Home or a Two-to-Four Family Building, determine the building’s Construction Type based on the construction used for the wall on the building’s first floor. The Construction Type rating factor only applies to the Single-Family Home or a Two-to-Four Family Building occupancy and does not apply to other occupancies, such as residential unit or manufactured/mobile home. Table 7 provides guidance on how to determine the construction type.

Table 7. Construction Type Determination

Construction Type Guidance

Frame

Use Frame as the construction type when: • The first floor above ground level is constructed with wood or

metal frame walls; or • Other materials such as exterior brick or masonry veneer are

connected to frame construction.

Masonry

Use Masonry as the construction type when the first full floor above ground level is constructed with masonry materials such as brick (not brick veneer), or concrete block walls for the full floor. Note: If the bottom floor is masonry (such as a basement, walkout level, or crawlspace), and the next higher floor has frame construction, use Frame as the construction type.

Other

Use Other as the construction type when: • The first floor above ground level is constructed with materials

other than wood or metal frame walls or masonry walls for the full story; or

• Any portion of the wall between ground level and next higher floor is frame construction (for example, “knee walls” whose lower wall is concrete block with frame wall on the higher portion).

3. Foundation Type

FEMA recognizes six foundation type options on the Application Form. The foundation types are:

• Slab on Grade (Non-Elevated) • Basement (Non-Elevated) • Elevated Without Enclosure on Posts, Piles or Piers • Elevated With Enclosure on Posts, Piles or Piers • Elevated With Enclosure Not on Posts, Piles, Piers (Solid Foundation Walls) • Crawlspace (Elevated or Non-Elevated Subgrade Crawlspace)

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These foundation types are described below and illustrated in Tables 8–13. Each foundation type identifies a building as non-elevated or elevated. The foundation type also corresponds with the Building Diagrams shown on the Elevation Certificate (EC) form in Appendix B: Forms.

a. Non-Elevated Building

A non-elevated building is a building with a:

• Slab-on-grade foundation with wood or metal frame walls on the first floor; or

• Basement or below grade (subgrade) crawlspace foundation.

Note: A basement is any area of the building, including any sunken room or sunken portion of a room, that has its floor below ground level (subgrade) on all sides. A building has a subgrade crawlspace if the subgrade under-floor area is no more than 5 feet below the top of the next higher floor (living floor) and no more than 2 feet below the Lowest Adjacent Grade (LAG) (lowest point of the ground level immediately next to a building) on all sides.

Tables 8 and 9 describe the Slab on Grade (Non-Elevated) and Basement (Non- Elevated) foundation types.

Table 8. Foundation Type – Slab on Grade (Non-Elevated)

A building whose foundation is slab-on-grade or slab-on-stem-wall with fill.

One floor, slab on grade Slab with attached garage Crawlspace with converted garage or attached finished room

Stem wall Two floor frame wall both floors Three or more floors on slab

Elevation Certificate Building Diagram Distinguishing Features

Diagram 1A: The bottom floor is at or above ground level (grade) on at least one side.

Diagram 1B: The bottom floor is at or above ground level (grade) on at least one side on slab-on-grade or slab-on-stem wall with fill.

Diagram 3: Split-level building; the bottom floor (excluding garage) is at or above ground level (grade) on at least one side.

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Table 8. Foundation Type – Slab on Grade (Non-Elevated) continued

A building whose foundation is slab-on-grade or slab-on-stem-wall with fill.

Building Indicators

• The building is constructed with wood or metal frame walls and encompasses the full footprint of the building with a slab-on-grade foundation.

• The building is one floor with any wall type and no airspace between the ground and lowest floor of the building. For example, a one floor building on grade with masonry/cinder block walls.

• If slab-on-grade, there is no airspace between the ground and the lowest floor of the building.

• This foundation type includes a building with a dual foundation. For example, an elevated building with a crawlspace or enclosure with an attached converted garage or attached finished room where the floor of the converted garage or attached finished room is equal to or lower than the enclosure floor.

Table 9. Foundation Type – Basement (Non-Elevated)

A non-elevated building that has a floor or any area of the building, including any sunken room or portion of a room, below the ground level (subgrade) on all sides.

Basement building Split level with basement

Elevation Certificate Building Diagram Distinguishing Features

Diagram 2A: The bottom floor (basement or underground garage) is below ground level (grade) on all sides.

Diagram 2B: The bottom floor (basement or underground garage) is below ground level (grade) on all sides; most of the height of the walls are below ground level on all sides and the door and area of egress is also below ground level on all sides.

Diagram 4: Split-level building; the bottom floor (basement or underground garage) is below ground level (grade) on all sides.

Building Indicators

• The building, including split-level, has a floor that is below grade on all sides even if the floor is used for living purposes, or as an office, garage, workshop, etc.

• If the building has a subgrade crawlspace and the distance from the crawlspace floor to the top of the next higher floor is more than 5 feet, or the crawlspace floor is more than 2 feet below the grade on all sides, describe the foundation type as a basement.

Note: If the building has a “walkout basement,” refer to foundation type Elevated with Enclosure Not Posts, Piles, Piers.

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b. Elevated Building

An elevated building is a building that:

• Has no basement; and • Has its lowest elevated floor raised above ground level by foundation walls,

shear walls, posts, piers, pilings, or columns.

Elevated buildings are generally elevated with the following elevating foundation types:

• Posts, Piles, Piers, and Columns: Reinforced masonry piers or concrete piers or columns.

• Foundation Walls: – Masonry walls, poured concrete walls, or precast concrete walls – regardless

of height – that extend above grade and support the weight of a building. – Knee foundation walls below the elevated floor (in other words, foundation

walls not constructed the full height of the area between the lowest elevated floor and the grade, with wood-frame or studs attached above the foundation wall).

Note: The building is non-elevated if a slab foundation supports the foundation walls.

• Shear Walls:

– Shear walls are for structural support and not structurally joined or enclosed at the ends, except by breakaway walls.

– Reinforced concrete or wood shear walls used as the method of elevating a building are normally parallel (or nearly parallel) to the expected flow of floodwaters.

Table 10 describes the Elevated Without Enclosure on Posts, Piles, or Piers foundation type.

Table 10. Foundation Type – Elevated Without Enclosure on Posts, Piles, or Piers

A building that has its lowest floor raised above the ground by posts, piles, piers, columns, or parallel shear walls with no enclosure below the lowest elevated floor.

Elevated no enclosure Elevated hanging floor Elevated with lattice

Elevated with utility chase Mobile home with skirting

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Table 10. Foundation Type – Elevated Without Enclosure on Posts, Piles, or Piers continued

A building that has its lowest floor raised above the ground by posts, piles, piers, columns, or parallel shear walls with no enclosure below the lowest elevated floor.

Elevation Certificate Building Diagram Distinguishing Features

Diagram 5: The area below the elevated floor is open, with no obstruction to flow of floodwaters (open lattice work and/or insect screening is permissible).

Building Indicators

• Hanging floors are walled-in floor areas beneath an elevated building that do not extend to the ground. The top of the hanging floor is considered the first floor.

• A mobile home with skirting around frame perimeter.

• FEMA does not consider a small enclosed area (a utility chase) below the lowest floor to be an enclosure if all the following criteria are met:

– It is the minimum size necessary to protect the building utilities (for example, plumbing, pipes, wiring, HVAC supply/return lines);

– It is constructed with flood-damage-resistant materials;

– There are no mechanical or electrical equipment inside the enclosed area; and

– There is not enough space for a person to enter into the enclosed area.

c. Elevated Building with an Enclosure

Other elevated buildings have enclosures under the lowest elevated floor.

i. Definition of an Enclosure

An enclosure is that portion of an elevated building below the lowest elevated floor that is either partially or fully enclosed by rigid walls. The following are examples of enclosures:

• A garage, storage, or utility room below the elevated floor of an elevated building.

• A garage, storage, or utility room attached and next to an elevated building with the enclosure floor lower than the elevated floor.

• An enclosed crawlspace below the lowest elevated floor.

ii. Enclosure Wall Types

An enclosure may be enclosed with any of the following: • Solid wood frame walls • Masonry walls • Breakaway walls

Note: Enclosures enclosed with insect screening with no additional support, plastic lattice, or wooden or plastic slats or shutters are treated as no enclosure. See Table 10: Elevated Without Enclosure.

Tables 11 and 12 describe the Elevated With Enclosure on Posts, Piles, or Piers and Elevated With Enclosure Not on Posts, Piles, or Piers foundation types.

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Table 11. Foundation Type – Elevated With Enclosure on Posts, Piles, or Piers (With an Enclosure Below the Elevated Floor)

A building that has its lowest floor raised above the ground by posts, piles, piers, columns, or parallel shear walls with an enclosure below the elevated floor.

Elevated with a garage Elevated with a bedroom below the elevated floor

Elevated on posts, piles, or piers with a properly vented partial enclosure

Elevation Certificate Building Diagram Distinguishing Features

Diagram 6: The area below the elevated floor is enclosed, either partially or fully, with or without openings present in the walls of the enclosure.

Building Indicators

• The building is elevated on piers, posts, piles, columns, or parallel shear walls and there is an enclosed storage area or garage below the elevated floor.

• The building is elevated on piers, posts, piles, columns, or parallel shear walls and there is a finished area (for example, a bedroom or bathroom) below the elevated floor.

Table 12: Foundation Type – Elevated with Enclosure Not On Posts, Piles, or Piers (Solid Foundation Walls)

A building that has its lowest floor raised above the ground by foundation walls (solid perimeter walls) with a full floor enclosure.

Walkout Basement Two floor building with a full floor solid perimeter foundation for the first story and a frame construction for the second floor.

Elevation Certificate Building Diagram Distinguishing Features

Diagram 7: The area below the elevated floor is enclosed, either partially or fully, with or without openings present in the walls of the enclosure. The building is elevated on full-story foundation walls.

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Table 12: Foundation Type – Elevated with Enclosure Not On Posts, Piles, or Piers (Solid Foundation Walls) continued

A building that has its lowest floor raised above the ground by foundation walls (solid perimeter walls) with a full floor enclosure.

Building Indicators • The building may have a walk-out level, where at least one side is at or above grade.

• The principal use of the building is located on the elevated floors of the building.

• The building has no basement (no portion of the building is below the ground on all sides). If the building has a floor below the ground on all sides refer to the Basement or Crawlspace foundation types.

d. Crawlspace – Elevated and Non-Elevated

Table 13 describes the Crawlspace (Elevated or Non-Elevated Subgrade Crawlspace) foundation type, which includes both elevated and non-elevated buildings.

Table 13. Foundation Type – Crawlspace (Elevated or Non-Elevated Subgrade Crawlspace)

A building that has its lowest floor raised above the ground by a crawlspace.

Crawlspace with attached garage Subgrade crawlspace Subgrade crawlspace with attached garage

Elevation Certificate Building Diagram Distinguishing Features

• Diagram 8: The area below the first floor is enclosed by solid or partial foundation perimeter walls. If the building has an above grade crawlspace, the crawlspace floor is no more than 5 feet below the top of the next higher floor above the crawlspace. If the difference between the crawlspace floor and floor above the crawlspace is more than 5 feet, then refer to Diagram 7 (Elevated with Enclosure Not on Posts, Piles, or Piers).

• Diagram 9: The bottom (crawlspace) floor is at or below ground level (grade) on all sides. If the building has a subgrade crawlspace, the crawlspace floor must be within 2 feet below the grade and the crawlspace floor is no more than 5 feet below the top of the next higher floor (above the crawlspace). If the difference between the crawlspace floor and floor above the crawlspace is more than 5 feet, or if the crawlspace floor is more than 2 feet below the grade, then refer to Diagram 2 (Basement).

Note: An elevated building that has a crawlspace foundation with an attached slab- on-grade finished room or attached slab-on-grade garage converted to a living area is considered the Slab on Grade foundation type.

Building Indicators A building with a crawlspace foundation may have an attached garage.

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4. First Floor Height

a. General Information

The First Floor Height, or the height of the building’s first lowest floor above the adjacent grade, is another rating variable critical to understanding flood risk. Generally, the higher the elevation of a building’s first floor, the less flood damage it is likely to incur. Table 14 shows what floor the NFIP uses for the First Floor Height measurement based on the foundation type selected.

Table 14. First Floor Height Measurement by Foundation Type

Foundation Type EC Diagram

Number Floor Used for First Floor

Height Measurement

Slab on Grade (Non-Elevated)

1A, 1B, and 3 First floor of the building

Basement (Non-Elevated)

2A, 2B, and 4 First floor above the basement

Elevated without Enclosure on Posts, Piles, or Piers

5 First elevated floor

Elevated with Enclosure on Posts, Piles, or Piers

6

Use the enclosure floor if:

• Pre-FIRM building (any zone); • In a Non-Special Flood Hazard Area; or

• In Zone Unnumbered A, A99, AO, AR/AO or Unnumbered V.

Use the elevated floor:

• Post-FIRM building; and • In Zones A1–A30, AE, AH, AR, AR/A, AR/ AE, AR/AH, AR/A1–A30, V1–V30, or VE

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Table 14. First Floor Height Measurement by Foundation Type continued

Foundation Type EC Diagram

Number Floor Used for First Floor

Height Measurement

Elevated with Enclosure Not on Posts, Piles, or Piers

(Solid Foundation Walls)

7

Use the enclosure floor if: • Pre-FIRM building (any zone); • In a Non-Special Flood Hazard

Area; or • In Zones Unnumbered A, A99, AO, AR/

AO or Unnumbered V.

Use the elevated floor: • Post-FIRM building; and • In Zones A1–A30, AE, AH, AR, AR/A, AR/

AE, AR/AH, AR/A1–A30, V1–V30, or VE.

Crawlspace (Elevated or Non- Elevated Subgrade Crawlspace)

8 or 9

Use the crawlspace floor if: • Pre-FIRM building (any zone); • In a Non-Special Flood Hazard

Area; or • In Zones Unnumbered A, A99, AO, AR/

AO or Unnumbered V.

Use the floor above the crawlspace if: • Post-FIRM building; and • In Zones A1–A30, AE, AH, AR, AR/A, AR/

AE, AR/AH, AR/A1–A30, V1–V30, or VE.

The First Floor Height is determined by FEMA, or the policyholder has the option to provide an EC. If the policyholder provides an EC, FEMA’s system will compare both values and use the First Floor Height that is more favorable to the policyholder.

b. FEMA Determined First Floor Height

FEMA will determine a First Floor Height value using application information and various datasets.

c. Elevation Certificate/Land Survey

The policyholder can optionally provide an EC (or land survey completed by a licensed engineer) to provide data for a First Floor Height value. Tables 15 and 16 show the steps to take when completing the First Floor Height Determination portion of the Application Form as well as how to determine the elevations to use when calculating the First Floor Height. All ECs and land surveys must be certified and accompanied by photographs. See Documentation Required below for additional documentation requirements.

Table 15 shows the elevation in Section C of the NFIP EC form (see Appendix B: Forms) to report as the Lowest Floor Elevation (LFE). The building’s First Floor Height is the difference between the reported LFE and the Lowest Adjacent Grade (LAG).

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Table 15. Completing the Application Form Using Section C of the Elevation Certificate (EC)

STEP GUIDANCE

1. Enter the EC date

2. Enter the Building Diagram Number (section A7. of the EC)

3. Enter the LAG (section C2f. of the EC)

4. Enter the LFE. See below for guidance.

Determine the Lowest Floor Elevation (LFE) Using Section C of the EC

EC Diagram Number and Scenario Elevation to Report as the LFE

EC Diagram Number: 1A, 1B, 3 or 5

Scenario: Non-elevated building on slab or elevated without an enclosure.

C2a. = LFE

If C2a. is not provided C2c. can be used: Add 1 foot to C2c. (for both residential and non-residential buildings)

C2c. + 1 = LFE

EC Diagram Number: 2, 2B, or 4

Scenario: Non-elevated building with basement.

C2b. = LFE

If C2b is not provided 8 feet can be added to C2a.: Add 8 feet to C2a

C2a. + 8 = LFE

EC Diagram Number: 6, 7, 8 or 9 Scenario: Elevated building with an enclosure or building with a crawlspace (elevated or non- elevated subgrade crawlspace) and

• Is Pre-FIRM (in any zone); or • In a Non-Special Flood Hazard Area; or • In Zone Unnumbered A, A99, AO, AR/AO or

Unnumbered V.

C2a. = LFE

If C2a. is not provided C2c. can be used: Add 1 foot to C2c. (for both residential and non-residential buildings)

C2c. + 1 = LFE

Determine the Lowest Floor Elevation (LFE) Using Section C of the EC

EC Diagram Number and Scenario Elevation to Report as the LFE

EC Diagram Number: 6, 7, 8 or 9

Scenario: Elevated building with an enclosure or building with a crawlspace (elevated or non- elevated subgrade crawlspace) and

• Is Post-FIRM; and

• In Zone A1–A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1–A30, V1–V30, or VE.

C2b. = LFE

If C2b. is not provided C2c. can be used: Add 1 foot to C2c. (for both residential and non-residential buildings).

C2c. + 1 = LFE

5. Enter the First Floor Height (FFH) in feet. The FFH is the difference between the LAG and LFE.

Section E of the NFIP EC form (see Appendix B: Forms) can also be used to determine a First Floor Height value. Table 16 provides guidance on how to use Section E to determine First Floor Height. E1b. in Section E is the difference between the top of the bottom floor and the LAG and can be used as the First Floor Height if the floor is above the grade. E2 can also be used in certain situations. Refer to the guidance below.

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Note: If Section E is completed for zones other than unnumbered A and AO, the information should be used for underwriting purposes only.

Table 16. Completing the Application Form Using Section E of the Elevation Certificate (EC)

STEP GUIDANCE

1. Enter the EC date.

2. Enter the Building Diagram Number (section A7. of the EC).

3. Enter the First Floor Height. See below for guidance.

Determine the First Floor Height (FFH) Using Section E of the EC

EC Diagram Number and Scenario Field to Report as the FFH

EC Diagram Number: 1A, 1B, 3 or 5

Scenario: Non-elevated building on slab or elevated without an enclosure.

E1b. = FFH

EC Diagram Number: 2, 2B, or 4

Scenario: Non-elevated building with basement. E2. = FFH

Determine the First Floor Height (FFH) Using Section E of the EC

EC Diagram Number and Scenario Field to Report as the FFH

EC Diagram Number: 6, 7, 8 or 9

Scenario: Elevated building with an enclosure or building with a crawlspace (elevated or non-elevated subgrade crawlspace) and

• Is Pre-FIRM (in any zone); • In a Non-Special Flood Hazard Area; or • In Zone Unnumbered A, A99, AO, AR/AO or

Unnumbered V.

E1b. = FFH

EC Diagram Number: 6, 7, 8 or 9

Scenario: Elevated building with an enclosure or building with a crawlspace (elevated or non-elevated subgrade crawlspace) and

• Is Post-FIRM; and • In Zone A1–A30, AE, AH, AR, AR/A, AR/AE, AR/

AH, AR/A1–A30, V1–V30, or VE.

E2. = FFH

d. Additional Information on Elevation Certificates or Land Surveys

i. Documentation Required

• EC or survey signed by a licensed surveyor. – The surveyor, engineer, or architect must sign and include their

identification number or seal in Section D or on the land survey. – A building official, a property owner, or an owner’s representative may

provide the EC for all flood zones by completing Section E. The property

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owner or owner’s representative must complete Section F when they prepare the EC.

• Photographs that show the front and rear of the building, including the building foundation type. – Photograph Requirements:

> A minimum of two clear/legible photographs that show the front and back of the building.

> Photographs dated within 90 days of submitting the EC to the insurer (not the certification date, if that date is earlier).

> Photographs must be at least 3” × 3” and may be analog (film) or digital. The NFIP prefers color photographs.

– Building under construction: > Photographs are not required when the building is under construction.

> A revised EC or survey based on finished construction elevations with photographs is required when the construction is complete.

ii. Other Elevation Information

• Existing documentation containing elevation information (for example, an older EC form, or surveyor letterhead) may transfer to Section C or E of the EC. – If Section C is completed, only a local official authorized by law or

ordinance to administer the community’s floodplain management ordinance may complete this transaction.

– The official must certify the information and provide a statement documenting the transfer of information in Section G of the EC.

• If Section C is completed, NFIP requires the LAG and diagram number for all new business.

• For all flood zones, a building official, a property owner, or an owner’s representative may provide the information in Sections B and E on the EC.

• In CRS communities, building elevation information and certificates may be available through the community.

• Conversion of elevation datums is not required for rating purposes.

iii. Troubleshooting

• Fields not applicable to the surveyed property should be marked as N/A (not applicable)

• If Section C is completed, the policyholder or policyholder’s representative must return the EC to the surveyor, engineer, architect, or community official completing the form to provide missing information in any part of Section A or C of the EC.

• The building elevation information contained in Section C (Survey Required) appears in feet, except in Puerto Rico, where it appears in meters. Before calculating the elevation difference, convert all metric elevation measurements to feet (1m = 3.28084 ft.).

• Section C2a. of the EC may remain blank if the surveyor, engineer, or architect cannot gain access to the crawlspace to obtain the elevation of the crawlspace floor. Preparers should enter the estimated measurements in the comments area of Section D.

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• Section E, Building Elevation Information (Survey Not Required) marked “for Zone AO and Zone A (without BFE)” can be used in all flood zones for rating purposes. – Preparers must compute and enter the elevation differences between the

lowest floor and the LAG along with lowest floor and Highest Adjacent Grade (HAG).

– If Section E is completed for zones other than unnumbered A and AO, the information can be used for rating purposes only and does not relate to floodplain management requirements.

e. First Floor Height Used

The final two fields of the First Floor Height Determination portion of the Application Form are completed by FEMA’s system when the quote is returned to the insurer.

• First Floor Height Used (In Feet). FEMA’s system will recognize the more favorable value between the FEMA Determined FFH and the EC FFH, enter it in this field, and use that value for rating purposes.

• Method Used to Determine First Floor Height. FEMA’s system will enter either FEMA Determined or Elevation Certificate depending on which returned the more favorable value.

Note: When EC information is provided, FEMA’s system compares the premium using elevation information from the EC with the premium using FEMA-sourced elevation data. After this comparison, FEMA returns the lowest premium for the policyholder. Providing EC information will not increase a premium.

5. Mitigation Discounts

FEMA offers certain mitigation discounts to incentivize a policyholder to take steps that meaningfully reduce their property’s flood risk.

a. Machinery and Equipment Above First Floor

Policyholders may receive a mitigation discount if certain covered Machinery and Equipment (M&E) servicing the building, inside or outside the building, is elevated to at least the elevation of the floor above the building’s first floor. Depending on the foundation type option selected, the building’s first floor may be either the main living floor (if slab on grade), basement floor, crawlspace floor, or enclosure floor. See Table 17 below which provides examples of where the M&E should be located to be eligible for the discount.

If the policyholder purchased building-only coverage, the following M&E must be elevated to receive the discount:

• Central air conditioner (including exterior compressor) • Furnace • Heat pump (including exterior compressor) • Hot water heater • Elevator machinery and equipment

If the policyholder purchased contents-only coverage, the following appliances must be elevated to receive the discount:

• Clothes washers and dryers • Food freezers

If the policyholder purchased both building and contents coverage, all the M&E and appliances listed above must be elevated to receive the discount.

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Select Yes on the Application Form under the question “Is the Building Eligible for the Machinery and Equipment Mitigation Discount?” if the M&E is elevated consistent with the guidance above and in Table 17, which provides examples of where the M&E should be located to be eligible for the discount.

Table 17. M&E Location for Discount Eligibility

Diagram Showing Location Guidance on Location

Slab on Grade (Non-Elevated)

• One floor: Elevated at least to the height of the attic

• More than one floor: Elevated to the height of the second floor or higher

Basement (Non-Elevated)

• Elevated to the height of the floor above the basement or higher

Elevated Without Enclosure on Posts, Piles or Piers

• Elevated to the height of the lowest elevated floor or higher

Elevated With Enclosure on Posts, Piles or Piers

• Elevated to the height of the lowest elevated floor or higher

Elevated With Enclosure Not Posts, Piles or Piers

• Elevated to the height of the lowest elevated floor or higher

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Table 17. M&E Location for Discount Eligibility continued

Diagram Showing Location Guidance on Location

Crawlspace (Elevated or Non-Elevated Subgrade Crawlspace)

• Elevated to the height of the floor above the crawlspace or higher

b. Proper Flood Openings

i. Proper Flood Openings Discount Requirements

Proper flood openings (flood vents) in enclosures or crawlspaces allow the hydrostatic flood forces on the walls to equalize and minimize foundation damage to the building. FEMA provides a discount for buildings, in any flood zone, with proper flood openings in enclosures.

Below are the foundation types that may be eligible to receive the proper flood openings discount:

• Elevated With Enclosure on Posts, Piles or Piers • Elevated With Enclosure Not Posts, Piles or Piers (Solid Foundation Walls) • Crawlspace (Elevated or Non-Elevated Subgrade Crawlspace)

To obtain the proper flood opening discount, all enclosures below the elevated floor must meet the following requirements:

• There must be a minimum of two openings positioned on at least two exterior walls. For partially subgrade floors, there must be a minimum of two openings positioned on a single exterior wall adjacent to the lowest grade next to the building.

• The bottom of all openings must be no higher than one foot above the higher of the exterior or interior adjacent grade or floor immediately below the openings.

• The openings must have a total net area of not less than one square inch for every one square foot of enclosed area.

The Application Form asks several questions to guide the policyholder’s eligibility to receive the Proper Flood Openings discount.

• Is the enclosure/crawlspace constructed with proper flood openings or engineered openings? Select Yes, if the enclosure or crawlspace is constructed with flood openings or engineered openings. Select No, if the enclosure or crawlspace is not constructed with proper flood openings or engineered openings.

• If Yes, enter the total number of flood openings. Enter the number of flood openings located in the enclosure or crawlspace. There must be a minimum of two openings positioned on at least two exterior walls and the bottom of all openings are no higher than one foot above the higher of the exterior or interior adjacent grade or floor immediately below the openings.

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• Total area of all permanent openings (in square inches). Enter the total square inches of openings.

• Total enclosed area (in square feet). Enter the total square footage of the entire enclosed area.

ii. Engineered Openings Certified by a Design Professional

An alternative to the proper openings requirement is engineered openings. Engineered openings can be used to obtain the proper flood opening discount. If used, the policyholder must provide to the insurer a copy of the certification validating that the openings meet NFIP requirements. NFIP Technical Bulletin 1, Requirements for Flood Openings in Foundation Walls and Walls of Enclosures provides technical guidance for these requirements.

The certification statement must identify the building with the installed engineered openings and include:

• The design professional’s name, title address, type of license, license number, the state issuing the license, and the signature and applied seal of the certifying registered design professional;

• A statement certifying that the design of the openings will automatically equalize hydrostatic flood loads on exterior walls by allowing for the automatic entry and exit of floodwaters; and

• A description of the range of flood characteristics tested or computed for which the certification is valid, such as rates of rise and fall of floodwaters.

iii. Engineered Openings Certified by the International Code Council Evaluation Service

Engineered openings identified by the International Code Council Evaluation Service, Inc., can be used to satisfy the proper opening requirements and receive the proper flood opening discount. The International Code Council Evaluation Service publishes an evaluation report for each specific engineered opening product (make and model) that it certifies, specifying the square footage of the area for which it is certified. If these openings are used, documentation to confirm the installation and model number of the opening is required. Reference the evaluation report information to confirm whether the engineered openings satisfy the proper openings requirement. Examples of documentation that can be used are:

• Documentation to confirm installation should specify the number of openings installed, the square footage of the area for which they are certified, and the model number of the engineered opening; or

• An EC that has information confirming the use of engineered openings.

6. Floodproofing

a. General Information

Floodproofing may be an alternative to elevating a building to or above the BFE; however, the NFIP requires a Floodproofing Certificate to consider floodproofing mitigation measures in rating a building (see Appendix B: Forms). Certified floodproofing may result in a lower premium because floodproofing ensures:

• A watertight building; • Waterproof non-collapsing walls; and

• The floor at the base of the floodproofed walls will resist flotation during a flood.

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Once approved, the floodproofing discount is incorporated in the building and contents premium.

b. Application Form

The application form must indicate whether an applicant is eligible for the floodproofing discount through the response to this question:

• Is the building properly floodproofed?

Answer Yes when the building meets the eligibility requirements listed in Table 18.

For Non-Residential buildings that indicate Yes, FEMA must approve eligibility, so the initial policy may not include the discount. If FEMA approves the floodproofing discount, the insurer must endorse the policy to reflect the premium change.

Table 18. Eligibility for a Floodproofing Discount

Type Eligibility Criteria Notes

Residential7

Floodproofing a residential building may qualify the policy for a floodproofing discount if all the following apply:

• The building’s foundation type is Basement (Non-Elevated);

• The building is located in an NFIP participating community where FEMA approved the residential basement floodproofing premium discount;

• The building is located in zone A1–A30, AE, AR, AR Dual, AO, AH, or A with a BFE;

• A registered professional engineer or architect certified that the building is floodproofed to at least one foot above the BFE; and

• Refer to fema.gov/floodplain- management/manage-risk for additional eligibility criteria.

If an existing policy for a residential building located in a community approved for the residential basement floodproofing discount received the discount before the property was remapped into a flood zone that doesn’t qualify for floodproofing (for example a V zone), then the policyholder loses the discount when the insurer validates the zone upon the next renewal.

• The NFIP insurer is responsible for determining eligibility for the residential floodproofing discount

• Refer to https://www.fema. gov/floodplain-management/ manage-risk/residential- buildings-basements for the list of communities approved for residential basement floodproofing.

• The insurer must maintain a completed NFIP Residential Basement Floodproofing Certificate and at least two photographs of the building to obtain a floodproofing discount.

7. 42 U.S.C. 4014(a)(1)(A)(ii); 42 U.S.C. 4102(d); 44 CFR 60.6(c)

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Type Eligibility Criteria Notes

Non- Residential

Floodproofing a Non-Residential Building may qualify the policy for a floodproofing discount if all the following apply:

• The building’s foundation type is Slab on Grade (Non-Elevated) or Basement (Non-Elevated);

• The building is located in zone A1–A30, AE, AR, AR Dual, AO, AH, or A with a BFE;

• The building is in any participating NFIP community; and

• A registered professional engineer or architect certifies that the building is floodproofed to at least one foot above the BFE.

• The insurer must submit the required floodproofing documentation listed below so FEMA can determine eligibility for a floodproofing discount. The insurer must email the documentation to NFIPUnderwritingMailbox@fema. dhs.gov.

• If the policy is issued without the floodproofing discount and FEMA approves the floodproofing discount, then the insurer must endorse the policy to reflect the premium change.

• Use the Floodproofing Certificate date in place of the EC date on the Application.

• The insurer must validate floodproofing documentation annually.

c. Documentation Requirements for Non-Residential Floodproofing

The insurer must email the following floodproofing documentation to [email protected], so FEMA can determine eligibility for a floodproofing discount:

• Completed Application Form; • Completed EC; • Completed NFIP Floodproofing Certificate for Non-Residential Structures; • At least two photographs of the building that show the floodproofing measures in place,

including: – Photographs of the exterior of the building (all sides); – Photographs of the components used to provide floodproofing protection (shields,

gates, barriers); and

• Flood Emergency Plan that includes: – Chain of command; – Notification procedures; – Personnel duties; – Location of floodproofing components, install procedures, repair procedures; – Evacuation procedures for building occupants; – Component maintenance procedures during flooding event; – Drill and training program (at least once a year); – Regular review and update of Flood Emergency Plan; and

Table 18. Eligibility for a Floodproofing Discount continued

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• Inspection and Maintenance Plan that includes: – Inspection procedures for the entire floodproofing system: wall systems,

floor slab, openings, floodproofing components, valve operation, drainage and pump systems, equipment and tools required to engage floodproofing measures; and

– Regular review and update of the Inspection and Maintenance Plan.

7. Replacement Cost Value

Replacement cost value information such as square footage and Building Replacement Cost Value apply to building coverage only and is not required for contents-only policies.

a. Square Footage

FEMA uses square footage as one of the variables to determine Building Replacement Cost Value. For certain building occupancies (see Subsection 7.b.ii below), the documentation requirements depend on the building’s square footage total.

The percentage of total floor area determines the appropriate building occupancy to select and is not calculated in the same method as square footage. Follow the guidelines in Table 19 to determine the building’s square footage.

Table 19. Square Footage Calculation

Building Occupancy Guidance

Single-Family Home, Residential Manufactured/ Mobile Home, Residential Unit, and Two-to-Four Family Building

Provide the total finished living area. An attached garage converted to a living space or an attic converted to living space should be included in the square footage calculation.

Do not include the following areas in the square footage calculation:

• Any garage area solely used for parking, storage or access; • Finished or unfinished basement; • Finished or unfinished enclosure area; or • Porches or decks.

Other Residential Building, Residential Condominium Building, Non-Residential Building, Non-Residential Manufactured/Mobile Building, and Non- Residential Unit

Provide the square footage of the building:

• Include stairwells and elevator shafts.

• Do not include areas such as basements, enclosures and mezzanines, finished or unfinished.

• If all of the floors are the same size, first calculate the ground floor area; then compute gross floor area by multiplying the ground floor area by the total number of floors.

• If the floor sizes vary, calculate each floor’s area, then provide the sum of all floors.

• Do not include any garage area solely used for parking, storage or access.

Note: For a unit policy, provide the square footage for the unit and not the entire building.

b. Building Replacement Cost Value

Building Replacement Cost Value is the cost to replace the building or unit (including, for a building, the cost of the foundation). The ratio of building coverage selected to

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Building Replacement Cost Value is a rating factor. The Building Replacement Cost Value used for rating does not affect the building replacement cost determined at time of loss.

The Building Replacement Cost Value used for rating has no bearing on the amount of coverage a policyholder can select. However, if a policyholder selects building coverage above the Building Replacement Cost Value (as determined by FEMA or provided to FEMA), then the building coverage amount selected by the policyholder will be used as the Building Replacement Cost Value in determining the premium.

i. Occupancy Type: Single-Family Home, Residential Manufactured/Mobile Home, Residential Unit, and Two-to-Four Family Building

FEMA will determine Building Replacement Cost Value for the building or unit by using Application Form data and insurance industry data connected with the property address. If FEMA is unable to determine the Building Replacement Cost Value, the insurer must obtain the Building Replacement Cost Value for the building or unit (including, for a building, the cost of the foundation) based on appraisals commonly used in the insurance industry, and report it on the Application Form. FEMA reassesses its determination of Building Replacement Cost Value at every renewal.

ii. Occupancy Type: Other Residential Building, Residential Condominium Building, Non-Residential Building, Non-Residential Manufactured/Mobile Building, Non- Residential Unit

FEMA will not determine the Building Replacement Cost Value for these building occupancies. The insurer must obtain the Building Replacement Cost Value for the building or unit (including the cost of the foundation). The Building Replacement Cost Value may be obtained by using common industry practices. The method or documentation used to determine the Building Replacement Cost Value must be maintained in the policy underwriting file by the insurer. The insurer must review (and update if any changes) the Building Replacement Cost Value. The insurer must validate the Building Replacement Cost Value information at least every 3 years. See the sample Building Replacement Cost Value notification letter in Appendix I: Policyholder Communications.

Supporting Building Replacement Cost Value method or documentation is not required if:

• The building occupancy is Non-Residential Manufactured/Mobile Building;

• The building description is either Storage/Tool Shed or Detached Garage; or

• The building or unit’s square footage is less than 1,000 square feet.

8. Claims History

The claims history used in the RR 2.0 rating methodology is the history of NFIP claim payments for loss or damage to insured property directly caused by a flood, or for loss avoidance measures. The claims history applies to a building’s property address and does not follow the policyholder or building owner.

a. Prior NFIP Claims

i. General Information

FEMA incorporates prior NFIP claims as a rating factor based on the number of loss dates that fall within a rolling 20-year window before the current policy

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effective date. The rating factor begins to apply at the renewal date following the first flood claim processed after the policy is rated under the NFIP’s Risk Rating 2.0 methodology. See Table 20 for examples illustrating how the prior NFIP claims rating factor applies.

Table 20. Applying the Prior NFIP Claims Rating Factor

TOPIC EXAMPLES

Rolling 20-Year Window The policy effective date is October 31, 2022–2023:

• The 20-year window will begin on October 31, 2002.

Initial Implementation of the Prior NFIP Claims

Rating Factor

The policy effective date is October 31, 2022–2023:

• The property has a loss history of two claims (processed in 2003 and 2014); and

• New flood claim processed in February 2023.

The implementation of the prior NFIP claims rating factor will begin on the October 31, 2023–24 renewal term.

The prior NFIP claims rating factor counts any date of loss with a paid claim regardless of payment amount with the following exceptions:

• Claims made within 10 days of each other will be counted as one claim (loss date); and

• One claim (loss date) that falls within the rolling 20-year window.

Note: The prior NFIP claims rating factor does not consider an Increased Cost of Compliance (ICC) claim payment or a date of loss where the claim was closed without payment.

When FEMA designates a property as Severe Repetitive Loss (SRL), an SRL rating factor applies until the first flood claim processed after the policy is rated under the NFIP’s Risk Rating 2.0 methodology. The rating factor applied then changes from SRL to prior NFIP claims at the renewal date following that date of loss. Please see below for additional information on the SRL rating factor.

ii. Correcting or Updating NFIP Claims History

The policyholder may dispute the property’s claims history if the policyholder believes that the number of claims used in applying the prior NFIP claims rating factor is inaccurate. The policyholder may also request that FEMA update the property’s claims history if mitigation has occurred to reduce its future flooding potential.

Documentation that may be required to correct or update a property’s claims history includes:

• Invalid Claim History Association – Incorrectly linked addresses and/or losses; or – A second address added to a Property Locator Record.

• Mitigation Action (Refer to https://www.fema.gov/floodplain-management/ manage-risk/document-library for NFIP floodplain management standards to reset NFIP claims history.) – EC based on finished construction of the new or improved building (if the

building was mitigated in a Special Flood Hazard Area);

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– Photographs of the building before the improvement; – Photographs of the building after the improvement; – Photographs of the flood vents/openings (if applicable); – Source of funding for the mitigation action (state, local or individual); – Demolition permit (if the building was demolished and rebuilt); – Building permit (if the building was elevated or rebuilt); and – In Zone B, C, or X, a signed statement from a community official that

shows mitigation was approved by the community.

Required documents should be sent via email to: NFIPUnderwritingMailbox@ fema.dhs.gov.

FEMA notifies the policyholder and agent of record regarding the review results when completed. If FEMA agrees to correct or update the property’s claims history, FEMA will reevaluate the prior NFIP claims rating factor accordingly. If FEMA determines that the building was brought into compliance with NFIP minimum floodplain management standards, then FEMA will reset the prior claims count to zero at the next renewal.

b. Severe Repetitive Loss Property

FEMA designates as Severe Repetitive Loss (SRL) any NFIP-insured building:

• That has incurred flood-related damage for which four or more separate claims payments have been made, with the amount of each claim (including building and contents payments) exceeding $5,000, and with the cumulative amount of such claims payments exceeding $20,000; or

• For which at least two separate claims payments (building payments only) have been made under such coverage, with the cumulative amount of such claims exceeding the market value of the building.

In both instances, at least two of the claims must be within 10 years of each other, and claims made within 10 days of each other will be counted as one claim. In determining SRL status, FEMA considers the loss history since 1978, or from the building’s construction if it was built after 1978, regardless of any changes in the ownership of the building.

A building designated as SRL will incur an SRL rating factor. However, once the first flood claim is processed after the policy is rated under the NFIP’s Risk Rating 2.0 methodology, the rating factor will change from SRL to prior NFIP claims at the renewal date following the loss. The prior NFIP claims rating factor will apply based on the guidance noted above. This change in the rating factor does not impact the building’s SRL designation or policy servicing with the Special Direct Facility.

Please see Appendix F: Severe Repetitive Loss Properties for additional information on SRL properties, including the Special Direct Facility that services SRL properties and how to correct or update a property’s SRL designation. Neither the SRL rating factor nor prior NFIP claims rating factor applies to provisionally rated policies.

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9. Other Building Factors

a. Date of Construction

i. General Information

The date of construction is the date that the building permit was issued, provided the actual start of construction, repair, reconstruction, or improvement was within 180 days of the permit date. Use the month, day, and year of the building permit, even if the building has subsequently been substantially improved.

Based on the building’s date of construction, insurers must determine if buildings are Post-Flood Insurance Rate Map (FIRM) or Pre-FIRM construction.

Buildings are Post-FIRM construction when the start of construction or substantial improvement was after December 31, 1974, or on or after the effective date of the initial FIRM for the community, whichever is later.

Buildings are Pre-FIRM construction when the start of construction or substantial improvement was on or before December 31, 1974, or before the effective date of the initial FIRM for the community, whichever is later.

ii. Substantial Improvement Date

A substantially improved building is a building that has undergone reconstruction, rehabilitation, addition, or other improvement, the cost of which equals or exceeds 50 percent (or a lower threshold if adopted and enforced by the community) of the market value of the building before the “start of construction” of the improvement. This term does not include a building that has undergone reconstruction, rehabilitation, addition, or other improvement related to:

• Any project or improvement of a building to correct existing violations of a state or local health, sanitary, or safety code specifications that have been identified by the local code enforcement official and which are the minimum necessary to assure safe living conditions; or

• Any alteration of a “historic building”, provided that the alteration will not preclude the structure’s continued designation as a “historic building.”

Note: All historic buildings are Pre-FIRM construction if they meet the definitions of “historic building” provided in Appendix K: Definitions and Acronyms.

When a building has been substantially improved, the agent must confirm if a local community official has declared the building substantially improved. The Application Form must report both the original date of construction and the substantial improvement date. The NFIP will use the substantial improvement date for policy coverage and rating purposes.

iii. Date of Construction for Manufactured/Mobile Homes and Travel Trailers

Determining the date of construction differs for manufactured/mobile homes and travel trailers depending on whether they are in a manufactured home park or subdivision versus on individually owned lots or tracts of land. See Table 21 for more detailed guidance.

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Table 21. Date of Construction — Manufactured/Mobile Homes and Travel Trailers

Location Determine Construction Date

Manufactured Home Park or Subdivision

• The date facilities were constructed for servicing the manufactured home site; or

• The date of the building permit, provided that construction began within 180 days of the permit date.

Individually Owned Lots or Tracts of Land

• The date the manufactured home was permanently affixed to the site; or

• The permit date, if affixed to the site within 180 days of the building permit date.

iv. Building Under Construction

The NFIP will insure a building under construction, alteration, or repair before it is walled and roofed, using the NFIP-issued rates based on the construction designs and the intended use of the building. See additional eligibility information in Table 4 in Section 2: Before You Start.

A building under construction should follow the same guidance, documentation, and process as all other buildings except photographs are not required while the building is rated under construction. Also, if a building under construction, alteration, or repair does not have at least two rigid exterior walls and a fully secured roof at the time of loss, then the deductible amount will be two times the deductible that would otherwise apply to a completed building.8

A building under construction that is not walled and roofed is not eligible for coverage if construction stops for more than 90 days. A cancellation form must be completed indicating Reason Code 01 to receive a pro-rata refund for the remainder of the policy term. Once construction begins again, a new Application Form should be completed and submitted to reinstate coverage for a new policy term.

When the construction is complete, then the policy must be endorsed to reflect that the building is no longer under construction and update any other rating variables as needed.

See Section 4: How to Endorse for guidance on converting a policy once construction is complete. The policy will not renew automatically if the building is still under construction at time of renewal. An Application Form or recertification questionnaire will be required to renew the policy.

b. Number of Detached Structures on Property When there are multiple structures located on the same property as the insured building, enter the total number of detached structures not including the insured building.

c. Number of Elevators If there are elevators within the building, enter the total number of elevators, including those located inside an enclosure. Enter zero or leave blank (no answer) if there are no elevators.

8. 44 CFR Part 61, Appendix A(1)-(3), VI.A

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d. Number of Floors in Building Determine the building’s number of floors based on the number of floors above the ground, excluding enclosures or basements (finished or unfinished), crawlspaces (on grade or subgrade) and attics (if not used for living space). For example, a building with a basement and one floor above the ground is rated as having one floor. Likewise, an elevated building with an enclosure (either compliant or non-compliant) and one additional floor above that is rated as having one floor. Indicate the total number of floors in the building even if the policy covers only an individual unit.

e. Floor of Unit If coverage is for a unit inside a multi-floor building with units located on different floors, indicate the floor where the unit to be insured is located. For example, if the unit is on the ninth floor of a twenty-story building, enter nine. If the building only has one floor, enter one.

f. Total Number of Units in the Building Determine the number of units in the building. If the building contains multiple units, enter the total number of units in the building, even if the policy covers only a single unit. For example, if coverage is for a unit within a four-unit building, enter four. Count both residential and non-residential units.

g. Rental Property Indicate if the building is a rental property. Select “Yes” if the building is a rental property; otherwise, select “No.”

h. Building Over Water Indicate whether the building is over water entirely, partially, or not at all.

i. Primary Residence Status

i. General Information A primary residence is a Single-Family Home, Residential Manufactured/Mobile Home, Residential Unit, or Two-to-Four Family Building in which the policyholder or the policyholder’s spouse lives. The policyholder or the policyholder’s spouse may have no more than one primary residence per person. Where the policyholder and the policyholder’s spouse identify different primary residences, the insured must submit the appropriate documentation for each person’s primary residence.

For a Single-Family Home, Residential Manufactured/Mobile Home, Residential Unit, or Two-to-Four Family Building to qualify as a primary residence, the policyholder or the policyholder’s spouse must live in the residence:

• More than 50 percent of the 365 calendar days following the current policy effective date; or

• 50 percent or less of the 365 calendar days following the current policy effective date, if the policyholder has only one residence and does not lease that residence to another party or use it as rental or income property at any time during the policy term: – Examples include, but are not limited to:

> Active-duty military personnel deployed for 50 percent or more of the policy year in compliance with military orders;

> Persons displaced from a primary residence and living in a temporary residence due to a federally declared disaster or a loss event on the

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primary residence claimed on any line of insurance for 50 percent or more of the policy year; or

> Persons absent from a primary residence for reasons such as routine business travel, hospitalizations, or vacation for 50 percent or more of the policy year.

Note: NFIP uses the term “primary residence” for rating purposes only. NFIP uses the term “principal residence” to determine loss settlement as defined in the Standard Flood Insurance Policy (SFIP). A principal residence is a single-family dwelling in which, at the time of loss, the policyholder or the policyholder’s spouse has lived for either 80 percent of the 365 days immediately preceding the loss, or 80 percent of the period of ownership, if the dwelling was owned less than 365 days. If the dwelling does not meet the definition of principal residence in the SFIP, the NFIP will settle the building losses using actual cash value.

ii. Documentation of Primary Residence

If the policy or Application Form indicates that coverage is for a primary residence, the insurer must verify that the address is the primary residence. When the mailing address and the property address match, that provides sufficient verification and no further documentation is required. If the addresses do not match, the insurer must obtain supporting documentation. The NFIP accepts the following documentation of primary residence:

• Homestead Tax Credit form for primary residence; • Automobile registration; • Proof of insurance for a vehicle; • Documents showing where children attend school; or • A signed and dated primary residence verification statement with the text below:

<Insured Property Address> The above address is my primary residence, and I and/or my spouse will live at this location for more than 50 percent of the 365 days following the policy effective date.

PURSUANT TO 28 U.S.C. § 1746 I CERTIFY UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE UNITED STATES OF AMERICA THAT THE FOREGOING IS TRUE AND CORRECT. I UNDERSTAND THAT ANY FALSE STATEMENTS MAY CAUSE MY POLICY TO BE VOID, AND MAY BE PUNISHABLE BY FINE OR IMPRISONMENT UNDER APPLICABLE FEDERAL LAW.

iii. Primary Residence and Trusts

If the policyholder is a trust and a beneficiary of the trust is using the building as a primary residence, the beneficiary of the trust must provide documentation of primary residence outlined above. In addition, the insurer must obtain documentation that the person using the home as a primary residence is a beneficiary of the trust named as the policyholder.

The grantor of a trust may also be eligible for the primary residence status if the trust documents support that the grantor is a beneficiary of the trust with the right to live in the home. The grantor must submit both the trust documents and the primary residence documentation outlined above. The insurer must obtain documentation that the grantor is a beneficiary of the trust named as the policyholder, with the right to live in the home as a benefit.

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D. Coverage and Deductibles 1. Maximum Coverage Limits

Table 22 and Table 23 show the maximum amounts of building and contents coverage available for each Building Occupancy, under the Regular Program and the Emergency Program respectively. Policies may carry building coverage not to exceed the lesser of:

• The building’s replacement cost value; or

• The maximum amount of coverage established by statute and regulation for each Building Occupancy as shown in Tables 22 and 23.9

Note: The premium is based on the cost per $1,000 of coverage.

See the Building Occupancy heading above for guidance on which Building Occupancy to select for a given building.

Table 22. Maximum Coverage Limits in the Regular Program

Building Occupancy Building Coverage Contents Coverage

Single-Family Dwelling

Single-Family Home $250,000 $100,000

Residential Manufactured/Mobile Home $250,000 $100,000

Residential Unit10

Residential Condominium Unit (in Residential Building) $250,000 $100,000

All Other Building Descriptions None $100,000

Multifamily Building

Two-to-Four Family Building $250,000 $100,000

Other Residential Building $500,000 $100,000

Residential Condominium Building

Residential Condominium Building11

Not to exceed the lesser of: • The building’s replacement cost value; or

• Total number of units × $250,000.

$100,000

Non-Residential

Non-Residential Building $500,000 $500,000

Non-Residential Manufactured/ Mobile Building $500,000 $500,000

Non-Residential Unit None $500,000

9. 42 U.S.C. § 4013(b); 44 C.F.R. § 61.6 10. For a Residential Unit, building coverage is only available if it is a residential condominium unit in a

residential building. A Dwelling Form policy on a Residential Unit in a cooperative or apartment building cannot provide building coverage, only contents coverage. Likewise, a Dwelling Form policy for a Residential Unit in a non-residential condominium building can only provide contents coverage.

11. Residential Condominium Building insured under the RCBAP Form. If a residential condominium building is ineligible for the Residential Condominium Building occupancy and RCBAP Form, see the Condominium Rating Information heading in this section (Scenario #1) for information on what building occupancy to select. The building occupancy determines the applicable maximum coverage limits.

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Table 23. Maximum Coverage Limits in the Emergency Program12

Building Occupancy Building Coverage Contents Coverage

Single-Family Dwelling

Single-Family Home $35,00013 $10,000

Residential Manufactured/Mobile Home $35,00013 $10,000

Residential Unit14

Residential Condominium Unit (in Residential Building) $35,00013 $10,000

All Other Building Descriptions None $10,000

Multifamily Building

Two-to-Four Family Building $35,00013 $10,000

Other Residential Building $100,00015 $10,000

Non-Residential

Non-Residential Building $100,00015 $100,000

Non-Residential Manufactured/ Mobile Building $100,00015 $100,000

Non-Residential Unit None $100,000

2. Increased Cost of Compliance (ICC) Coverage

ICC coverage is flood insurance for expenses a policyholder incurs, above and beyond physical damage sustained from a flooding event, to repair or rebuild a flood-damaged building in compliance with state or local floodplain management ordinances or laws. ICC coverage pays up to $30,000, subject to eligibility, toward the cost of acceptable mitigation measures. Compliance activities eligible for payment are elevation, floodproofing, relocation, demolition, or any combination of these activities. Eligible floodproofing activities apply only to non-residential buildings and residential buildings with basements that satisfy FEMA standards (see the Floodproofing heading in this section).16

ICC coverage is not available for:

• Dwelling Form policies on individual condominium units including townhouse or rowhouse condominiums (The condominium association is responsible for complying with mitigation requirements);

• Emergency Program policies; • Contents-only policies;

12. If a residential condominium building is located in an Emergency Program community and thus ineligible for the Residential Condominium Building occupancy and RCBAP Form, see the Condominium Rating Information heading in this section (Scenario #1) for information on what building occupancy to select. The building occupancy determines the applicable maximum coverage limits.

13. In Alaska, Guam, Hawaii, and the U.S. Virgin Islands, the amount available is $50,000. 14. For a Residential Unit, building coverage is only available if it is a residential condominium unit in a

residential building. A Dwelling Form policy on a Residential Unit in a cooperative or apartment building cannot provide building coverage, only contents coverage. Likewise, a Dwelling Form policy for a Residential Unit in a non-residential condominium building can only provide contents coverage.

15. In Alaska, Guam, Hawaii, and the U.S. Virgin Islands, the amount available is $150,000. 16. 44 C.F.R. § 60.6

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• GFIPs; or

• Detached garages, unless insured by a separate policy.

ICC coverage is in addition to the amount of building coverage purchased, and the two combined totals cannot exceed the statutory maximum limits for building coverage. FEMA’s system calculates the ICC premium as 1.9 percent of the policy’s building and contents coverage premiums (inclusive of any mitigation discounts or CRS discount), not to exceed a maximum of $75 (there is no minimum).

Please see Appendix A: Policy for additional information on ICC coverage.

3. Deductibles

Select building and contents coverage deductibles from the options in the charts below. The minimum deductible for building coverage varies based on the building occupancy, Pre-FIRM or Post-FIRM construction, receipt of statutory discounts, and the amount of building coverage purchased.17 In most cases, a higher deductible may reduce the premium. Contents-only policies (policies with no building coverage) receive a minimum $1,000 deductible.

Policyholders can select any combination of building and contents deductibles for Single-Family Home, Residential Manufactured/Mobile Home, Residential Unit, and Two-to-Four Family Building occupancies. For all other building occupancies, the NFIP offers building and contents deductible options in fixed combinations.

Notes:

• If the building’s value is less than the minimum deductible available, then the amount of any building loss will be less than the minimum deductible.

• If a building under construction, alteration, or repair does not have at least two rigid exterior walls and a fully secured roof at the time of loss, then the deductible amount will be two times the deductible that would otherwise apply to a completed building.

• Policies in the Emergency Program have the same deductible options as shown under the Exception: Pre-FIRM Receiving Any Statutory Discount columns in Tables 24–26.

Table 24. Deductible Options: Single-Family Home, Residential Manufactured/Mobile Home, Residential Unit, Two-to-Four Family Building

Standard Building Options

Building Coverage of $100,000 or less

$1,000

$2,000

$5,000

$10,000

Building Coverage over $100,000

$1,250

$2,000

$5,000

$10,000

Exception Building Options: Pre-FIRM Building Receiving Any Statutory Discount

Building Coverage of $100,000 or less

$1,500

$2,000

$5,000

$10,000

Building Coverage over $100,000

N/A

$2,000

$5,000

$10,000

Contents Options

Contents Coverage of Any Amount

$1,000

$2,000

$5,000

$10,000

Note: For more information on statutory discounts see the Statutory Discounts heading below.

17. 42 U.S.C. 4013(d); 42 U.S.C. 4019(b); 44 C.F.R. § 61.5

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Table 25. Deductible Options: Other Residential Building, Non-Residential Building, Non-Residential Manufactured/Mobile Building, Non-Residential Unit

Standard Building Options18

Building Coverage of $100,000 or less

$1,000 / $1,000

$2,000 / $2,000

$5,000 / $5,000

$10,000 / $10,000

$25,000 / $25,000

$50,000 / $50,000

Building Coverage over $100,000

$1,250 / $1,250

$2,000 / $2,000

$5,000 / $5,000

$10,000 / $10,000

$25,000 / $25,000

$50,000 / $50,000

Exception Building Options: Pre-FIRM Building Receiving Any

Statutory Discount18

Building Coverage of $100,000 or less

$1,500 / $1,500

$2,000 / $2,000

$5,000 / $5,000

$10,000 / $10,000

$25,000 / $25,000

$50,000 / $50,000

Building Coverage

N/A

over $100,000

$2,000 / $2,000

$5,000 / $5,000

$10,000 / $10,000

$25,000 / $25,000

$50,000 / $50,000

Contents Options

Contents-Only Coverage

$1,000

$2,000

$5,000

$10,000

$25,000

$50,000

Table 26. Deductible Options: Residential Condominium Building

Standard Building Options18

Building Coverage of $100,000 or less

$1,000 / $1,000

$2,000 / $2,000

$5,000 / $5,000

$10,000 / $10,000

$25,000 / $25,000

Building Coverage over $100,000

$1,250 / $1,250

$2,000 / $2,000

$5,000 / $5,000

$10,000 / $10,000

$25,000 / $25,000

Exception Building Options: Pre-FIRM Building Receiving Any Statutory Discount18

Building Coverage of $100,000 or less

$1,500 / $1,500

$2,000 / $2,000

$5,000 / $5,000

$10,000 / $10,000

$25,000 / $25,000

Building Coverage over $100,000

N/A

$2,000 / $2,000

$5,000 / $5,000

$10,000 / $10,000

$25,000 / $25,000

E. Statutory Discounts FEMA provides certain properties with statutorily-mandated discounts to encourage community and property owner participation in the NFIP. Such properties include eligible Pre-FIRM buildings and buildings mapped into certain specific flood zones. Properties in the Emergency Program are also eligible for a statutory discount. Except for the Emergency Program discount, statutory discounts gradually phase out through a statutory annual increase cap discount19 at each renewal date until the policy reaches its full-risk premium.

Notes:

• A lapse in coverage (for example, resulting from paying a renewal premium 30 days or more after the expiration date of the policy) may affect eligibility for statutory discounts.

• If a property is eligible for more than one statutory discount, the discount most beneficial to the policy applies. All policy forms including the RCBAP Form may be eligible for a statutory discount.

• In addition to the eligibility rules below, there is a category of Leased Federal Properties (LFPs) that must pay full-risk premiums and are thus not eligible for any statutory discounts. See Appendix G: Leased Federal Properties for more information.

18. Shown as: Building Deductible/Contents Deductible options in fixed combinations. Building-only policies have the same deductible options as shown for building coverages in the table above.

19. 42 U.S.C. 4015(e)

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1. Pre-FIRM Discount20

a. Eligibility

For insurance rating purposes, a building is Pre-FIRM construction if the start of construction or substantial improvement was on or before December 31, 1974, or before the effective date of the initial FIRM for the community (Initial FIRM Date). The effective date of the community’s Initial FIRM Date is located in the NFIP Community Status Book. Insurers must confirm a building’s Pre-FIRM construction status.

A Pre-FIRM building is eligible for the Pre-FIRM discount if the property: • Qualifies as a primary residence; • Is not a commercial property; and • Is not designated an SRL property.

After the initial policy term when an eligible building receives the Pre-FIRM discount, the discount phases out annually until the policy reaches its full-risk premium, consistent with statutory caps on annual premium increases.

Notes:

• All historic buildings are Pre-FIRM construction if they meet the definition of “historic building” provided in Appendix K: Definitions and Acronyms.

• If a property that previously qualified as Pre-FIRM construction is substantially improved after the application date, the property is no longer considered Pre- FIRM and the policy must be endorsed to reflect the new information. As a result of the substantial improvement, the property is no longer eligible for the Pre-FIRM discount, and the annual increase cap discount increases to reach the full-risk premium more quickly as required by statute.

• Pre-FIRM buildings that do not meet the criteria above (for example, Pre-FIRM non-primary residences, businesses, and SRL properties) are not eligible for a Pre-FIRM discount on a new NFIP policy. However, such a building with an existing NFIP policy may have received a Pre-FIRM discount in a prior policy term and may continue to be rated with a less-than-full-risk premium due to the statutory caps on annual increases. Such Pre-FIRM buildings transition to the full-risk premium more quickly than Pre-FIRM primary residences.

b. Lapse in Coverage21

In general, a policyholder loses their Pre-FIRM discount if they allow a lapse (the coverage expired or is no longer in effect) to occur. See Table 27 for impacts on eligibility for the discount when a policy receiving the Pre-FIRM discount lapses.

Table 27. Impact of a Lapse on Pre-FIRM Discount Eligibility

SCENARIO GUIDANCE

Policy Lapsed – No longer eligible for the Pre-FIRM

discount

Aside from the two exceptions listed below, if a prior NFIP policy for the building in the current applicant’s name received a Pre-FIRM discount and lapsed on or after April 1, 2016, then the policyholder is no longer eligible for a Pre-FIRM discount on the previously covered building.

This applies if any of the applicants for the new policy was either a policyholder named on the expired or canceled policy or had an ownership interest in the building at the time of cancellation or expiration.

20. 42 U.S.C. 4014(a)(2) 21. 42 U.S.C. § 4014(g)

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Table 27. Impact of a Lapse on Pre-FIRM Discount Eligibility continued

SCENARIO GUIDANCE

Policy Lapsed – Retains eligibility for the Pre-FIRM

discount

Such a policyholder retains eligibility for a Pre-FIRM discount on the previously covered property if either:

• The applicant was required to obtain and maintain flood insurance for the property and allowed their coverage to lapse once no longer subject to the requirement (such as they paid off the mortgage, the property was remapped out of an SFHA, or the lender no longer required the coverage, etc.)21; or

• The policy lapsed because the property was in a community suspended from the NFIP and the policyholder reinstated the policy within 180 days of the community’s reinstatement as a participating NFIP community.22

Note: If a prior NFIP policy on a Pre-FIRM building lapsed when not receiving the Pre-FIRM discount, that lapse does not affect subsequent eligibility for the Pre-FIRM discount.23 For example, if a prior policy for a Pre-FIRM building receiving a Newly Mapped discount lapsed, that lapse does not make the policyholder ineligible for the Pre-FIRM discount.

c. Application

The Application Form must indicate whether a prior lapse affects the applicant’s eligibility for the Pre-FIRM discount through the response to these two questions:

• Did the applicant have a prior NFIP policy for the building that received a Pre-FIRM discount and lapsed?

• If yes, did the lapse occur for a valid reason?

Table 28 explains how to answer the questions based on the detailed guidance above.

Table 28. Application Response on Lapse and Pre-FIRM Discount Eligibility

RESPONSE CONDITIONS OUTCOME

Question: Did the applicant have a prior NFIP policy for the building that received a Pre-FIRM discount and lapsed?

Answer ‘Yes’

If the applicant had a prior NFIP policy for the building that received a Pre-FIRM discount and lapsed.

In this case, the lapse in coverage may impact the applicant’s eligibility for the Pre-FIRM discount. Proceed to the next question.

Answer ‘No’

If any of the following are true: • There was not a prior NFIP policy for the building

that lapsed; • There was not a prior NFIP policy for the building that

lapsed while receiving the Pre-FIRM discount; or • None of the applicants for the new policy was a

policyholder named on the expired or canceled policy or had an ownership interest in the building at the time of cancellation or expiration (in other words, the current applicant is a different policyholder).

In this case, there is no impact on the applicant’s eligibility for the Pre-FIRM discount.

22. 42 U.S.C. § 4014(g); 42 U.S.C. § 4014(a)(2); 42 USC § 4012a; 44 C.F.R. § 59.24 23. The § 4014(g) prohibition on offering Pre-FIRM rates after a policy has lapsed applies only to policies

receiving the Pre-FIRM discount. 42 U.S.C. § 4014(g); 42 U.S.C. § 4014(a)(2)(A)-(E)

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Table 28. Application Response on Lapse and Pre-FIRM Discount Eligibility continued

RESPONSE CONDITIONS OUTCOME

Question: If yes, did the lapse occur for a valid reason?

Answer ‘Yes’

If the applicant allowed a prior NFIP policy for the building receiving the Pre-FIRM discount to lapse and did so because either:

• The applicant was required to obtain and maintain flood insurance for the property and allowed their coverage to lapse once no longer subject to the requirement; or

• The property was in a community suspended from the NFIP and the policyholder reinstated the policy within 180 days of the community’s reinstatement as a participating NFIP community.

In this case, the lapse in coverage does not impact the applicant’s eligibility for the Pre-FIRM discount.

Answer ‘No’

If the applicant allowed a prior NFIP policy for the building receiving the Pre-FIRM discount to lapse and neither of the previous two conditions was met (even if flood insurance was not ever required by the lender).

In this case, the applicant is ineligible for the Pre-FIRM discount.

Note: The insurer system makes an automated determination on whether the applicant is eligible for the Pre-FIRM discount based on the rules under the Eligibility heading above (using other information provided on the Application Form) and the response to the two lapse-related questions.

2. Newly Mapped Discount24

A property may be eligible for the Newly Mapped discount if it was once designated outside of the Special Flood Hazard Area (SFHA) on an effective Flood Insurance Rate Map (FIRM) and, following a map revision, is designated within a Special Flood Hazard Area (SFHA). The Newly Mapped discount phases out annually until reaching the policy’s full-risk premium.

The insurer must verify the policy’s eligibility for the Newly Mapped discount, including by confirming any prior flood zone designation before the most current FIRM.

a. Eligibility

A property may be eligible for the Newly Mapped discount if it was either:

• Previously designated in a Zone B, C, or X on the previous flood map and newly mapped into an SFHA.

• Previously designated in a Zone D, A99, or AR and newly mapped into a different SFHA zone.

To determine the current flood zone, use the FIRM in effect at the time of application and payment of the total amount due. The Newly Mapped discount does not apply to properties mapped into the SFHA on the community’s initial FIRM.

Properties newly mapped into the SFHA after April 1, 2015, are eligible for the Newly Mapped discount if:

• The policy effective date is within 12 months of the effective FIRM revision date; or

24. 42 U.S.C. 4015(i)

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• The policyholder applied for the policy within 45 days of initial lender notification, if the notification occurred within 24 months of the effective FIRM revision date. Note: The insurer must retain a copy of the lender notification in the underwriting file.

The following is ineligible for the Newly Mapped discount:

• Buildings and/or contents in Emergency Program communities

b. Documentation

Insurers must obtain one or more of the following to document the previous and current flood zones:

• Special Flood Hazard Determination Form (SFHDF). • Copy of the most recent effective flood map marked to show the exact location

and flood zone of the building. The NFIP may require additional documentation if the building is close to the zone boundary.

• Letter signed by a local community official indicating the property address and flood zone of the building.

• EC signed and dated by a surveyor, an engineer, an architect, or a local community official indicating the exact location and flood zone of the building.

• Letter of Map Amendment (LOMA). • Letter of Map Revision (LOMR).

c. Lapse in Coverage

In general, a policyholder loses their Newly Mapped discount if they allow a lapse (the coverage expired or is no longer in effect) to occur. See Table 29 for impacts on eligibility for the discount when a policy receiving the Newly Mapped discount lapses.

Table 29. Impact of a Lapse on Newly Mapped Discount Eligibility

SCENARIO GUIDANCE

Policy Lapsed – No longer eligible

for the Newly Mapped discount

Aside from the one exception listed below, if a prior NFIP policy for the building in the current applicant’s name received a Newly Mapped discount and lapsed on or after April 1, 2016, then the policyholder is no longer eligible for a Newly Mapped discount on the previously covered building.

This applies if any of the applicants for the new policy was either a policyholder named on the expired or canceled policy or had an ownership interest in the building at the time of cancellation or expiration.25

Policy Lapsed – Retains eligibility

for the Newly Mapped discount

Such a policyholder retains eligibility for a Newly Mapped discount on the previously covered property if:

• The policy lapsed because the property was in a community suspended from the NFIP and the policyholder reinstated the policy within 180 days of the community’s reinstatement as a participating NFIP community.26

Note: If a prior NFIP policy lapsed when not receiving the Newly Mapped discount, that lapse does not affect subsequent eligibility for the Newly Mapped discount. In other words, if a policy lapsed on a property before it was mapped into an SFHA, the property may still receive the Newly Mapped discount if it meets the other eligibility requirements.

25. Under 42 U.S.C. § 4015(i), a policy with a newly mapped discount must renew (in other words, not lapse) to retain the newly mapped discount. 42 U.S.C. § 4015(i)

26. 42 U.S.C. § 4015(i); 44 C.F.R. § 59.24

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d. Application Form

The Application Form must indicate whether an applicant is eligible for the Newly Mapped discount through responses to these three questions:

• Did the applicant have a prior NFIP policy for the building that received a Newly Mapped discount and lapsed?

• If yes, did the lapse occur for a valid reason?

• Is the property eligible for the Newly Mapped discount

Table 30 explains how to answer the questions based on the detailed guidance above.

Table 30. Application Response on Newly Mapped Discount Eligibility

RESPONSE CONDITIONS OUTCOME

Question: Did the applicant have a prior NFIP policy for the building that received a Newly Mapped discount and lapsed?

Answer ‘Yes’

If the applicant had a prior NFIP policy for the building that received a Newly Mapped discount and lapsed.

In this case, the lapse in coverage may impact the applicant’s eligibility for the Newly Mapped discount. Proceed to the next question.

Answer ‘No’

If either of the following are true:

• There was not a prior NFIP policy on the building that lapsed while receiving the Newly Mapped discount; or

• None of the applicants for the new policy was a policyholder named on the expired or canceled policy or had an ownership interest in the building at the time of cancellation or expiration (in other words, the current applicant is a different policyholder).

In this case, there is no impact on the applicant’s lapse eligibility for the Newly Mapped discount.

Question: If yes, did the lapse occur for a valid reason?

Answer ‘Yes’

If the applicant allowed a prior NFIP policy for the building receiving the Newly Mapped discount to lapse because:

• The property was in a community suspended from the NFIP and the policyholder reinstated the policy within 180 days of the community’s reinstatement as a participating NFIP community.

In this case, the lapse in coverage does not impact the applicant’s eligibility for the Newly Mapped discount.

Answer ‘No’

If the applicant allowed a prior NFIP policy for the building receiving the Newly Mapped discount to lapse and the prior condition was not met.

In this case, the applicant is ineligible for the Newly Mapped discount.

Question: Is the property eligible for the Newly Mapped discount?

Answer ‘Yes’

If the property meets the Newly Mapped discount eligibility rules under the Eligibility heading above and the responses to the previous lapse-related questions show that the applicant is eligible for the Newly Mapped discount.

FEMA’s system will evaluate whether applying the Newly Mapped discount is most advantageous for the policyholder.

Answer ‘No’

If the property does not meet the Newly Mapped discount eligibility rules under the Eligibility heading above or the responses to the previous lapse-related questions show that the applicant is not eligible for the Newly Mapped discount.

FEMA’s system will not apply the Newly Mapped discount

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3. Other Statutory Discounts

Using other information provided on the Application Form, FEMA’s system automatically determines a policy’s eligibility for other statutory discounts that may also apply to properties located in:

• Zone AR until the policy gradually reaches its full-risk premium through an annual increase cap discount;27 or

• Zone A99 until the policy gradually reaches its full-risk premium through an annual increase cap discount;28 or

• A community in the Emergency Program until it joins the Regular Program.

4. New Policy After a Real Estate Transaction

The new owner of an NFIP-insured building can buy a new NFIP policy and receive any statutory discount the prior policyholder receive29 if all of the following apply:

• The building is not in condominium ownership before or after the transaction; • The building was insured by the NFIP with building coverage at the time

of transaction; • The new NFIP policy will be effective on, or within one year after, the

transaction date; and

• The insurer must submit the prior NFIP policy number and prior NFIP policy Primary NAIC number to FEMA and have documentation of the title transfer.

Select New (at the top of the Application Form) as the policy transaction type and enter the prior policy number in the appropriate field. The standard NFIP effective date rules apply based on the date the applicant submitted the Application Form and full amount due.

The insurer must maintain the closing papers to support that the new NFIP policy is effective on, or within one year after, the real estate transaction date. Real estate transactions also include title transfers through purchases or by other means such as inheritances and gifts. The insurer must validate the primary residence status when writing the new policy for the new owner to be eligible for the primary residence status and associated HFIAA surcharge.

Note: If the previous owner received a discount that the new owner is ineligible for, the new owner may receive the same discounted premium as the previous owner. However, the annual increase cap (which is a component of the discounted premium) is based on the information provided by the new owner. The discounted premium does not include assessments, fees, or surcharges.

F. Assessments, Fees, and Surcharges This section describes assessments, fees, and surcharges that are not part of the full- risk premium or discounted premium but are, as applicable, required components of the total amount due to purchase an NFIP policy. These apply to both rating engine rated and provisionally rated policies.

1. Reserve Fund Assessment

The Reserve Fund Assessment is a percentage of the Discounted Premium (excluding the Federal Policy Fee, HFIAA surcharge, and probation surcharge) paid on new and

27. 42 U.S.C. 4014(f) 28. 42 U.S.C. 4014(e) 29. 42 U.S.C. 4015(e)

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renewed policies. Revenues from this statutorily-mandated assessment build an NFIP Reserve Fund to pay claims after catastrophic flood events.30

Table 31. Reserve Fund Assessment

Assessed Policies Reserve Fund Assessment

GFIP31 0%

All Other Policies 18%

2. HFIAA Surcharge

The Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) introduced a mandatory annual surcharge for all new and renewed policies.32 For more information on primary residences see the Primary Residence Status heading above in this section.

Table 32. HFIAA Surcharge

Property Type Surcharge

Primary Residences — A primary residence is a Single-Family Home, Residential Manufactured/Mobile Home, Residential Unit, or Two-to-Four Family Building in which the policyholder or the policyholder’s spouse lives.

$25

All Other NFIP policies — Non-primary residences and the following building occupancies:

• Other Residential Building • Residential Condominium Building • Non-Residential Building • Non-Residential Manufactured/Mobile Building • Non-Residential Unit

Note: A non-primary residence is a residential building that is not the primary residence of the policyholder.

$250

3. Federal Policy Fee

The Federal Policy Fee (FPF) is a flat charge paid by the policyholder on each new and renewed policy to defray certain administrative expenses incurred in carrying out the NFIP.33

Table 33 lists the FPF applicable for each building occupancy. For building occupancies under the Dwelling Form and General Property Form, a flat FPF applies. For Residential Condominium Buildings the calculation involves the total number of units in the building. For the first 20 units, the FPF is $47 per unit, reaching $940 at 20 units. After 20 units, the formula adds $20 for each additional unit up until there are 40 total units, with a total FPF of $1,340 at that point. Above 40 units, there is an additional $10 per unit up until the total number of units reaches 100, at which point the total FPF would be $1,940. Beyond 100 units, the per-unit increase is $2 regardless of the number of additional units.

30. 42 U.S.C. 4017A 31. The GFIP is only available to recipients of federal disaster assistance and is serviced by the

NFIP Direct Servicing Agent. 32. Pub. L. No. 113-89 33. 42 U.S.C. 4014(a)(1)(B)(iii); 4015(d); 4017(b)(5)

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Table 33. Federal Policy Fee

Building Occupancy Federal Policy Fee Amount

• Single-Family Home • Residential Manufactured/Mobile Home • Residential Unit • Two-to-Four Family Building

$47

• Other Residential Building • Non-Residential Building • Non-Residential Manufactured/Mobile Building • Non-Residential Unit

$47

Residential Condominium Building

Units 1–20 $47 per unit

Units 21–40 $20 per unit

Units 41–100 $10 per unit

Units 101+ $2 per unit

4. Probation Surcharge

The Probation Surcharge is a flat surcharge paid by the policyholder on each new or renewed policy issued covering a property in a community that FEMA has placed on probation because the community failed to meet NFIP floodplain management requirements.34

Table 34. Probation Surcharge

Fee Type Amount

Probation Surcharge $50

G. Premium Considerations Each policy premium is subject to a loss constant and expense constant. All rating variables are factored into the full-risk premium before adding in the loss constant and expense constant.

Policies also may be subject to minimum or maximum rates by peril and coverage and statutory discounts. These minimum and maximum rates may affect how rating variables (such as the deductible, CRS discount or mitigation discount) impact the premium. In some rare cases, there may be no change in premium when there is a change in a rating variable.

III. Condominium Rating Information

A. Condominium Rating Scenarios 1. Overview

Table 35 provides an overview of five principal scenarios for insuring condominiums. The following sub-sections provide detailed guidance on each scenario and – where rated the same as other NFIP policies – references to the General Rating Information earlier in this section. Both condominium associations and individual condominium unit owners can purchase NFIP coverage. The NFIP defines a condominium association

34. 44 CFR 59.24

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as an entity made up of condominium unit owners, where membership in the entity is a required condition of unit ownership, that is responsible for the maintenance and operation of:

• Common elements owned in undivided shares by unit owners; and

• Other real property in which the unit owners have use rights.

Table 35. Methods for Insuring Condominiums

SCENARIO POLICY FORM

#1 – Condominium Association Coverage for Residential Condominium Building

Use the RCBAP Form to insure a residential condominium building and contents owned by the condominium association. The condominium association must be named as the policyholder.

• Building Occupancy: Residential Condominium Building • Building Description: Entire Residential Condominium Building

#2 – Residential Unit Owner Coverage in Residential Condominium Building

Use the Dwelling Form to insure an individual residential condominium unit and its contents in a residential condominium building. The unit owner must be named as the policyholder.

• Building Occupancy: Residential Unit • Building Description: Residential Condominium Unit (in

Residential Building)

#3 – Residential Unit Owner Coverage in Non-Residential Condominium Building

Use the Dwelling Form to insure an individual residential condominium unit owner’s contents in a non-residential condominium building. The unit owner must be named as the policyholder.

• Building Occupancy: Residential Unit • Building Description: Residential Condominium Unit (in Non-

Residential Building)

#4 – Condominium Association Coverage for Non-Residential Condominium Building

Use the General Property Form to insure a non-residential condominium building and contents owned by the condominium association. The condominium association must be named as the policyholder.

• Building Occupancy: Non-Residential Building • Building Description: Commercial, Detached Garage, Government-

Owned, House of Worship, Recreation Building, Storage/Tool Shed, or Other Non-Residential Type

#5 – Non-Residential Unit Owner Coverage in Residential or Non-Residential Condominium Building

Use the General Property Form to insure a non-residential condominium unit owner’s contents in a residential or non-residential condominium building. The unit owner must be named as the policyholder.

• Building Occupancy: Non-Residential Unit • Building Description: Commercial, Government-Owned, House of

Worship, Recreation Building, Storage/Tool Shed, or Other Non- Residential Type

2. Condominium Association Coverage for Residential Condominium Building (Scenario #1)

Use the Residential Condominium Building Association Policy (RCBAP) Form to insure a residential condominium building and contents that are owned by a condominium association. The condominium association must be named as the policyholder. Table 36 describes the specific eligibility, rating, and claims handling requirements applicable to the RCBAP Form.

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Table 36. Condominium Association Coverage for Residential Condominium Association Building (Scenario #1)

TOPIC GUIDANCE

Eligibility Rules

Policy Form RCBAP (Building and Contents)

Program Eligibility

Regular Program only (RCBAPs in Emergency Program communities are only eligible for coverage under the Dwelling Form or General Property Form, as appropriate based on the building’s total number of units.)

Building Eligibility

A residential condominium building (or mixed-use condominium building with non- residential uses limited to less than 25 percent of the building’s total floor area) with one or more units.

Notes: • When determining non-residential uses, exclude the common areas of the

building from the building’s total floor area. Exclude areas such as garages, lobbies, recreation rooms, storage/utility rooms, and hallways when determining residential use of a condominium building.

• A townhouse or rowhouse in the condominium form of ownership may be insured as either an entire building (exterior, walls, and interior) or unit (interior). If insuring as an entire building and owned by a condominium association, it is eligible for the Residential Condominium Building occupancy and RCBAP Form.

• Timeshare buildings in condominium ownership are eligible for the RCBAP. • Residential condominium buildings used as hotels or motels or rented either

short or long-term are eligible for the RCBAP.

Policyholder Eligibility

Eligible Policyholders • The policyholder must be a condominium association. • If the policyholder named is not clearly a condominium association,

the insurer must have legal documentation confirming the entity is a condominium association. Acceptable examples of condominium association documentation include: – A copy of the condominium association bylaws; or – A statement signed by an officer or representative of the condominium association confirming the building is in the condominium form of ownership.

• If a Homeowners Association (HOA) is in the condominium form of ownership, and its by-laws require purchase of flood insurance building coverage for its members, then the HOA may purchase an RCBAP.

Ineligible Policyholders • Buildings in the cooperative form of ownership. • HOAs not in the condominium form of ownership.

Is the Policyholder a Condominium Association?

• Select “Yes” • If the policyholder is not a condominium association then the building is not

eligible for the RCBAP Form; in that case, select “No” and use the Dwelling Form or General Property Form as appropriate based on the total number of units in the building.

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Table 36. Condominium Association Coverage for Residential Condominium Association Building (Scenario #1) continued

TOPIC GUIDANCE

Property Insured

• Condominium building. • Individually-owned units within the building. • Improvements within units. • Additions and extensions attached or connected to the insured building. • Fixtures, machinery, and equipment within the building. • Contents owned by the association.

Note: The NFIP requires a separate policy for each building owned by a condominium association. Coverage applies to the single building described under Building Location on the Flood insurance Application Form and Insured Property Location on the Declarations Page.

Other Eligibility Rules See guidance in Section 2: Before You Start

Geographic Location Variables

See the Geographic Location Variables heading under General Rating Information above • Building Location • Community Map Information and Flood Zone • Community Rating System Discount

Structural Variables

Building Occupancy

Eligible for the RCBAP Form • Select “Residential Condominium Building” • The building must meet the criteria for the Residential Condominium Building

occupancy to be eligible for the RCBAP Form (and vice versa since the criteria are identical). See the Building Occupancy heading under General Rating Information above.

Not Eligible for the RCBAP Form • If a mixed-use single-family condominium building has non-residential uses

between 25 percent and 49 percent of the building’s total floor area, select the “Single-Family Home” occupancy.

• If a mixed-use single-family condominium building has non-residential uses greater than or equal to 50 percent of the building’s total floor area, select the “Non-Residential Building” occupancy.

• If a mixed-use condominium building with two or more units has non- residential uses greater than or equal to 25 percent of the building’s total floor area, select the “Non-Residential Building” occupancy.

• If the policyholder is not a condominium association, select either the Single- Family Home, Two-to-Four Family Building, or Other Residential Building occupancy depending on the building’s total number of units.

• If the building is located in an Emergency Program community, select either the Single-Family Home, Two-to-Four Family Building, or Other Residential Building occupancy depending on the building’s total number of units.

• If insuring a townhouse or rowhouse in condominium ownership as a unit (as opposed to an entire building), select the Residential Unit occupancy.

Note: The guidance in this Scenario #1 table is specific to the Residential Condominium Building occupancy and RCBAP Form and does not cover residential condominiums that are ineligible and thus insured under a different Building Occupancy and policy form.

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Table 36. Condominium Association Coverage for Residential Condominium Association Building (Scenario #1) continued

TOPIC GUIDANCE

Building Description Select “Entire Residential Condominium Building”

Construction Type Not applicable to the Residential Condominium Building occupancy.

Number of Elevators

If there are elevators within the building, enter the total number elevators, including those located inside an enclosure.

Number of Floors in Building

Determine the building’s number of floors based on the number of floors above the ground, excluding enclosures or basements (finished or unfinished), crawlspaces (on grade or subgrade) and attics (if not used for living space).

Total Number of Units in the Building

Determine the number of units in the building. If the building contains multiple units, count the total number of units including both residential and non-residential units.

Building Replacement Cost Value

• The insurer must obtain Building Replacement Cost Value of the building (including the cost of the building’s foundation) based on appraisals commonly used in the industry.

• The insurer must maintain, supporting documentation of the Building Replacement Cost Value. Supporting documentation may include a recent property valuation report stating the value of the building and its foundation on a Replacement Cost Value basis to meet this requirement.

• Supporting valuation documentation is not required if the building’s square footage is less than 1,000 square feet.

• The insurer must validate the Building RCV information at least every 3 years. See notice requirements and a sample version in Appendix I: Policyholder Communications.

Other Structural Variables

For guidance on other structural variables, see the Structural Variables heading under General Rating Information above.

• Foundation Type • First Floor Height • Machinery & Equipment Above First Floor • Proper Openings • Floodproofing • Prior NFIP Claims • Severe Repetitive Loss Property • Date of Construction • Number of Detached Structures on Property • Rental Property • Building Over Water • Primary Residence Status

Coverage and Deductibles

Maximum Coverage Limits

Building: Not to exceed the lesser of: • The building’s replacement cost value; or • Total number of units × $250,000

Contents: Actual cash value (ACV) of commonly owned contents to a maximum of $100,000 per building.

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Table 36. Condominium Association Coverage for Residential Condominium Association Building (Scenario #1) continued

TOPIC GUIDANCE

Maximum Coverage Limits continued

Notes: • A unit owner may purchase a Dwelling Form policy with building coverage for a

residential condominium unit in a residential condominium building insured by an RCBAP. However, the NFIP will not pay more than $250,000 for combined coverage for a single unit under the Dwelling Form policy and the RCBAP. Insureds may not claim the same damaged items on more than one NFIP policy.

• If insuring a residential condominium building in an Emergency Program community, determine the appropriate Building Occupancy and apply the associated maximum coverage limits. For the Single-Family Home and Two-to- Four Family Building occupancies under the Dwelling Form, maximum limits of $35,000 building and $10,000 contents apply. For the Other Residential Building occupancy under the General Property Form, maximum limits of $100,000 building and $10,000 contents apply.

ICC Coverage Yes

Assessment Coverage No

Deductibles See the Deductibles heading under General Rating Information above

Statutory Discounts

See the Statutory Discounts heading under General Rating Information above • Newly Mapped Discount • Pre-FIRM Discount • Other Statutory Discounts

Assessments, Fees, and Surcharges

Federal Policy Fee

Number of Units Federal Policy Fee

Units 1–20 $47 per unit

Units 21–40 $20 per unit

Units 41–100 $10 per unit

Units 101+ $2 per unit

Example for a building with 130 units:

Units 1–20, add $47 per unit = $940 Units 21–40, add $20 per unit = $400 Units 41–100, add $10 per unit = $600 Units 101–130, add $2 per unit = $60

Federal Policy Fee Total = $2,000 ($940+$400+$600+$60)

Other Assessments and Surcharges

For guidance see the Assessments, Fees, and Surcharges heading under General Rating Information above.

• Reserve Fund Assessment • HFIAA Surcharge • Probation Surcharge

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Table 36. Condominium Association Coverage for Residential Condominium Association Building (Scenario #1) continued

TOPIC GUIDANCE

Claim Settlement

Replacement Cost Coverage

• Yes, for the building only, subject to policy provisions. • RCV is the cost to replace property with the same type of material and

construction without deduction for depreciation.

Coinsurance Penalty

• The RCBAP coinsurance penalty applies to building coverage only. To receive full replacement cost, the insured must have purchased insurance in an amount equal to 80 percent of the full replacement cost of the building at the time of loss or the maximum amount of insurance available for that building under the NFIP, whichever is less.

• For instructions and examples on the coinsurance penalty see the RCBAP Form, VII. Coinsurance.

Incorrect SFIP Form

Building Becomes Ineligible

• If an insurer discovers that a building is not eligible for the RCBAP, the insurer must cancel and rewrite the coverage under the correct form with the original effective date. See additional guidance under Reason Code 22 “Cancel and rewrite due to administrative error” in Section 6: How to Cancel.

• The provisions of the correct SFIP form apply. • The insurer must set the amount of building or contents coverage according to

the provisions of the correct SFIP form. The coverage amount on the correct SFIP form must equal (and may not exceed) the coverage amount on the canceled SFIP form and may not exceed the maximum coverage limits available on the correct SFIP form. If the policyholder requests to increase coverage above the coverage amount on the canceled SFIP form, the insurer must follow the standard endorsement procedures for adding or increasing coverage described in Section 4: How to Endorse.

Owner Becomes Ineligible

• If, during a policy term, the policy fails to meet the eligibility requirements due to a change in the form of ownership, it becomes ineligible for coverage under the RCBAP.

• The insurer must cancel and rewrite the policy using the correct SFIP form. • The effective date of the cancellation is the date that the form of

ownership changed.

3. Residential Unit Owner Coverage in Residential Condominium Building (Scenario #2)

a. General Information

Use the Dwelling Form to insure an individual residential condominium unit and its contents in a residential condominium building. The unit owner must be named as the policyholder. Table 37 describes the applicable eligibility and rating requirements.

Table 37. Residential Unit Owner Coverage in Residential Condominium Building (Scenario #2)

TOPIC GUIDANCE

Eligibility Rules

Policy Form Dwelling Form (Building and Contents)

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Table 37. Residential Unit Owner Coverage in Residential Condominium Building (Scenario #2) continued

TOPIC GUIDANCE

Program Eligibility Regular Program or Emergency Program

Building Eligibility

A residential condominium unit (or mixed-use unit with non-residential uses limited to less than 50 percent of the unit’s total floor area) in a residential condominium building with one or more units, including a townhouse or rowhouse

Note: See Scenario #3 for information on insuring a residential condominium unit in a non-residential condominium building.

Policyholder Eligibility

Eligible Policyholders • Unit owner or tenant (with contents only policy); • Condominium association in the name of the unit owner and the association

as their interests may appear; or • Condominium association for an individual unit owned by the association.

Note: When the applicant is the condominium association, the lender for the individual unit owner should not appear on the declarations page.

Is the Policyholder a Condominium Association?

• Generally select “No”, including if the condominium association purchases the policy on behalf of a different unit owner.

• Only select “Yes” if the condominium association owns the individual unit.

Property Insured

• Building elements. • Individually-owned contents. • Interior walls, floor, and ceiling (not otherwise insured under a flood insurance

policy purchased by the condominium association) for not more than 10 percent of the stated contents coverage amount.

Duplicate Coverage

• In an exception to the general rule that multiple policies with building coverage may not insure a single building, the insurer may issue a Dwelling Form policy with building coverage to a residential condominium unit owner in a condominium building also covered by an RCBAP.

• However, no more than $250,000 may be paid in combined benefits for a single unit under the Dwelling Form and the RCBAP. Insureds may not claim damaged items under more than one policy. The NFIP will only pay for damaged items under one policy.

Other Eligibility Rules See guidance in Section 2: Before You Start

Geographic Location Variables

See the Geographic Location Variables heading under General Rating Information above • Building Location • Community Map Information and Flood Zone • Community Rating System Discount

Structural Variables

Building Occupancy

• Select “Residential Unit” • See the Building Occupancy heading under General Rating Information above

Building Description

• Select “Residential Condominium Unit (in Residential Building)” • See the Building Description heading under General Rating Information above

Construction Type Not applicable

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Table 37. Residential Unit Owner Coverage in Residential Condominium Building (Scenario #2) continued

TOPIC GUIDANCE

Foundation Type and First Floor Height

The general guidance applies since even if the unit is not on the first floor the NFIP is still interested in the entire building’s foundation and height above ground elevation. See the Foundation Type and First Floor Height headings under General Rating Information above.

Building Replacement Cost Value

FEMA will determine Building Replacement Cost Value for the unit by using Application Form data and industry data connected with the property address. If FEMA is unable to determine the Building Replacement Cost Value, the insurer must obtain the Building Replacement Cost Value for the unit based on appraisals commonly used in the industry, and report it on the Application Form. FEMA reassesses its determination of Building Replacement Cost Value at every renewal.

Number of Elevators Not applicable

Number of Floors in Building

Indicate the total number of floors in the building even though the policy covers only an individual unit. Determine the building’s number of floors based on the number of floors above the ground, excluding enclosures or basements (finished or unfinished), crawlspaces (on grade or subgrade) and attics (if not used for living space).

Floor of Unit If coverage is for a unit inside a multi-floor building with units located on different floors, indicate the floor where the unit to be insured is located. For example, if the unit is on the ninth floor of a twenty-story building, enter nine.

Total Number of Units in the Building

Determine the number of units in the building. If the building contains multiple units, enter the total number of units in the building, even though the policy covers only a single unit. For example, if coverage is for a unit within a four-unit building, enter four. Count both residential and non-residential units.

Other Structural Variables

For guidance on other structural variables, see the Structural Variables heading under General Rating Information above.

• Machinery & Equipment Above First Floor • Proper Openings • Floodproofing • Square Footage • Building Replacement Cost Value • Prior NFIP Claims • Severe Repetitive Loss Property • Date of Construction • Number of Detached Structures on Property • Rental Property • Building Over Water • Primary Residence Status

Coverage and Deductibles

Maximum Coverage Limits

Regular Program • Building: Not to exceed the lesser of:

– The building’s replacement cost value; or – $250,000

• Contents: $100,000 Emergency Program

• Building: Not to exceed the lesser of: – The building’s replacement cost value; or – $35,000

• Contents: $10,000

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Table 37. Residential Unit Owner Coverage in Residential Condominium Building (Scenario #2) continued

TOPIC GUIDANCE

ICC Coverage No

Assessment Coverage Yes. See information in Table 38 below.

Deductibles See the Deductibles heading under General Rating Information above

Statutory Discounts

See the Statutory Discounts heading under General Rating Information above • Newly Mapped Discount • Pre-FIRM Discount • Other Statutory Discounts

Assessments, Fees, and Surcharges

Federal Policy Fee $47

Other Assessments and Surcharges

For guidance see the Assessments, Fees, and Surcharges heading under General Rating Information above.

• Reserve Fund Assessment • HFIAA Surcharge • Probation Surcharge

Claim Settlement

Replacement Cost Coverage Yes, subject to policy provisions

b. Assessment Coverage

Table 38 shows how assessment coverage applies after a loss. Assessment coverage is only available under the Dwelling Form, for residential condominium unit owners in residential condominium buildings. Two limitations apply:

• The insured cannot use the assessment coverage under the Dwelling Form to meet the 80 percent coinsurance provision of the RCBAP.

• The assessment coverage under the Dwelling Form does not apply to ICC coverage or buildings subject to continuous flooding from closed basin lakes.

Note: The RCBAP and General Property Forms do not provide assessment coverage.

Table 38. Assessment Coverage After a Loss

Condition At Time of Loss Assessment Coverage Under the Dwelling Form

No RCBAP On the Entire Building

If the unit owner has purchased building coverage: • Responds to a loss assessment against the unit owner for damages to

common areas, up to the building limit under the Dwelling Form. • If there is also damage to the building elements of the unit:

– Coverage combination cannot exceed the maximum coverage limits available for a single-family dwelling.

– Settlement of the unit building damages applies first and then the loss assessment.

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Table 38. Assessment Coverage After a Loss continued

Condition At Time of Loss Assessment Coverage Under the Dwelling Form

If RCBAP Insured to at Least

80 Percent of the Building

Replacement Cost

If the unit owner has purchased building coverage: • The loss assessment coverage under the Dwelling Form will pay that

part of a loss that exceeds 80 percent of the association’s building replacement cost.

• The loss assessment coverage under the Dwelling Form will not cover the association’s policy deductible purchased by the condominium association.

• The RCBAP is primary and the Dwelling Form is considered excess. • Coverage combination cannot exceed the maximum coverage limits

available for a single-family dwelling.

If RCBAP Insured to Less Than 80 Percent of the Building

Replacement Cost

If the unit owner has purchased building coverage: • The RCBAP is primary and the Dwelling Form is considered excess. • The Dwelling Form will respond to a loss assessment resulting from the

coinsurance penalty under the RCBAP, even if the loss did not meet the RCBAP limits.

4. Residential Unit Owner Coverage in Non-Residential Condominium Building (Scenario #3)

Use the Dwelling Form to insure an individual residential condominium unit owner’s contents in a non-residential condominium building. The unit owner must be named as the policyholder. Table 39 describes the applicable eligibility and rating requirements.

Table 39. Residential Unit Owner Coverage in Non-Residential Condominium Building (Scenario #3)

TOPIC GUIDANCE

Eligibility Rules

Policy Form Dwelling Form (Contents Only)

Program Eligibility Regular Program or Emergency Program

Building Eligibility

A residential condominium unit (or mixed-use unit with non-residential uses limited to less than 50 percent of the unit’s total floor area) in a non-residential condominium building with one or more units, including a townhouse or rowhouse

Policyholder Eligibility

Eligible Policyholders • Unit owner; • Condominium association in the name of the unit owner and the association

as their interests may appear; or • Condominium association for an individual unit owned by the association.

Note: When the applicant is the condominium association, the lender for the individual unit owner should not appear on the declarations page.

Is the Policyholder a Condominium Association?

• Generally select “No”, including if the condominium association purchases the policy on behalf of a different unit owner.

• Only select “Yes” if the condominium association owns the individual unit.

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Table 39. Residential Unit Owner Coverage in Non-Residential Condominium Building (Scenario #3) continued

TOPIC GUIDANCE

Property Insured

• Individually-owned contents. • Interior walls, floor, and ceiling (not otherwise insured under a flood insurance

policy purchased by the condominium association) for not more than 10 percent of the stated contents coverage amount.

Other Eligibility Rules See guidance in Section 2: Before You Start

Geographic Location Variables

See the Geographic Location Variables heading under General Rating Information above • Building Location • Community Map Information and Flood Zone • Community Rating System Discount

Structural Variables

Building Occupancy

• Select “Residential Unit” • See the Building Occupancy heading under General Rating Information above

Building Description

• Select “Residential Condominium Unit (in Non-Residential Building)” • See the Building Description heading under General Rating Information above

Construction Type Not applicable

Foundation Type and First Floor Height

The general guidance applies since even if the unit is not on the first floor the NFIP is still interested in the whole building’s foundation and height above ground elevation. See the Foundation Type and First Floor Height headings under General Rating Information above.

Building Replacement Cost Value

FEMA will determine Building Replacement Cost Value for the unit by using Application Form data and industry data connected with the property address. If FEMA is unable to determine the Building Replacement Cost Value, the insurer must obtain the Building Replacement Cost Value for the unit based on appraisals commonly used in the industry, and report it on the Application Form. FEMA reassesses its determination of Building Replacement Cost Value at every renewal.

Number of Elevators Not applicable

Number of Floors in Building

Indicate the total number of floors in the building even though the policy covers only an individual unit. Determine the building’s number of floors based on the number of floors above the ground, excluding enclosures or basements (finished or unfinished), crawlspaces (on grade or subgrade) and attics (if not used for living space).

Floor of Unit If coverage is for a unit inside a multi-floor building with units located on different floors, indicate the floor where the unit to be insured is located. For example, if the unit is on the ninth floor of a twenty-story building, enter nine.

Total Number of Units in the Building

Determine the number of units in the building. If the building contains multiple units, enter the total number of units in the building, even though the policy covers only a single unit. For example, if coverage is for a unit within a four-unit building, enter four. Count both residential and non-residential units.

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Table 39. Residential Unit Owner Coverage in Non-Residential Condominium Building (Scenario #3) continued

TOPIC GUIDANCE

Other Structural Variables

For guidance on other structural variables, see the Structural Variables heading under General Rating Information above.

• Machinery & Equipment Above First Floor • Proper Openings • Floodproofing • Square Footage • Building Replacement Cost Value • Prior NFIP Claims • Severe Repetitive Loss Property • Date of Construction • Number of Detached Structures on Property • Rental Property • Building Over Water • Primary Residence Status

Coverage and Deductibles

Maximum Coverage Limits

Regular Program • Contents: $100,000

Emergency Program • Contents: $10,000

ICC Coverage No

Assessment Coverage No

Deductibles See the Deductibles heading under General Rating Information above

Statutory Discounts

See the Statutory Discounts heading under General Rating Information above • Newly Mapped Discount • Pre-FIRM Discount • Other Statutory Discounts

Assessments, Fees, and Surcharges

Federal Policy Fee $47

Other Assessments and Surcharges

For guidance see the Assessments, Fees, and Surcharges heading under General Rating Information above.

• Reserve Fund Assessment • HFIAA Surcharge • Probation Surcharge

Claim Settlement

Replacement Cost Coverage No

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3. How to Write

5. Condominium Association Coverage for Non-Residential Condominium Building (Scenario #4)

Use the General Property Form to insure a non-residential condominium building and the commonly owned contents. The condominium association must be named as the policyholder. Table 40 describes the applicable eligibility and rating requirements.

Table 40. Condominium Association Coverage for Non-Residential Condominium Building (Scenario #4)

TOPIC GUIDANCE

Eligibility Rules

Policy Form General Property Form (Building and Contents)

Program Eligibility Regular Program or Emergency Program

Building Eligibility

• Non-residential condominium building with one or more units • Mixed-use condominium building if non-residential uses are 25 percent or more

of the building’s total floor area.

Policyholder Eligibility Non-residential condominium association

Is the Policyholder a Condominium Association?

Select “Yes”

Property Insured

The property insured includes: • Condominium building. • Individually owned units within the building. • Improvements within units. • Additions and extensions attached or connected to the insured building. • Fixtures, machinery, and equipment within building. • Contents owned by the association. • Non-residential common building elements and the contents..

Note: The NFIP requires a separate policy for each building owned by a condominium association. Coverage applies to the single building described under Building Location on the Application Form and Insured Property Location on the Declarations Page.

Other Eligibility Rules See guidance in Section 2: Before You Start

Geographic Location Variables

See the Geographic Location Variables heading under General Rating Information above • Building Location

• Community Map Information and Flood Zone

• Community Rating System Discount

Structural Variables

Building Occupancy

• Select “Non-Residential Building” • See the Building Occupancy heading under General Rating Information above.

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Table 40. Condominium Association Coverage for Non-Residential Condominium Building (Scenario #4) continued

TOPIC GUIDANCE

Building Description

Select one of the following that best describes the building: • Commercial • Detached Garage • Government-Owned • House of Worship • Recreation Building • Storage/Tool Shed • Other Non-Residential Type

See the Building Description heading under General Rating Information above

Construction Type Not applicable to the Non-Residential Building occupancy.

Number of Elevators If there are elevators within the building, enter the total number elevators, including those located inside an enclosure.

Number of Floors in Building

Determine the building’s number of floors based on the number of floors above the ground, excluding enclosures or basements (finished or unfinished), crawlspaces (on grade or subgrade) and attics (if not used for living space).

Total Number of Units in the Building

Determine the number of units in the building. If the building contains multiple units, count the total number of units in the building including both residential and non- residential units.

Building Replacement Cost Value

• The insurer must obtain the Building Replacement Cost Value (including the cost of the building’s foundation) based on appraisals commonly used in the industry.

• The insurer must maintain supporting documentation of the Building Replacement Cost Value. Supporting documentation may include a recent property valuation report stating the value of the building and its foundation on a replacement cost value basis to meet this requirement.

• Supporting Building Replacement Cost Value documentation is not required if: – The building description is either Storage/Tool Shed or Detached Garage; or – The building’s square footage is less than 1,000 square feet.

• The insurer must validate the Building Replacement Cost Value information at least every 3 years. See notice requirements and a sample version in Appendix I: Policyholder Communications.

Other Structural Variables

For guidance on other structural variables, see the Structural Variables heading under General Rating Information above.

• Foundation Type • First Floor Height • Machinery & Equipment Above First Floor • Proper Openings • Floodproofing • Prior NFIP Claims • Severe Repetitive Loss Property • Date of Construction • Number of Detached Structures on Property • Rental Property • Building Over Water • Primary Residence Status

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Table 40. Condominium Association Coverage for Non-Residential Condominium Building (Scenario #4) continued

TOPIC GUIDANCE

Coverage and Deductibles

Maximum Coverage Limits

Regular Program • Building: Not to exceed the lesser of:

– The building’s replacement cost value; or – $500,000

• Contents: $500,000

Emergency Program • Building: Not to exceed the lesser of:

– The building’s replacement cost value; or – $100,000

• Contents: $100,000

ICC Coverage Yes

Assessment Coverage No

Deductibles See the Deductibles heading under General Rating Information above

Statutory Discounts

See the Statutory Discounts heading under General Rating Information above • Newly Mapped Discount • Pre-FIRM Discount • Other Statutory Discounts

Assessments, Fees, and Surcharges

Federal Policy Fee $47

Other Assessments and Surcharges

For guidance see the Assessments, Fees, and Surcharges heading under General Rating Information above.

• Reserve Fund Assessment • HFIAA Surcharge • Probation Surcharge

Claim Settlement

Replacement Cost Coverage No

6. Non-Residential Unit Owner Coverage in Residential or Non-Residential Condominium Building (Scenario #5)

Use the General Property Form to insure a non-residential condominium unit owner’s contents in a residential or non-residential building. The unit owner must be named as the policyholder. Table 41 describes the applicable eligibility and rating requirements.

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3. How to Write

Table 41. Non-Residential Unit Owner Coverage in Residential or Non-Residential Condominium (Scenario #5)

TOPIC GUIDANCE

Eligibility Rules

Policy Form General Property Form (Contents Only)

Program Eligibility Regular Program and Emergency Program

Building Eligibility A non-residential condominium unit in a residential or non-residential condominium building with one or more units, including a townhouse or rowhouse.

Property Insured

• Contents of non-residential condominium unit. • A condominium unit owner may apply up to 10 percent of the contents coverage

limit, chosen by the policyholder, to cover loss to interior walls, floor, and ceiling that are not insured under a policy issued to the condominium association insuring the condominium building.

• A tenant may apply up to 10 percent of the contents coverage limit to improvements: – Made a part of the building the tenant occupies; and – The tenant acquired, or made at the tenant’s expense, even though the tenant cannot legally remove.

• This coverage does not increase the amount of insurance that applies to insured personal property

Policyholder Eligibility

Eligible Policyholders • Unit owner; or • Tenant.

Is the Policyholder a Condominium Association?

• Generally select “No”, including if the condominium association purchases the policy on behalf of a different unit owner.

• Only select “Yes” if the condominium association owns the individual unit.

Other Eligibility Rules See guidance in Section 2: Before You Start

Geographic Location Variables

See the Geographic Location Variables heading under General Rating Information above • Building Location • Community Map Information and Flood Zone • Community Rating System Discount

Structural Variables

Building Occupancy

• Select “Non-Residential Building” • See the Building Occupancy heading under General Rating Information above.

Building Description

Select one of the following that best describes the building: • Commercial • Government-Owned • House of Worship • Recreation Building • Storage/Tool Shed • Other Non-Residential Type

See the Building Description heading under General Rating Information above

Construction Type Not applicable

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3. How to Write

Table 41. Non-Residential Unit Owner Coverage in Residential or Non-Residential Condominium (Scenario #5) continued

TOPIC GUIDANCE

Foundation Type & First Floor Height

The general guidance applies since even if the unit is not on the first floor the NFIP is still interested in the entire building’s foundation and height above ground elevation. See the Foundation Type and First Floor Height headings under General Rating Information above.

Building Replacement Cost Value

• The insurer must obtain the Building Replacement Cost Value for the unit based on appraisals commonly used in the industry.

• The insurer must maintain supporting documentation of the Building Replacement Cost Value. Supporting documentation may include a recent property valuation report stating the value of the unit on a replacement cost value basis to meet this requirement.

• Supporting Building Replacement Cost Value documentation is not required if: – The building description is either Storage/Tool Shed or Detached Garage; or – The building’s square footage is less than 1,000 square feet.

• The insurer must update the Building Replacement Cost Value information at least every 3 years. See notice requirements and a sample version in Appendix I: Policyholder Communications.

Number of Elevators Not applicable

Number of Floors in Building

Indicate the total number of floors in the building even though the policy covers only an individual unit. Determine the building’s number of floors based on the number of floors above the ground, excluding enclosures, crawlspaces (on grade or subgrade), basements (finished or unfinished), and attics (if not used for living space).

Floor of Unit If coverage is for a unit inside a multi-floor building with units located on different floors, indicate the floor where the unit to be insured is located. For example, if the unit is on the ninth floor of a twenty-story building, enter nine.

Total Number of Units in the Building

Determine the number of units in the building. If the building contains multiple units, enter the total number of units in the building, even though the policy covers only a single unit. For example, if coverage is for a unit within a four-unit building, enter four. Count both residential and non-residential units.

Other Structural Variables

For guidance on other structural variables, see the Structural Variables heading under General Rating Information above.

• Machinery & Equipment Above First Floor • Proper Openings • Floodproofing • Prior NFIP Claims • Severe Repetitive Loss Property • Date of Construction • Number of Detached Structures on Property • Rental Property • Building Over Water • Primary Residence Status

Coverage and Deductibles

Maximum Coverage Limits

Regular Program • Contents: $500,000

Emergency Program • Contents: $100,000

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3. How to Write

Table 41. Non-Residential Unit Owner Coverage in Residential or Non-Residential Condominium (Scenario #5) continued

TOPIC GUIDANCE

ICC Coverage No

Assessment Coverage No

Deductibles See the Deductibles heading under General Rating Information above

Statutory Discounts

See the Statutory Discounts heading under General Rating Information above • Newly Mapped Discount • Pre-FIRM Discount • Other Statutory Discounts

Assessments, Fees, and Surcharges

Federal Policy Fee $47

Other Assessments and Surcharges

For guidance see the Assessments, Fees, and Surcharges heading under General Rating Information above.

• Reserve Fund Assessment • HFIAA Surcharge • Probation Surcharge

Claim Settlement

Replacement Cost Coverage No

B. Applying the Condominium Rating Scenarios Tables 42–44 apply the five scenarios above to various specific situations that can arise when writing policies for condominium buildings and units. The tables clarify what Building Occupancy and Building Description to select and what condominium rating scenario and policy form applies.

Table 42: Single-Family Residential Building or Individual Residential Townhouse or Rowhouse in a Condominium Complex

Situation

Is the Policyholder a Condominium Association?

Building Occupancy Building Description

Rating Scenario & Policy Form

Type of Coverage Available

Residential Condominium Building or Unit in Such a Building

Single-Family Residential

Condominium Building

(a one-unit building in a condominium

complex)

YES

(Purchased by the condominium association to insure the entire building)

Residential Condominium Building

Entire Residential Condominium Building

Scenario #1: RCBAP

Building and Contents

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3. How to Write

Table 42: Single-Family Residential Building or Individual Residential Townhouse or Rowhouse in a Condominium Complex continued

Situation

Is the Policyholder a Condominium Association?

Building Occupancy Building Description

Rating Scenario & Policy Form

Type of Coverage Available

Single-Family Residential

Condominium Building continued

(a one-unit building in a condominium

complex)

YES or NO

(Purchased by or on behalf of the unit owner – which may be the association – to insure the building’s single unit, whether or not the condominium association has an RCBAP on the building)

Residential Unit

Residential Condominium Unit (in Residential Building)

Scenario #2: Dwelling

Building and Contents

Townhouse or Rowhouse Condominium

Individual Residential

Townhouse or Rowhouse

(in a row of townhouse

or rowhouse condominiums

but insured as a single building)

YES

(Purchased by the condominium association to insure the entire building)

Residential Condominium Building

Entire Residential Condominium Building

Scenario #1: RCBAP

Building and Contents

YES or NO

(Purchased by or on behalf of the unit owner – which may be the association – to insure the townhouse or rowhouse’s single unit, whether or not the condominium association has an RCBAP on the building)

Residential Unit

Residential Condominium Unit (in Residential Building)

Scenario #2: Dwelling

Building and Contents

Table 43: Residential Condominium Building with 2-4 Units, or a Unit in Such a Building (Non-Townhouse/Rowhouse)

Situation

Is the Policyholder a Condominium Association?

Building Occupancy Building Description

Rating Scenario & Policy Form

Type of Coverage Available

Residential Condominium Building or Unit in Such a Building

Residential Condominium Building with

2–4 Units

YES (Purchased by the condominium association to insure the entire building)

Residential Condominium Building

Entire Residential Condominium Building

Scenario #1: RCBAP

Building and Contents

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3. How to Write

Table 43: Residential Condominium Building with 2-4 Units, or a Unit in Such a Building (Non-Townhouse/Rowhouse) continued

Situation

Is the Policyholder a Condominium Association?

Building Occupancy Building Description

Rating Scenario & Policy Form

Type of Coverage Available

Residential Unit in

2–4 Family Residential

Condominium Building

YES or NO (Purchased by or on behalf of a unit owner – which may be the association – to insure an individual unit, whether or not the condominium association has an RCBAP on the building)

Residential Unit

Residential Condominium Unit (in Residential Building)

Scenario #2: Dwelling

Building and Contents

Non- Residential

Unit in 2–4 Family Residential

Condominium Building

YES or NO

(Purchased by or on behalf of a unit owner – which may be the association – to insure an individual unit, whether or not the condominium association has an RCBAP on the building)

Non- Residential Unit

Pick one: • Commercial • Government-Owned • House of Worship • Recreation Building • Storage/Tool Shed • Other Non- Residential Type

Scenario #5: General Property

Contents

Table 44: Residential Condominium Building with Five or More Units, or a Unit in Such a Building (Non-Townhouse/Rowhouse)

Situation

Is the Policyholder a Condominium Association?

Building Occupancy Building Description

Rating Scenario & Policy Form

Type of Coverage Available

Residential Condominium Building or Unit in Such a Building

Residential Condominium Building with Five or More

Units

YES

(Purchased by the condominium association to insure the entire building)

Residential Condominium Building

Entire Residential Condominium Building

Scenario #1: RCBAP

Building and Contents

Residential Unit in

Residential Condominium Building with Five or More

Units

YES or NO

(Purchased by or on behalf of a unit owner – which may be the association – to insure an individual unit, whether or not the condominium association has an RCBAP on the building)

Residential Unit

Residential Condominium Unit (in Residential Building)

Scenario #2: Dwelling

Building and Contents

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3. How to Write

Table 44: Residential Condominium Building with Five or More Units, or a Unit in Such a Building (Non-Townhouse/Rowhouse) continued

Situation

Is the Policyholder a Condominium Association?

Building Occupancy Building Description

Rating Scenario & Policy Form

Type of Coverage Available

Non- Residential

Unit in Residential

Condominium Building with Five or More

Units

YES or NO

(Purchased by or on behalf of a unit owner – which may be the association – to insure an individual unit, whether or not the condominium association has an RCBAP on the building)

Non- Residential Unit

Pick one: • Commercial • Government-Owned • House of Worship • Recreation Building • Storage/Tool Shed • Other Non-

Residential Type

Scenario #5: General Property

Contents

Table 45. Non-Residential Condominium Building, or Unit in Such a Building

Situation

Is the Policyholder a Condominium Association?

Building Occupancy Building Description

Rating Scenario & Policy Form

Type of Coverage Available

Single-Unit Non-Residential Condominium Building, or Unit in Such a Building

Non- Residential Single-Unit

Condominium Building

(in a condominium

complex)

YES

(Purchased by the condominium association to insure the entire building)

Non- Residential Building

Pick one: • Commercial • Detached Garage • Government-Owned • House of Worship • Recreation Building • Storage/Tool Shed • Other Non-

Residential Type

Scenario #4: General Property

Building and Contents

YES or NO

(Purchased by or on behalf of the unit owner – which may be the association – to insure the building’s single unit, whether or not the condominium association has a General Property Form policy on the building)

Non- Residential Unit

Pick one: • Commercial • Government-Owned • House of Worship • Recreation Building • Storage/Tool Shed • Other Non-

Residential Type

Scenario #5: General Property

Contents

Non-Residential Condominium Building with Multiple Units, or Unit in Such a Building

Non- Residential

Condominium Building with

Multiple Units

YES

(Purchased by the condominium association to insure the entire building)

Non- Residential Building

Pick one: • Commercial • Government-Owned • House of Worship • Recreation Building • Storage/Tool Shed • Other Non-

Residential Type

Scenario #4: General Property

Building and Contents

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3. How to Write

Table 45. Non-Residential Condominium Building, or Unit in Such a Building continued

Situation

Is the Policyholder a Condominium Association?

Building Occupancy Building Description

Rating Scenario & Policy Form

Type of Coverage Available

Non- Residential

Unit in a Non- Residential

Condominium Building with

Multiple Units

YES or NO

(Purchased by or on behalf of a unit owner – which may be the association – to insure an individual unit, whether or not the condominium association has a General Property Form policy on the building)

Non- Residential Unit

Pick one: • Commercial • Government-Owned • House of Worship • Recreation Building • Storage/Tool Shed • Other Non- Residential Type

Scenario #5: General Property

Contents

Residential Unit in a Non- Residential

Condominium Building with

Multiple Units

YES or NO

(Purchased by or on behalf of a unit owner – which may be the association – to insure an individual unit, whether or not the condominium association has a General Property Form policy on the building)

Residential Unit

Residential Condominium Unit (in Non-Residential Building)

Scenario #3: Dwelling Contents

IV. Provisional Rating Information A. General Information Insurers should use provisional rates to enable coverage when the FEMA system is unavailable, or when FEMA has provided guidance to use provisional rating.

When the system is once again available to provide a rating engine rate, the insurer will finish processing the policy or, if the policy was already submitted to FEMA’s system with the provisional rate, endorse the policy to a rating engine rate. FEMA highly recommends that the insurer endorse the policy to a rating engine rate within 60 days of the Application Form submission. The following rules govern use of provisional rating:

• Provisionally rated policies are valid for 1 year. • Provisionally rated policies cannot be renewed. • Provisionally rated policies may be endorsed during the policy term or by new

application at renewal to obtain a rating engine rate. • The insurer must submit the endorsement to FEMA for a premium before any claim

payment in the event of a loss. • When writing a provisionally rated policy, use the effective date rules in Section 2:

Before You Start No waiting period applies when endorsing to a rating engine rate unless the policyholder requests increased or additional coverage, in which case that coverage is subject to a waiting period consistent with the guidance in Section 4: How to Endorse.

• A provisionally rated policy cannot be canceled and rewritten as another provisionally rated policy.

• The insurer may not endorse a provisionally rated policy to increase coverage until the policy is endorsed to a rating engine rate.

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3. How to Write

B. Eligibility FEMA authorizes NFIP insurers to use provisional rates (at their discretion) in the following scenarios:

• Planned FEMA maintenance windows. • Geolocation variable issues – When FEMA’s system does not return one or

more geolocation variables required for rating (for example, distance to flooding source) based on the submitted geolocation. This does not include scenarios where FEMA’s geocoder cannot successfully produce a latitude and longitude for a submitted address. Note: See Section B.1.b Geolocation for guidance on submitting the building’s latitude and longitude to enable geolocation.

• Unplanned outages: – Unplanned FEMA system outage; or – Issue between FEMA and insurer system where the responsible party is unclear.

The insurer must document the quote/policy file.

FEMA does not authorize NFIP insurers to use provisional rates in the following situations:

• Planned NFIP insurer or vendor maintenance windows • Known NFIP insurer or vendor system issues • Issues with FEMA third-party tools: Geocoder, First Floor Height Tool, Replacement

Cost Value

The following are eligible for provisional rating:

• All building occupancies • All policy forms • All foundation types • Regular Program and Emergency Program communities

C. Rates Table 46 shows the provisional rates used to determine premium for all policy types.

Table 46: Provisional Rates for All Policy Types

Policy Type Premium

Building Coverage $5.30 / $1,000 of Building Limit

Contents Coverage $9.80 / $1,000 of Contents Limit

For provisionally rated policies, calculate the building and contents premiums by applying the rate per thousand to the amount of coverage requested. Provisionally rated policies are subject to the ICC premium, calculated as 1.9 percent of the building and contents coverage premiums. The building, contents, and ICC premiums combine to an adjusted premium. The Reserve Fund Assessment, Federal Policy Fee, HFIAA Surcharge, and Probation Surcharge (if applicable), and Federal Policy Fee are applied to that adjusted premium to calculate the total amount due. For additional information, see the Assessments, Fees, and Surcharges heading under General Rating Information above. Provisionally rated policies are not eligible for CRS discounts. Follow the steps in Table 47 to determine the total amount due.

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3. How to Write

Table 47. Calculate Premium for a Provisionally-Rated Policy

Step Action Reference/Guidance

1 Apply the rate $5.30 per $1,000 of Building Limits and $9.80 per $1,000 of Contents Limits.

2 Apply standard deductible

Apply deductible of $2,000 building / $2,000 contents (only option).

3 Add ICC premium (if eligible)

If eligible for ICC coverage, apply 1.9 percent of the building and contents coverage premiums. For more information about ICC eligibility, see the ICC Coverage heading above.

4 Apply Reserve Fund Assessment

Apply 18 percent of the adjusted premium (building, contents, and ICC premiums).

5 Add HFIAA Surcharge

See Table 32 “HFIAA Surcharge” under the Assessments, Fees, and Surcharges heading above to determine the applicable surcharge.

6 Add Federal Policy Fee

See Table 33 “Federal Policy Fee” under the Assessments, Fees, and Surcharges heading above for the applicable fee.

7 Add Probation Surcharge

Insurer must determine if the community is on NFIP probation. Add a $50 Probation Surcharge if the community is on probation.

D. Premium Adjustments When the system is available to obtain a rating engine rate, the insurer must submit all required rating information by endorsement to FEMA. Follow the guidance in Section 4: How to Endorse on premium-bearing endorsements, in particular the Refund heading if the rating engine rate is lower than the provisional rate the policyholder initially paid. If the rating engine rate is higher, follow the guidance under the Reformation Due to Insufficient Premium or Rating Information heading in Section 2 Before You Start.

E. Notification The insurer must provide notice to the policyholder, agent and lender (if applicable) that provisional rating was used and explaining the provisional rating process, the non- renewability of a provisionally rated policy, the inability to file a claim on a provisionally rated policy before endorsement to a rating engine rate, and FEMA’s recommendation that the policy should be re-rated promptly using the endorsement process. See the sample notification letter in Appendix I: Policyholder Communications.

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4. How to Endorse

This section provides guidance on how to endorse a policy. An endorsement is a change or correction to an existing NFIP policy that may or may not affect premium.

I. Endorsement Process A. General Change Endorsement Form To endorse a policy, submit a completed Endorsement Form (FF-206-FY-21-119 or a similar request) and attach an updated copy of the Flood Insurance Application Form (FF- 206-FY-21-117) reflecting only the changes to the policy. Supporting documentation and premium must be submitted with the endorsement request when necessary. Copies of the forms are located in Appendix B: Forms.

The Endorsement Form cannot be used to: • Renew a policy; • Extend or change a policy term; or • Correct the effective date of a policy.

Please see Reason Code 22 in Section 6: How to Cancel for additional information on when to cancel and rewrite a policy.

Policies cannot be endorsed to account for rating plan changes during a policy term, including changes that would decrease premium. Premium-bearing changes must reflect the rating plan and CRS discounts in place on the policy’s effective date.

Note: If the FEMA system is not available when trying to process an endorsement transaction, submit the endorsement as soon as the system becomes available.

B. Signatures A signature is required for all endorsements. The policyholder must sign the General Change Endorsement Form or similar document when there is a request to reduce policy limits, increase the deductible, assign the policy, or change the agent of record.

Note: Signatures are not required on the Application Form when it is submitted with the General Change Endorsement Form (FF-206-FY-21-119).

Insurers can accept electronic endorsement submissions. See the Administrative Topics heading in Section 2: Before You Start for additional information on electronic signatures.

C. Non-Premium and Premium-Bearing Changes Endorsement requests may be non-premium or premium-bearing. An endorsement request can also include non-premium and premium-bearing changes in the same transaction. When combined, the effective date for the premium-bearing change should be used as the transaction effective date.

1. Non-Premium Changes

Non-premium changes are endorsements that do not require additional premium to process the transaction. Examples of non-premium changes include:

• Changing the mailing address. • Assigning the policy. • Changing a mortgagee. • Changing the agent of record.

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a. Process for Submitting a Non-Premium Change

Below is a high-level summary of the process for submitting a non-premium change.

• Agent – Using the insurer system, work with the policyholder to complete the Endorsement Form and update the Application Form with the endorsement information and submit it to the insurer.

• Insurer – Validate the endorsement information, determine the endorsement effective date, issue the policy and declarations page, and report policy data to FEMA.

2. Premium-Bearing Changes

Premium-bearing changes are endorsements that impact rating variables, which may change the policy premium and result in a refund or insufficient premium. Similar to the application process, FEMA will provide the insurer the updated cost information for the premium-bearing endorsement, using the rating plan and CRS discount in place on the policy’s effective date. As explained in the process below, the insurer must take the prorated premium, if necessary, using the determined endorsement effective date and determine whether a refund or insufficient premium applies.

Examples of premium-bearing changes include: • Rating adjustment. • Rating correction. • Coverage or deductible change. • Rate category change. • Adding an Elevation Certificate (EC).

a. Process for Submitting a Premium Change

Below is a high-level summary of the process for submitting a premium change.

• Agent – Using the insurer system, work with the policyholder to complete the Endorsement Form; update the Application Form with the endorsement information; and submit the information to FEMA for a premium quote.

• FEMA – Calculate the premium with the updated endorsement information using the rating plan and CRS discount in place on the policy’s effective date for the full term; send the updated cost information to the insurer system.

• Insurer – Determine whether a refund or insufficient premium applies. • Agent – Apprise the policyholder of the total amount due and, if they want to

proceed, collect the premium and any supporting documentation and submit it to the insurer.

• Insurer – Validate the payment; confirm the policy effective date; issue a revised declarations page; and report policy data to FEMA. Note: If the endorsement effective date changes, a new premium quote is required.

b. Statutory Annual Increase Cap

Most premium rates may not increase by more than 18 percent each year, whether at renewal or by endorsement, except when increasing coverage, decreasing the amount of the deductible, or reflecting a change in the CRS discount.1 Certain premium-bearing changes that are similar to writing a new policy are also exempt from the 18 percent cap on annual rate increases, for example an endorsement for

1. 42 U.S.C. 4015(e)

4. How to Endorse

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a Policy Form update or correction, completed construction, or a property address correction (if keyed incorrectly).

D. Refund Insurers must refund premium if an endorsement results in lowered premium. Insurers must process the return premium on policy terms for which they are the insurer of record. The Federal Policy Fee and Probation Surcharge (if applicable) are not subject to calculation of return premiums. Insurers may not process an endorsement refund for canceled or inactive policies.

1. Prior Term Refunds (PTRs)

For a return premium request that covers more than two policy terms, lapses in coverage do not extend the number of policy terms a premium refund can cover. The insurer must include any lapse in coverage when determining the number of years allowed for a refund, and must provide proper documentation. The insurer must reimburse FEMA for any refunds exceeding the allowable amount.

The insurer may choose to process the return premium request or submit the request and documentation to FEMA for processing. The documentation must include:

• The insurer’s statistical records or declarations pages for each policy term with evidence of premium payments; and

• An endorsement request with supporting documentation, if applicable, for each policy term and the premium refund calculation for each policy term.

The insurers should send the request and documentation to FEMA by email at: [email protected].

FEMA will notify the insurer of the premium refunded and the Expense Allowance due to the NFIP. The insurer must maintain this documentation as part of their underwriting files. FEMA will return refund requests that are inaccurate or incomplete.

E. Insufficient Premium If an endorsement results in a higher premium, the insurer must collect the additional premium before processing the endorsement. The procedures for processing such an endorsement depend on whether the endorsement is elective (optional for the policyholder) or required (needed to properly rate the policy). Note that these distinctions are only relevant when the premium previously paid is insufficient, not when an endorsement results in a refund. Table 1 describes the procedures that apply in each case.

Table 1. Procedures if a Premium-Bearing Endorsement Results in Insufficient Premium

Type of Premium-Bearing Endorsement Procedure If Premium Insufficient

Elective Endorsement Including but not limited to:

• Coverage or deductible change

• The insurer must collect the additional premium and receive payment before processing the endorsement.

• If the insurer receives the full amount due, it processes the endorsement.

• If the insurer receives payment but less than the full amount due to purchase the endorsement requested, it must proceed with endorsing the policy to the amount of coverage that the premium received can purchase after deducting the costs of all applicable

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Table 1. Procedures if a Premium-Bearing Endorsement Results in Insufficient Premium continued

Type of Premium-Bearing Endorsement Procedure If Premium Insufficient

Elective Endorsement continued

fees and surcharges. See the applicable procedures under the Reformation Due to Insufficient Premium or Rating Information heading in Section 2: Before You Start.

• If the insurer receives no payment, it must nullify the endorsement.

Required Endorsement Including but not limited to:

• Rating adjustment • Rating correction • Correcting or updating the

policy form • Rate category change

• Knowing that the policy’s current rating is incorrect, the insurer must endorse the policy whether or not it receives additional premium.

• The insurer must collect the additional premium. If the insurer receives the full amount due, it processes the endorsement.

• If the insurer receives no payment or a payment less than the full amount due, see the applicable procedures under the Reformation Due to Insufficient Premium or Rating Information heading in Section 2: Before You Start. The insurer must process the endorsement to correct the rating and reform the policy by reducing coverage to the amount that the premium received can purchase.

Note: When processing a rating correction involving an incorrect property location or flood zone, follow the guidance under the Exception When Reforming a Policy Due to an Incorrect Geolocation or Flood Zone heading in Section 2: Before You Start.2

II. Coverage and Deductible Changes

A. Adding or Increasing Coverage Policyholders may add or increase coverage on their policy any time during the policy term. Upon receiving a completed Endorsement Form and updated Application Form reflecting only the changes to the policy, FEMA will provide the insurer updated cost information using the endorsement effective date determined by the insurer based on the guidance below. The insurer must receive payment before processing an endorsement to add or increase coverage (see detailed guidance under the Insufficient Premium heading above).

1. Effective Dates for Endorsements Adding or Increasing Coverage

In general, endorsements adding or increasing coverage become effective following a 30-day waiting period. However, there are three exceptions listed below:

• Map Revision Exception: Coverage becomes effective after a 1-day waiting period during the first 13 months following a flood map revision newly identifying a building as located within a Special Flood Hazard Area (SFHA) when it was previously identified as outside of an SFHA.

• Loan Exception: If the initial purchase of additional or increased flood insurance coverage is in connection with making, increasing, extending, or renewing a loan secured by the insured property (for example, a mortgage loan) – and if the NFIP receives the endorsement request and full amount due within specified timeframes – then no waiting period applies and coverage becomes effective as of the time of the loan closing.

2. 42 U.S.C. 4015(f)

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• Post-Wildfire Exception: Coverage becomes effective after a 1-day waiting period if: – The insured property is privately-owned (property not owned by a federal, state,

local, territorial, or tribal government) and experiences damage caused by a flood that originated on federal land;

– Post-wildfire conditions on federal lands caused or worsened the flooding; and

– The policyholder purchased the additional or increased coverage either: > On or before the fire containment date; or

> During the 60-calendar day period following the fire containment date.

See the Effective Dates for New Policies and Endorsements heading in Section 2: Before You Start for additional information on the 30-day waiting period rule and the three exceptions.

B. Reducing Coverage 1. Reduction in Building Coverage

During a policy term, policyholders may only reduce building coverage to align the coverage amount with the current replacement cost value of the insured building or due to the removal of a portion of the building. Insurers may not accept endorsements that reduce building coverage without valid explanation. For example, a valid explanation would be, “A wing of the building was damaged by fire and the building was repaired without the wing.”

2. Reduction in Contents Coverage

During a policy term, policyholders may only reduce contents coverage when they sell or remove a portion of the contents, reducing the contents’ value to less than the amount insured. Insurers may not accept endorsements that reduce contents coverage without valid explanation. For example, a valid explanation would be, “The policyholder moved out of the house and a limited amount of insured contents remain at the described location.”

3. Effective Dates for Endorsements Reducing Coverage

The effective date of an endorsement reducing coverage should be the day after the occurrence causing the request to reduce coverage. The effective date of the endorsement cannot be earlier than that day.

C. Removing Coverage Insurers may only remove coverage upon the policyholder’s request in the following instances:

• The building or contents are no longer at the described location. • The policyholder no longer owns the property. • There is more than one NFIP policy with building coverage insuring the same building. • The policyholder wants to remove building coverage while retaining contents

coverage on a Dwelling Form policy insuring a residential condominium unit, only if there is a Residential Condominium Building Association Policy (RCBAP) in force.

Table 2 outlines how to determine the endorsement effective date and terms eligible for refund, depending on the reason for removing coverage.

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Table 2. Effective Dates for Endorsements Removing Coverage

Scenario Endorsement Effective Date &

Terms Eligible For Refund

Building or contents are no longer at the described location

The date when the building or contents were no longer at the described location, subject to a limitation of no more than 5 years prior to the effective date of the current policy term.

The policyholder no longer owns the property

The date when the policyholder ceased ownership of the property, subject to a limitation of no more than 5 years prior to the effective date of the current policy term.

For duplicate coverage

• More than one NFIP policy with building coverage insuring the same building.

• Building coverage removed while retaining contents coverage for a Dwelling Form policy insuring a residential condominium unit if there is a RCBAP in force.

The date when the duplicate coverage began, subject to a limitation of no more than 5 years prior to the effective date of the current policy term.

1. Duplicate Coverage

The NFIP does not permit duplicate coverage. Insurers must issue only one building coverage policy per building, with the exception of condominium coverage as noted below. If there is more than one policy with building coverage for the same building, only one building policy can remain in force. The insurer must cancel the policy with the later effective date, the policy with the earlier effective date will continue. The policy that remains in force must list all building owners as policyholders, and insurers must cancel or remove building coverage on all other policies for that building.

When duplicate coverage occurs, the insurer may endorse the policy to remove the duplicate building coverage effective the date when the duplicate coverage began but no more than 5 years prior to the effective date of the current policy term. See Table 2 above. The insurer may also cancel the policy for duplicate coverage. Refer to Section 6: How to Cancel for further guidance on canceling a duplicate policy.

If different policyholders have more than one policy covering the same building, the building owner must choose which policy to keep and the building owner must be named as a policyholder. For example, if a tenant purchased building coverage, the insurer must either remove the building coverage from the policy, endorse the policy to add the building owner as a policyholder, or cancel the policy.

If there is more than one building at the location of the insured property, use the Application Form’s Building Location section to clearly identify the building to be insured. For example, five buildings with the same property location may be insured with separate policies. If necessary, use identifiers such as Building A, B, or C, or “Smith Hall” in the second line of the street address to distinguish the buildings. Also select the Building Description that best corresponds to the insured building. If there are multiple buildings at the same address and the specific building identification is not clear, a photo of the building or a sketch showing the location of the building on the property to be insured should be retained in the policy file. This will help in proper identification of the insured building for the adjustment of claims, especially for multiple non-residential buildings at the same location.

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When insuring a building with one or more additions, the policyholder must choose between purchasing one policy or separate policies for the building and each addition and extension. See Section 2: Before You Start for further guidance on additions and extensions.

2. Condominium Coverage

Insurers may issue more than one building coverage policy for the same building if one is an RCBAP for the condominium association and the other a Dwelling Form policy for a residential condominium unit owner; however, condominium units shall not receive duplicate coverage or coverage that exceeds the maximum coverage limits. The combined building coverage between the Dwelling Form policy and the RCBAP cannot exceed $250,000 for the unit.

For all unit policies, insurers must specify the individual unit insured in the Building Location section of the Application Form.

D. Changing Deductibles During the current policy term, insurers can increase or decrease deductibles consistent with the available options listed in Section 3: How to Write and according to the guidance below.

1. Deductible Increases

Policyholders may increase deductibles during the current policy term. The earliest effective date of the increased deductible is the date the insurer receives the endorsement request.

However, if a policyholder with a provisionally rated policy and standard $2,000 deductible selects a higher deductible when transitioning to a rating engine rate, use the effective date of the current policy term. See Rate Category Change below for additional information.

2. Deductible Decreases

Insurers may decrease deductibles during the current policy term only in the following instances:

• If the property has a mortgage and the mortgagee requires a lower deductible. In this case, the same waiting period guidance above (and in Section 2: Before You Start) for endorsements that add or increase coverage also applies to deductible decreases. Therefore, the earliest effective date of a decreased deductible is generally:

– 30 days from the date the insurer receives the endorsement request; or – The time of the loan closing, if the mortgagee requests the change in

connection with making, increasing, extending, or renewing a loan secured by the insured property (for example, a mortgage loan) – and if the NFIP receives the endorsement request and full amount due within specified timeframes.

• If a policyholder with a provisionally rated policy and standard $2,000 deductible selects a lower deductible when transitioning to a rating engine rate.

– Use the effective date of the current policy term. See Rate Category Change below for additional information.

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E. Coverage Changes During the Renewal Cycle The waiting period rules above apply to all endorsements throughout the policy term including coverage increases before the renewal date. The Renewal Notice the insurer sent might not reflect endorsement requests received close to the expiration date (for example, a request to add or increase coverage received within 75 days of the policy expiration date). When an insurer receives a request for a coverage endorsement close to renewal, it should submit the policy number and the requested changes to FEMA. FEMA will provide updated quotes for the renewal coverage options.

1. Adding or Increasing Coverage at Renewal

If the insurer receives a request to add or increase coverage after sending a Renewal Notice and more than 30 days before the current policy expiration date:

• The insurer shall issue a revised Renewal Notice; and • If the insurer receives the total amount due for the added or increased coverage

before the end of the 30-day grace period following the policy expiration date, the added or increased coverage becomes effective at 12:01 a.m. on the policy renewal date.

If the insurer receives a request to add or increase coverage less than 30 days before the current policy expiration date, the following rules apply:

• If the endorsement request is to increase coverage to an amount less than Option B and the insurer receives the additional premium for the increased coverage before the end of the 30-day grace period following the policy expiration date, the increased coverage becomes effective at 12:01 a.m. on the policy renewal date.

• If the endorsement request is to add or increase coverage to an amount greater than Option B, the insurer must issue the renewal policy without the added coverage or using the Option B coverage amounts, as applicable, and then endorse the policy with the requested coverage subject to the appropriate waiting period.

Note: Any coverage increase, including Option B, is exempt from the annual increase cap.

2. Reducing Coverage on a Future Renewal Effective Date

If the insurer receives a request to reduce coverage on a policy that renewed with a future effective date and it receives the request before the effective date, the insurer may reduce coverage effective on the policy renewal date. The insurer must submit a completed Endorsement Form and updated Application Form reflecting only the changes to the policy to FEMA, to obtain the new premium amount. No additional documentation is required to reduce coverage at the renewal date.

III. Other Premium-Bearing Changes Upon receiving a completed Endorsement Form and updated Application Form reflecting only the changes to the policy, FEMA will provide the insurer updated cost information using the endorsement effective date determined by the insurer based on the guidance below. See the Refund and Insufficient Premium headings above for additional information on how to process such premium-bearing changes.

A. Rating Adjustment A rating adjustment is a type of premium-bearing change used to reflect an update in a rating variable since the policy was issued. In other words, the prior information used to rate the policy was correct but now an event has occurred that requires the insurer to add,

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update, or change one or more rating variables. For example, a home had one floor at time of renewal but midway through the term the policyholder added an additional floor. Table 3 shows how to determine the endorsement effective date when applying a rating adjustment.

Table 3. Endorsement Effective Date When Applying a Rating Adjustment

PREMIUM STATUS ENDORSEMENT EFFECTIVE DATE

Refund or Insufficient Premium

If the event that triggered the rating adjustment occurred during the current policy term, use the event date as the endorsement effective date.

If the event that triggered the rating adjustment occurred before the current policy term, use the effective date of the current policy term.

B. Rating Correction A rating correction is a type of premium-bearing change used to correct one or more rating variables that were incorrect in a prior transaction on the policy. For example, policy data indicated a home was one floor but in fact it is two floors. Table 4 shows how to determine the endorsement effective date when endorsing for a rating correction.

Table 4. Endorsement Effective Date When Applying a Rating Correction

PREMIUM STATUS ENDORSEMENT EFFECTIVE DATE

Refund

If the rating issue first affected the current policy term (either from the start of the policy term or a portion through an incorrectly rated endorsement), use the date the rating issue first affected the policy.

If the rating issue first affected the policy during a previous policy term, use the date the rating issue first affected the policy but no more than 5 years prior to the effective date of the current policy term.

Insufficient Premium

If the rating issue first affected the current policy term (either from the start of the policy term or a portion through an incorrectly rated endorsement), use the date the rating issue first affected the policy.

If the rating issue first affected the policy during a previous policy term, use the effective date of the current policy term.

Note: For rating corrections involving an incorrect property location or flood zone, see different effective date guidance under the Exception When Reforming a Policy Due to an Incorrect Geolocation or Flood Zone heading in Section 2: Before You Start.3

C. Adding an Elevation Certificate A policyholder may request to add an EC to help determine the building’s First Floor Height. When EC information is provided, FEMA’s system compares the EC information with the FEMA-determined First Floor Height and provides the lowest premium for the policyholder. An endorsement to add EC information will not result in insufficient premium.

Upon receiving a completed Endorsement Form and updated Application Form reflecting only the changes to the policy, FEMA will provide the insurer the updated annual cost

3. 42 U.S.C. 4015(f)

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for a full policy term. If the updated cost is lower than the premium previously paid, the insurer must calculate the refund amount based on the effective date of the current policy term. See the Refund heading above for additional information on how to process such a premium-bearing endorsement.

Table 5. Endorsement Effective Date When Using an EC

FIRST FLOOR HEIGHT PREMIUM STATUS ENDORSEMENT EFFECTIVE DATE

Higher First Floor Height value than FEMA determined

This produces a lower premium

Refund The effective date of the current policy term

Lower First Floor Height value than FEMA determined

This results in no change to premium

No Change N/A

D. Community Information

1. Change in Program Status

The insurer must submit an endorsement request to revise the policy rating to reflect the correct community status when the community converts from the Emergency Program to the Regular Program.

2. Change in Community Rating System (CRS) Status

If a community’s CRS class changes or a given policy’s eligibility for a CRS discount changes midway through a policy term, any resulting adjustment to the CRS discount applies only at the next policy renewal.

E. Construction Completed For a building under construction, when the construction is complete, then the policy must be endorsed to reflect that the building is no longer under construction and update any other rating variables as needed. Follow the guidance under the Rating Adjustment heading above.

If an EC was used to determine the First Floor Height, an updated EC and photos based on finished construction are required.

F. Incorrect Policy Form If the insurer discovers that a policy requires a different Standard Flood Insurance Policy (SFIP) form, how it processes the change depends on the specific issue:

• If the policy form was correct before but an event changed the applicable policy form, the insurer must endorse the policy to the correct form. Follow the guidance under the Rating Adjustment heading above regarding refunds, insufficient premium, and effective dates.

• If the policy was written using an incorrect policy form, the insurer must likewise endorse the policy to the correct form. Follow the guidance under the Rating Correction heading above.

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4. How to Endorse

However, in either case, if the policy is currently written on the Dwelling Form or General Property Form when the Residential Condominium Building Association Policy Form is appropriate, or vice versa, the insurer must cancel and rewrite the coverage under the correct form with the original effective date. See additional guidance under Reason Code 22 “Cancel and rewrite due to administrative error” in Section 6: How to Cancel.

The insurer must set the amount of building or contents coverage according to the provisions of the correct policy form. The coverage amount under the correct policy form must equal (and may not exceed) the coverage amount under the prior policy form, and may not exceed the maximum coverage limits available on the correct policy form. If the premium previously received is insufficient to restore the originally requested amount of coverage under the correct policy form, the insurer must follow applicable procedures under the Reformation Due to Insufficient Premium or Rating Information heading in Section 2: Before You Start. If the policyholder requests to increase coverage above the prior coverage amount, the insurer must follow the standard endorsement procedures for adding or increasing coverage included in this section, including endorsement effective date rules.

Before making any loss payment, the insurer must complete the policy endorsement or cancel/rewrite to correct the policy form. The provisions of the correct policy form apply, as does the guidance in Section 2: Before You Start on how to handle a claim involving policy reformation.

G. Property Address Corrections The insurer may endorse a policy to correct a property address without FEMA approval, but may not change an address to insure a different building at the same or another location. (A different building would require a new policy.) When processing a property address correction, the insurer must include documentation substantiating the change in the underwriting file. Examples include a typographical error correction, addition of a specific unit number, or a U.S. Postal Service address revision.

A property address endorsement is generally considered as a non-premium change such as a U.S. Postal Service address (911) change. However, when a property address correction indicates a possible building location change that may impact its geocoding (for example, 1000 Water Street corrected to 2000 Water Street), then the insurer must cancel and rewrite the policy using the correct address. A property address correction is exempt of the annual increase cap.

If a claim is pending, the insurer must obtain authorization from FEMA before correcting the address and making a claim payment. The authorization (waiver) must indicate that:

• The building description, coverage, and rating elements belong to the building at the address indicated on the endorsement; and

• The policyholder has no insurable interest in the building at the prior, incorrect address.

Insurers may not endorse or transfer a flood policy to change the insured building, location, or unit. Examples include relocating to a different building, a unit within the same building or moving a mobile home or travel trailer to a new location. To insure a different building at the same location or another location, the policyholder must purchase a new policy for each additional building identified.

H. Rate Category Change A policy issued with a provisional rate should be endorsed to a rating engine rate during the initial policy term. FEMA highly recommends that the insurer endorse the policy to a rating engine rate within 60 days of the Application Form submission. Such an endorsement

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may result in either a premium refund or insufficient premium. Upon receiving a completed Endorsement Form and updated Application Form, FEMA will provide the insurer the updated annual cost for a full policy term. The insurer must calculate the refund amount or amount due. See the Refund and Insufficient Premium headings above for additional information on how to process such a premium-bearing endorsement.

Table 6. Endorsement Effective Date for a Rate Category Change

PREMIUM STATUS ENDORSEMENT EFFECTIVE DATE

Refund or Insufficient Premium

Use the effective date of the current policy term.

I. Examples of Other Premium-Bearing Changes Table 7 lists some examples of what FEMA considers a rating adjustment, rating correction, or other types of endorsements. The table also includes documentation requirements when applicable, indication if premium is exempt from the 18 percent cap on annual rate increases, and what selections to make on the Endorsement Form. See guidance above for effective date rules.

Table 7. Examples of Other Premium-Bearing Endorsements

Endorsement Scenario

Documentation Requirements

Exempt From 18% Cap On Annual Rate Increases

Endorsement Form Reason For Change

Options (Select from the options below)

Endorsement Form Type Of Change

Options (Select Premium

Change and the option specified below)

Adding an Elevation Certificate

• EC • Photos

• Building Information

• Adding an Elevation Certificate

Building Description

• Building Information

• Rating Adjustment • Rating Correction

Building Occupancy

• Building Information

• Rating Adjustment • Rating Correction

Change in Community Rating System

Exempt • N/A (Effective at

next policy renewal) • N/A (Effective at next

policy renewal)

Change in Program Status

• Community Information

• Rating Adjustment

Construction Type

• Building Information

• Rating Adjustment • Rating Correction

Flood Openings

See the Proper Openings heading in Section 3: How to Write for additional information

• Building Information

• Rating Adjustment

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Table 7. Examples of Other Premium-Bearing Endorsements continued

Endorsement Scenario

Documentation Requirements

Exempt From 18% Cap On Annual Rate Increases

Endorsement Form Reason For Change

Options (Select from the options below)

Endorsement Form Type Of Change

Options (Select Premium

Change and the option specified below)

Floodproofed

See the Floodproofing heading in Section 3: How to Write for additional information

• Building Information

• Rating Adjustment

Foundation Type • Building

Information • Rating Adjustment • Rating Correction

Machinery and Equipment Discount Eligible

• Building Information

• Rating Adjustment

Number of Floors • Building

Information • Rating Adjustment • Rating Correction

Policy Form Exempt • Policy Form

• Rating Adjustment • Rating Correction • Or not an endorsement

but instead a cancel/ rewrite

Primary Residence Status

See the Primary Residence Status heading in Section 3: How to Write for additional information.

• Building Information

• Rating Adjustment • Rating Correction

Property Address Correction

Exempt (if cancel/rewrite)

• Property Address (Correction)

• Non-premium change if due to a U.S. Postal Service address (911) change

• Or not an endorsement but instead a cancel/ rewrite

Rate Category Change

• Rate Category • Rate Category Change

Replacement Cost Value

• Building Information

• Rating Adjustment • Rating Correction

Statutory Discount

See the Statutory Discounts heading in Section 3: How to Write for additional information.

• Statutory Discounts

• Rating Adjustment • Rating Correction

Substantially Improved

Exempt • Building

Information • Rating Correction • Rating Adjustment

Construction Completed

If using an EC, provide an updated EC and photos based on finished construction.

Exempt • Construction

Completed • Rating Adjustment

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Table 7. Examples of Other Premium-Bearing Endorsements continued

Endorsement Scenario

Documentation Requirements

Exempt From 18% Cap On Annual Rate Increases

Endorsement Form Reason For Change

Options (Select from the options below)

Endorsement Form Type Of Change

Options (Select Premium

Change and the option specified below)

Increasing Coverage

Exempt • Coverage/

Deductible • Coverage/Deductible

Change

Decreasing the Deductible

See the Changing Deductibles heading in this section for additional information.

Exempt • Coverage/

Deductible • Coverage/Deductible

Change

IV. Assignment of a Policy The owner of an insured building may provide written consent to assign a flood insurance policy with building coverage to the purchaser of the building. Owners may not assign contents-only policies or policies on buildings under construction. The seller must sign the assignment endorsement on or before the closing date, and the new building owner has up to 30 days beyond the closing date (closing date plus 29 days) to submit the Endorsement Form to the insurer for processing.

If the building is a primary residence, the insurer must validate the primary residence status at the time of assignment for the assignee to be eligible for the primary residence status.

Note: A new owner may receive the same discounted premium as the previous owner. However, the annual increase cap (which is a component of the discounted premium) is based on the information provided by the new owner. The discounted premium does not include assessments, fees, or surcharges.

A. Assignment with Building Purchase The owner and seller of an insured building may assign the flood policy to the purchaser of the insured building. The assignment becomes effective on the date of the ownership transfer.

B. Assignment without Building Purchase The owner of an insured building may assign the flood policy to the new building owner, effective on the date of the ownership transfer. Examples include inheritance, gifting, divorce, estate, trust, or foreclosure (will require legal documentation).

Note: Policyholders cannot assign policies that cover buildings under construction or for contents only.

4. How to Endorse

5. How to Renew

NOTE: This section applies to renewing NFIP policies that are already under the new pricing methodology.

This section provides information and guidance on how to renew an NFIP flood insurance policy.

I. General Information See Table 1 below for general policy renewal information.

Table 1. General Renewal Information

SUBJECT GUIDANCE

Policy Terms

• The Standard Flood Insurance Policy (SFIP) contract is for one year only. • All policies expire at 12:01 a.m. on the last day of the one-year

policy term. • A new policy term and new contractual agreement between the

policyholder and the insurer begins when an expiring policy renews.

Rating Plan • All policies renew using the rating plan and Community Rating System

(CRS) discounts in effect on the policy renewal effective date.

Premium Payment

• The insurer must receive the total amount due to renew the policy at the coverage amount offered on the renewal bill.

• Paying the premium 30 days or more after the expiration date of the policy causes a lapse in coverage that may affect policy rating (see the Statutory Discounts heading in Section 3: How to Write).

• All references to days are calendar days, not business days.

Severe Repetitive Loss (SRL) Properties

• The NFIP Special Direct Facility, operated by NFIP Direct, processes the policy renewals for SRL properties (see Appendix F: SRL Properties for more information).

II. Renewal Process

A. Starting the Renewal Process Before generating the Renewal Notice, the insurer must send the policy number, along with any changes to policy information, to FEMA. FEMA will provide the premium options for the policy renewal. The premium amount(s) may reflect updates to certain rating variables, such as the building replacement cost value (see Section 3: How to Write for information on rating variables). The insurer should request the renewal quote no sooner than 90 days before the policy expiration date.

All renewals will increase or decrease to their full-risk premium, subject to the statutory caps on annual increases.

1. Renewal Notice

The insurer must send a Renewal Notice to the payor listed on the policy declarations page at least 45 days before the policy expiration date. The insurer must also send

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5. How to Renew

a copy of the Renewal Notice to all parties listed on the policy declarations page. The Renewal Notice copy should state “THIS IS NOT A BILL.” See detailed Renewal Notice requirements in Appendix I: Policyholder Communications.

2. Amounts of Insurance on the Renewal Notice

The insurer must submit required policy information so FEMA’s system can calculate the premium to renew the policy. The insurer may present the payor with two coverage options:

• Option A – Renewing for the Same Amounts of Insurance:

– This option provides the current amounts of insurance and applicable deductibles.

• Option B – Renewing for Higher Amounts of Insurance:

– This option provides an inflation option of 10 percent for building coverage and 5 percent for contents coverage with applicable deductibles.

– The amount of insurance offered cannot exceed the maximum limits.

– The minimum deductible may change based on the amount of insurance offered at renewal.

3. Final Notice

If the insurer does not receive the premium payment by the policy expiration date, it must send a Final Notice, on the policy expiration date, to all parties listed on the prior policy declarations page.

The Final Notice must include the same information printed on the Renewal Notice and state that coverage has expired. See detailed Final Notice requirements in Appendix I: Policyholder Communications.

Lender Protection

Coverage will continue for lenders listed on the declarations page for 30 days from the date the Final Notice was sent, as required under the Mortgage Clause of the SFIP (see Appendix A: Policy).

Therefore, the following requirements apply:

• The Final Notice to the lender must indicate that coverage will terminate if the premium is not received within this 30-day period.

• The insurer must be able to reproduce copies of the Final Notice to the mortgagee. • The insurer must have processes in place to verify when the Final Notice was sent.

B. Renewal Notification Requirements Table 2 below summarizes renewal notification requirements.

Table 2. Renewal Notification Requirements

Notice Type Payor All Other Parties Listed on the

Declarations Page

Renewal Notice Insurer sends the Renewal Notice for payment at least 45 days before the policy expiration date.

Insurer sends a copy of the Renewal Notice at least 45 days before the policy expiration date.

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5. How to Renew

Table 2. Renewal Notification Requirements continued

Notice Type Payor All Other Parties Listed on the

Declarations Page

Final Notice Insurer sends the Final Notice on the policy expiration date.

Insurer sends a copy of the Final Notice on the policy expiration date.

Policy Declarations Page

Insurer sends the policy declarations page after receiving payment.

Insurer sends the policy declarations page after receiving payment.

C. Premium Payment The payor may pay the premium by check, credit card, or electronically. The insurer must receive the premium within 30 days of the policy expiration date (includes policy expiration date plus 29 days).

Table 3. Premium Payment

METHOD GUIDANCE

Check The payor can pay by a check payable to the insurer.

Credit Card The payor can make a payment by credit card, if the insurer accepts credit card payments.

Electronic Transfers The insurer may use electronic transfers if its process includes authentication of signatures and dates of receipt of premium.

Certified Mail

The payor can submit a payment by certified mail, and the payment receipt date is the certified mail date. The term certified mail extends to certified mail sent via the U.S. Postal Service or reputable third- party delivery services that provide proof of the actual mailing and delivery date to the insurer.

1. Invalid Payment

A payment is invalid if there are non-sufficient funds (NSF) in the account, such as a successfully completed reversal (dispute) of an electronic payment, or the payment is non-negotiable for any other reason. The insurer may not use the receipt date of an invalid payment to determine the effective date of a policy renewal. Upon notification that the payment is invalid, the insurer must:

• Cancel or nullify the transaction associated with that payment; and

• Send notification of the cancellation or nullification to the policyholder, agent, and lender(s), if applicable.

If the insurer receives a new valid payment, it must process the transaction based on the new premium receipt date. The insurer must determine the effective date of the transaction based on the new payment receipt date, subject to the effective date rules.

Note: A new Flood Insurance Application Form is required if the renewal effective date is changed.

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5. How to Renew

2. Insufficient Payment

An insufficient payment is when the insurer receives a payment less than the amount shown on the bill, resulting in an underpayment. The insurer must send an underpayment notice for the additional premium.

• If the insurer receives the additional premium within 30 days of the underpayment notice, the policy will renew at the original requested amount.

• If the insurer does not receive the additional premium within 30 days of the underpayment notice, then the insurer must reduce the coverage to the amount that the premium received will purchase.

For more information, see the Reformation Due to Insufficient Premium or Rating Information heading in Section 2: Before You Start.

D. Determine the Renewal Effective Date The date the insurer receives the premium will determine the renewal effective date, except for payments sent by certified mail. See Table 3 for more information on certified mail and use Table 4 to determine the renewal effective date.

Table 4. Determine the Renewal Effective Date

RECEIPT DATE RENEWAL DATE EXAMPLE

Within 30 days of the policy

expiration date

The insurer renews the policy with the same effective date and policy number as the previous term without a lapse in coverage.1

If the policy expires on May 1 and the insurer receives payment before May 30, then the effective date of the policy is May 1.

On or after 30 days following the policy

expiration date

Due to the lapse in coverage, the insurer cannot renew the expired policy. The insurer must receive a new Application Form with payment after validating the rate. The standard 30-day waiting period will apply; the lapse may affect policy rating.

If the policy expires on May 1 and the insurer receives payment on June 15, the insurer must require a new Application Form with the full annual premium and apply the 30- day waiting period.

Note: If the last day of the grace period falls on a Saturday, Sunday, or holiday, the deadline does not extend to the next business day.

Upon receipt of the total amount due, the insurer must send the policy declarations page to the policyholder and all parties listed on the policy.

III. Additional Information

A. Renewal by Application or Recertification Questionnaire If the insurer does not have all the updated policy information required to calculate the renewal premium, it may not generate a Renewal Notice until it obtains the information through an Application Form or Recertification Questionnaire submitted by the agent.2

No less than 45 days before policy expiration, the insurer must notify any lender listed on the declarations page of the requirement for renewal by use of an Application Form

1. 44 CFR Part 61, Appendix A(1)-(3), VII.E.2 2. 44 CFR Part 61, Appendix A(1)-(2), VII.E.4; 44 CFR Part 61, Appendix A(3), VII.E.3.c

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5. How to Renew

or Recertification Questionnaire. On the expiration date, the insurer must send the Final Notice to the payor and all parties listed on the prior policy declarations page.

Examples of situations that may require an Application Form or Recertification Questionnaire include, but are not limited to:

• FEMA re-underwriting requirements resulting from an audit, quality review, or program changes.

• Substantial improvement of the building.

• New additions or extensions to the building (even when not a substantial improvement).

• The building was under construction during the previous policy term.

• Need for a rating correction discovered by the insurer during an internal quality review.

• An incorrect geolocation or flood zone (see related guidance under the Exception When Reforming a Policy Due to an Incorrect Geolocation or Flood Zone heading in Section 2: Before You Start).

B. Nonrenewal The insurer may not renew a policy for an ineligible risk.

If a property becomes ineligible for coverage during a policy term, the insurer may not generate a Renewal Notice or renew the policy. Examples of such situations include, but are not limited to:

• The NFIP suspended the community in which the building is located.

• A state or local authority declared the property in violation of its floodplain management regulations (a Section 1316 property).

• A structure that no longer meets NFIP eligibility requirements (see the Building Eligibility heading in Section 2: Before You Start).

On the expiration date, the insurer must notify all parties listed on the prior policy declarations page of the non-renewal by sending a Final Notice.

If the insurer discovers that the property was not eligible for coverage at time of application, see Reason Code 06 in Section 6: How to Cancel for additional guidance.

Note: A policy may not renew with provisional rates. FEMA highly recommends that the insurer endorse the policy to a rating engine rate within 60 days of the Application Form submission.

C. Coverage Changes During the Renewal Cycle The Renewal Notice the insurer sent might not reflect endorsement requests received close to the expiration date (for example, a request to add or increase coverage received within 75 days of the policy expiration date). When an insurer receives a request for a coverage endorsement close to renewal, it should submit the policy number and the requested changes to FEMA. FEMA will provide updated quotes for the renewal coverage options.

1. Adding or Increasing Coverage at Renewal

If the insurer receives a request to add or increase coverage after sending a Renewal Notice and more than 30 days before the current policy expiration date:

• The insurer shall issue a revised Renewal Notice; and

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5. How to Renew

• If the insurer receives the total amount due for the added or increased coverage before the end of the 30-day grace period following the policy expiration date, the added or increased coverage becomes effective at 12:01 a.m. on the policy renewal date.

If the insurer receives a request to add or increase coverage less than 30 days before the current policy expiration date, the following rules apply:

• If the endorsement request is to increase coverage to an amount less than Option B and the insurer receives the additional premium for the increased coverage before the end of the 30-day grace period following the policy expiration date, the increased coverage becomes effective at 12:01 a.m. on the policy renewal date.

• If the endorsement request is to add coverage or increase coverage to an amount greater than Option B, the insurer must issue the renewal policy without the added coverage or using the Option B coverage amounts, as applicable, and then endorse the policy with the requested coverage subject to the appropriate waiting period. See the Adding or Increasing Coverage heading in Section 4: How to Endorse for additional information.

Note: Any coverage increase, including Option B, is exempt from the annual increase cap.

2. Reducing Coverage on a Future Renewal Effective Date

If the insurer receives a request to reduce coverage on a policy that renewed with a future effective date and it receives the request before the effective date, the insurer may reduce coverage effective on the policy renewal date. See the Reducing Coverage heading in Section 4: How to Endorse for further guidance.

3. Other Premium-Bearing Endorsements at Renewal

If the insurer receives a request to update other premium-bearing changes at renewal, the insurer must send the policy number, along with any changes to policy information, to FEMA. FEMA will provide the new renewal premium due for the policy term. If the policy has renewed, see Section 4: How to Endorse for further guidance.

D. Transfer of Business at Renewal A transfer of business occurs when either:

• A policyholder or agent moves any or all of their existing business from one insurer to another; or

• A WYO company moves all of its existing business to another WYO company or to the NFIP Direct.

For more information on transfer of business, including when this occurs at renewal, see the Assignment and Transfer of Business heading in Section 2: Before You Start.

6. How to Cancel

Under certain circumstances, NFIP insurers may cancel flood insurance policies through the remainder of a policy’s term or for the entire term. NFIP insurers may also nullify or void a policy through the policy’s entire term, where eligible. This section describes the procedures for canceling, nullifying, or voiding a policy and whether the policyholder is entitled to a full, partial, or no refund.

I. General Information • To cancel or nullify (void) a policy, a completed cancellation/nullification or similar

request with proper documentation must be submitted to the insurer.

• The receipt date of the cancellation or nullification request is the date the insurer receives the request with the proper documentation. If additional documentation is required by the insurer, it must be received within 60 days of the insurer’s notification in order to retain the original receipt date. If received more than 60 days after the notification, then the receipt date will be the date the additional documentation was received.

• Unless otherwise specified within the reason code description, a policy may be canceled for up to 5 years prior to the receipt date of the cancellation request, if applicable. Insurers must include any lapse in coverage when determining the number of years allowed for a refund as a lapse in coverage does not extend the number of policy terms allowed.

• If there is an open claim on a policy, then the policy cannot be canceled.

• If there is a closed paid claim on a policy term, then that policy term cannot be canceled, except under reason codes 1, 2, 3, 4, 10, and 21 which allow cancellation after the loss date.

• If there is a claim closed without payment on a policy term, the policy term can be canceled.

• After processing a cancellation or nullification request, the insurer must provide the policyholder and all interested parties with a notice advising of the cancellation or nullification. Interested parties include any additional policyholders, additional lenders, loss payees, trustees, or disaster assistance agencies.

Note: A copy of the Flood Insurance Cancellation/Nullification Request Form is in Appendix B: Forms.

II. Valid Cancellation Reason Codes The tables that follow provide the valid reason codes for canceling or nullifying an NFIP policy, with specific conditions applicable to each. Table 1 shows how the valid reason codes are grouped by topic rather than numerical order.

Table 1: Valid Cancellation Reason Codes

TOPIC REASON CODES

A. No Insurable Interest

01 – Building sold, removed, or destroyed

02 – Contents sold, removed, or destroyed

07 – Property closing did not occur

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Table 1: Valid Cancellation Reason Codes continued

TOPIC REASON CODES

B. Establish a Common Expiration Date

03 – Policy canceled and rewritten to establish a common expiration date with other insurance coverage for the same building

C. Duplicate Coverage

04 – Duplicate NFIP policies 10 – Condominium unit or association policy

converting to RCBAP 26 – Duplicate policy from a source other than NFIP

D. Not Eligible for Coverage

06 – Property not eligible for coverage at time of application

27 – Property becomes ineligible for coverage during policy term

29 – Building physically altered and no longer eligible for NFIP coverage

E. Lender No Longer Requires Insurance

28 – Insurance no longer required by lender

F. Invalid Payment or Fraud

05 – Invalid payment 23 – Fraud or Misrepresentation 30 – Insufficient premium to retain coverage

G. Other Reason Codes

13 – Nullification prior to policy effective date 20 – SRL written with incorrect insurer 21 – Continuous lake flooding or closed basin lakes 22 – Cancel and rewrite due to administrative error

For specific guidance on each reason code please see the tables below.

Note: Over time FEMA has retired some reason codes.

A. No Insurable Interest

Reason Code 01 Building sold, removed, or destroyed1

Conditions

The insurer may cancel the policy if the policyholder had an insurable interest in the insured property during the policy term, but no longer has an insurable interest. For example:

• The policyholder sold or transferred ownership of the insured building and no longer has an insurable interest in the insured building.

• Relocation or destruction of the insured building. • The builder or developer requests to cancel a policy mid-term because

ownership transferred to a newly-created condominium association and the association purchased a policy under its name.

• The lienholder foreclosed on the building.

Cancellation Effective Date

The date the policyholder ceased to have an insurable interest in the building. Examples include the date of the sale of the building or the date the policyholder removed the building from the described location.

1. 44 CFR Part 61, Appendix A(1)-(3), VIII.D.2; 44 CFR § 62.5(b)

6. How To Cancel

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Reason Code 01 Building sold, removed, or destroyed1

Policy Terms Eligible for Refund

The term the policyholder ceased to have an insurable interest and subsequent renewed policy terms but no more than 5 years prior to the date of the cancellation request.

Type of Refund

A pro-rata premium refund excluding the Federal Policy Fee and Probation Surcharge is applied to the policy term canceled. For any subsequent renewed terms eligible for refund, full premium refunds including surcharges and fees apply.

Required Documentation

Evidence of the sale, transfer, removal, or destruction of the building, such as:

• Bill of sale; • Settlement statement; • Closing disclosure statement; • Proof of removal; • Proof of destruction; • Court documentation for foreclosed buildings; or

• Legal documents showing the transfer of ownership upon the death of the policyholder.

Reason Code 02 Contents sold, removed, or destroyed 2

Conditions

The insurer may cancel a contents-only policy if the policyholder had an insurable interest in the insured property during the policy term, but no longer has an insurable interest. For example:

• The policyholder sold or transferred ownership of the insured contents. • The contents were completely removed or relocated from the

described location. • The contents were destroyed by any peril. • The policyholder is deceased.

Cancellation Effective Date

The date the policyholder ceased to have an insurable interest in the contents at the described location, or the removal date of the contents from the described location.

Policy Terms Eligible for Refund

The term the policyholder ceased to have an insurable interest and subsequent renewed policy terms but no more than 5 years prior to the date of the cancellation request.

Type of Refund

A pro-rata premium refund excluding the Federal Policy Fee and Probation Surcharge is applied to the policy term canceled. For any subsequent renewed terms eligible for refund, full premium refunds including surcharges and fees apply.

Required Documentation

Evidence of contents sold, removed, or destroyed such as:

• Bill of sale; • Inventory record; • Proof of destruction; • In the case of residential contents, a signed statement from the

policyholder or a policyholder’s representative; or • Death of the policyholder.

2. 44 CFR Part 61, Appendix A(1)-(3), VIII.D.2; 44 CFR § 62.5(b)

6. How To Cancel

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Reason Code 07 Property closing did not occur3

Conditions

The insurer may nullify (void) a policy when the policyholder never had an insurable interest in the property listed on the Flood Insurance Application Form because the property closing did not occur. This typically occurs when:

• The anticipated transfer of the property (typically, but not always, a loan closing) does not take place.

Cancellation Effective Date The policy will be nullified from the beginning of the policy term.

Policy Terms Eligible for Refund Current policy term.

Type of Refund Full premium refund including fees and surcharges, less any claim payments made during the nullified policy term.

Required Documentation

A signed cancellation request or a signed statement from the policyholder that the closing did not occur. See the sample verification letter in Appendix I: Policyholder Communications.

B. Establish a Common Expiration Date

Reason Code 03 Policy canceled and rewritten to establish a common expiration date with other insurance coverage for the same building4

Conditions

The insurer may cancel and rewrite an NFIP policy with building coverage to establish a common expiration date with other insurance coverage if:

• The other insurance coverage is for building coverage on the same building insured by the existing NFIP policy being canceled and rewritten;

• The agent submits a new Application Form and premium;

• The insurer remains the same for the new NFIP policy with the same or higher amounts of coverage; and

• The coverage for the new policy is effective before canceling the existing policy.

Note: The new policy is not subject to a waiting period. However, coverage beyond the limits of the canceled policy will be subject to a 30-day waiting period.

Cancellation Effective Date The cancellation effective date is the effective date of the new flood policy.

Policy Terms Eligible for Refund Current policy term.

Type of Refund

Pro-rated premium refund calculated from the effective date of the new policy to the end date of the previous policy, including ICC premium, and Reserve Fund Assessment, but not the HFIAA Surcharge Federal Policy Fee or Probation Surcharge.

Required Documentation

• A copy of the new flood policy declarations page; and

• A copy of the other insurance policy declarations page.

Note: These pages must show the building address and policy effective dates.

3. 44 CFR Part 61, Appendix A(1)-(3), VIII.B.1.c 4. 44 CFR Part 61, Appendix A(1)-(3), VIII.C; 44 CFR § 62.5(d)

6. How To Cancel

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C. Duplicate Coverage

Reason Code 04 Duplicate NFIP policies5

Conditions

Duplicate Policies with Same Policyholder

If the same policyholder has more than one policy covering the same building, contents, or both, then the insurer must cancel the policy with the later effective date. The policy with the earlier effective date will continue.

However, if both policies have the same policy effective date, the policyholder may choose which policy will remain in effect.

Notwithstanding the above, the insurer may cancel the policy with the earlier effective date for one of the following reasons:

• Cancellation of the earlier policy to establish a common expiration date with other insurance coverage for the same building (see Reason Code 03).

• Cancellation of a Dwelling Form policy with only building coverage on a residential condominium unit that is also insured by a Residential Condominium Building Association Policy (RCBAP) on the building that was issued at the maximum limit for building coverage (see Reason Code 10).

• The policy with the earlier effective date expired more than 30 days before the cancellation request.

• The policy with the earlier effective date is a Group Flood Insurance Policy (GFIP) and the policy with the later effective date is a regular SFIP.

Duplicate Policies with Different Policyholders

If different policyholders have more than one policy covering the same building, the building owner must choose which policy to keep and the building owner must be named as a policyholder. For example, if a tenant purchased building coverage, the insurer must either remove the building coverage from the policy, endorse the policy to add the building owner as a policyholder, or cancel the policy.

Cancellation Effective Date

Consistent with the guidance above, the cancellation effective date will be either:

• If the duplicate policies have the same effective date, then the effective date of the policy the insured chooses to cancel; or

• If the duplicate policies have different effective dates, then the effective date of the later policy.

Note: If the premiums for the two policies differ, the insurer must verify that the rating of the policy that will remain in effect is correct.

Policy Terms Eligible for Refund

The policy term the duplicate coverage began and subsequent renewed policy terms but no more than 5 years prior to the date of the cancellation request.

Type of Refund

If a duplicate policy with same effective date or later effective date is canceled, then a full premium refund including surcharges and fees applies to the policy term canceled and any subsequent renewed terms.

• If an exception to allow cancellation of the earlier policy applies, then a pro-rata premium refund excluding the Federal Policy Fee and Probation Surcharge is applied to the policy term canceled. For any subsequent renewed terms eligible for refund, full premium refunds including

5. 44 CFR Part 61, Appendix A(1)-(3), VIII.D.3; 44 CFR § 62.5(e)

6. How To Cancel

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Reason Code 04 Duplicate NFIP policies5

Type of Refund continued

surcharges and fees apply. When the policy with the earlier effective date expired more than 30 days before the cancellation request:

– If the earlier policy was a Dwelling Form policy with only building coverage on a condominium unit canceled due to a duplicate RCBAP issued at the maximum limit for building coverage, then the refund provisions of Reason Code 10 apply.

– If the earlier policy is canceled to establish a common expiration date with other insurance coverage for the same building, then the refund provisions of Reason Code 03 apply.

– No refund of premium, surcharges, or fees applies to a canceled GFIP.

Required Documentation Copies of the duplicate policies’ declarations pages.

Reason Code 10 Condominium unit or association policy converting to RCBAP6

Conditions

An insurer may cancel a Dwelling Form policy for a residential condominium unit (whether the unit owner is a policyholder or the condominium association) if:

• The Dwelling Form policy has only building coverage and is replaced by an RCBAP; and

• The combined limits of the Dwelling Form policy and the RCBAP exceed either: – The maximum amount of building coverage available for the individual

unit; or

– The building replacement cost value of the unit.

Cancellation Effective Date The cancellation effective date is the effective date of the RCBAP.

Policy Terms Eligible for Refund

The term the RCBAP coverage became effective in and subsequent renewed policy terms but no more than 5 years prior to the date of the cancellation request.

Type of Refund

A pro-rata premium refund excluding the Federal Policy Fee and Probation Surcharge is applied to the policy term canceled. For any subsequent renewed terms eligible for refund, full premium refunds including surcharges and fees apply.

Required Documentation

• A copy of the RCBAP declarations page; and

• Documentation showing the replacement cost value of the unit, if applicable.

6. 44 CFR Part 61, Appendix A(1)-(3), VIII.C & VIII.D.3; 44 CFR § 62.5(e)(2)(v)

6. How To Cancel

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Reason Code 26 Duplicate policy from source other than NFIP7

Conditions

An NFIP insurer may cancel a policy if:

• The policy was replaced by a non-NFIP flood insurance policy; and

• The policyholder did not intend to purchase or renew the NFIP policy because they purchased a duplicate non-NFIP flood insurance policy; and

• The request was submitted within 60 days of the NFIP policy becoming effective.

The NFIP will presume that a policyholder did not intend to renew their policy if they purchased a duplicate non-NFIP policy on or before the NFIP policy’s purchase or renewal date.

If the policyholder requested to cancel or not renew the NFIP policy before the NFIP policy effective date, see Reason Code 13 “Nullification prior to the effective date.”

Note: FEMA must review and approve all other requests under this reason code that do not meet the above conditions. These requests with supporting documentation can be emailed to [email protected] with an explanation of the circumstances.

Cancellation Effective Date The effective date of the NFIP policy (nullified).

Policy Terms Eligible for Refund Current policy term.

Type of Refund Full premium refund, including fees and surcharges.

Required Documentation

Evidence of a valid duplicate non-NFIP flood insurance policy, such as a declarations page or copy of the Application Form and paid receipt

D. Not Eligible for Coverage

Reason Code 06 Property not eligible for coverage8

Conditions

An insurer issues a policy for an ineligible property. See the Standard Flood Insurance Policy (SFIP) and Eligibility for NFIP Coverage heading in Section 2: Before You Start for guidance on properties not eligible for coverage.

Examples of a property not eligible at the time of application include: • Structures that do not meet the definition of a building. • Contents not located in an eligible building. • Policies issued under an incorrect community number for buildings not

located in an NFIP participating community. • Buildings located in a Coastal Barrier Resources System (CBRS). • Buildings declared in violation of local floodplain management

requirements pursuant to section 1316 of the NFIA before purchase of the flood insurance policy.

Cancellation Effective Date The insurer must nullify (void) the policy from its initial effective date.

7. 44 CFR Part 61, Appendix A(1)-(3), VIII.C 8. 44 CFR Part 61, Appendix A(1)-(3), VIII.B.1&2; 44 CFR § 62.5(a)(1)

6. How To Cancel

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Reason Code 06 Property not eligible for coverage8

Policy Terms Eligible for Refund

All policy terms since the date of commencement of the policy, but no more than 5 years prior to the date of receipt of verifiable evidence that the property was ineligible for coverage at the time of the initial application.

Type of Refund

A full premium refund including fees and surcharges, less the amount of any claims paid during the nullified policy terms.

If the policy has any paid claims and the policyholder does not return the claim payment(s), the insurer must verify the loss history of the property with FEMA ([email protected]) before issuing refunds for more than two policy terms:

• If the premium refund is greater than the amount of any paid claims, the net refund paid to the policyholder is the difference between the premium refund and the amount of the paid claims.

• If the premium refund is less than the amount of any paid claims, the insurer must reimburse FEMA for the difference between the premium refund amount and the paid claims.

Required Documentation

A cancellation request that identifies the basis for ineligibility and the date the property became ineligible, with supporting documentation.

Examples of supporting documentation that may demonstrate ineligibility include: • Property tax records • A Section 1316 declaration (floodplain management violation) • Coastal Barrier Resources Act (CBRA) determination • Photographs

Reason Code 27 Property becomes ineligible for coverage during policy term9

Conditions

A property eligible for coverage at time of application becomes ineligible during the policy term. See the Standard Flood Insurance Policy (SFIP) and Eligibility for NFIP Coverage heading in Section 2: Before You Start for guidance on properties not eligible for coverage.

Examples of a property eligible at the time of application but later ineligible include:

• Buildings declared in violation of local floodplain management requirements pursuant to section 1316 of the NFIA prior to renewal of the flood insurance policy.

• Buildings located in an NFIP participating community suspended after the issuance of the flood policy.

• Annexation of the property to a non-participating community after issuance of the flood policy.

Note: This reason code does not cover a building physically altered such that it is no longer eligible for NFIP coverage. See Reason Code 29.

Cancellation Effective Date

The insurer may not renew the policy. If the policy has renewed, the insurer must nullify (void) the policy from the first renewal date after the property became ineligible.

9. 44 CFR § 62.5(a)(2)

6. How To Cancel

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Reason Code 27 Property becomes ineligible for coverage during policy term9

Policy Terms Eligible for Refund

All policy terms since the first renewal date after the property became ineligible, but no more than 5 years before the date of receipt of verifiable evidence that the property was eligible for coverage at the time of the initial application, but later became ineligible for coverage.

Type of Refund

A full premium refund including fees and surcharges, less the amount of any claims paid during the nullified policy terms.

If the policy has any paid claims and the policyholder does not return the claim payment(s), the insurer must verify the loss history of the property with FEMA by sending the request to [email protected] before issuing refunds for more than two policy terms:

• If the premium refund is greater than the amount of any paid claims, the net refund paid to the policyholder is the difference between the premium refund and the amount of the paid claims.

• If the premium refund is less than the amount of any paid claims, the insurer must reimburse FEMA for the difference between the premium refund amount and the paid claims.

Required Documentation

Identification of the basis for ineligibility and the date the property became ineligible, with supporting documentation.

Examples of supporting documentation that may demonstrate ineligibility include: • Property tax records • A Section 1316 declaration (floodplain management violation) • Coastal Barrier Resources Act (CBRA) determination • Photographs

Reason Code 29 Building physically altered and no longer eligible for NFIP coverage10

Conditions

A policy insuring a building or its contents, or both, where the building has been physically altered in such a manner that the building and its contents are no longer eligible for flood insurance coverage. (For example, the policyholder removes a mobile home from a permanent foundation and places it on wheels.)

Cancellation Effective Date The date the building became ineligible for coverage.

Policy Terms Eligible for Refund Current policy term.

Type of Refund A pro-rata premium refund excluding the HFIAA Surcharge, Federal Policy Fee and Probation Surcharge.

Required Documentation

Documentation verifying the building’s ineligibility for NFIP coverage, such as photographs.

10. 44 CFR Part 61, Appendix A(1)-(3), VIII.D.4; 44 CFR § 62.5(f)(3)

6. How To Cancel

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E. Lender No Longer Requires Insurance

Reason Code 28 Insurance no longer required by lender11

Conditions

The policyholder was subject to a requirement by a lender, loss payee, or other federal agency to obtain and maintain flood insurance pursuant to statute, regulation, or contract, but there is no longer such a requirement.

Examples of such situations include but are not limited to: • Required for a loan closing, but it was later discovered that the building

was not located in an SFHA at the time of closing. • Required because a building was located in an SFHA but FEMA issued

a map revision, Letter of Determination Review (LODR), Letter of Map Revision (LOMR), or Letter of Map Amendment (LOMA) that removed the building from the SFHA.

• Required because a building was located in an SFHA but FEMA issued a LODR indicating the building is not located in an SFHA.

• Determined that flood insurance is no longer required for a structure on a residential property that is detached from the primary residential structure and not itself a residence.

• Required as part of a loan closing and the borrower has paid off the mortgage loan.

Note: Lenders have discretion to impose flood insurance requirements beyond the mandatory purchase requirement. For example, they may require flood insurance outside of SFHAs. Therefore, insurers may use this cancellation reason even for properties not located in SFHAs, if the lender no longer requires the policy.

Cancellation Effective Date The date the insurer receives the request.

Policy Terms Eligible for Refund Current policy term.

Type of Refund

A pro-rata premium refund excluding the HFIAA Surcharge, Federal Policy Fee and Probation Surcharge applies to the policy term canceled. For any subsequent renewed terms eligible for refund, full premium refunds including surcharges and fees apply.

Required Documentation

In lieu of a signed cancellation request, a signed statement from the policyholder that the lender no longer requires a flood policy. See the sample verification letter regarding the requirement to maintain flood insurance coverage in Appendix I: Policyholder Communications.

F. Invalid Payment or Fraud

Reason Code 05 Invalid payment12

Conditions

Valid reasons to nullify (void) the policy for an invalid payment include: • A policyholder’s check payment to the agent or insurer is returned for

non-sufficient funds or rejected. • A policyholder’s electronic payment to the agent or insurer is rejected

or disputed. Note: Reason Code 05 is not valid if an agent advances insurance agency funds without first receiving payment from the policyholder.

11. 44 CFR Part 61, Appendix A(1)-(3), VIII.C; 44 CFR § 62.5(c) 12. 44 CFR Part 61, Appendix A(1)-(3), VIII.B.1.d

6. How To Cancel

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Reason Code 05 Invalid payment12

Cancellation Effective Date The policy is nullified as of the effective date of the policy.

Policy Terms Eligible for Refund

Current policy term. However, if a claim was paid for a policy that is void, the policyholder must return the claim payment to FEMA, or the insurer must offset the amount of the claim payment from the premiums to be refunded, before the insurer will process the refund.

Type of Refund

When invalid payment is presented to the agent:

• The insurer must provide a full refund to the agent, including all fees and surcharges, for returned or rejected policyholder payments to the agent.

When invalid payment is presented to the insurer:

• There is no refund for returned or rejected payments paid by the policyholder directly to the insurer.

Required Documentation The notice of returned or rejected payment.

Reason Code 23 Fraud or Misrepresentation13

Conditions

• NFIP insurers must cancel a policy for fraud committed by the policyholder or the agent.

• NFIP insurers may cancel a policy for misrepresentation of a material fact by the policyholder or agent.

Cancellation Effective Date The date of the fraudulent act or material misrepresentation of fact.

Policy Terms Eligible for Refund N/A

Type of Refund

• The policyholder is not eligible for a refund of any premiums, fees, or surcharges.

• If the agent did not commit or participate in the fraud or misrepresentation, there is no reduction to the insurer’s expense allowance.

Required Documentation

Notification from FEMA that the situation qualifies for cancellation under this reason code.

Reason Code 30 Insufficient premium to retain coverage14

Conditions

Consistent with the reformation procedures described under the Reformation Due to Insufficient Premium or Rating Information heading in Section 2: Before You Start, an insurer may cancel a policy if:

• The premium the insurer received for the policy, after deducting the costs of all applicable fees and surcharges, is insufficient to buy any amount of coverage; and

13. 44 CFR Part 61, Appendix A(1)-(3), VIII.A; 44 CFR § 62.5(f)(1) 14. 44 CFR Part 61, Appendix A(1)-(3), VIII.D.1

6. How To Cancel

OCTOBER 2022 RISK RATING 2.0: EQUITY IN ACTION NFIP FLOOD INSURANCE MANUAL 6 • 12

Reason Code 30 Insufficient premium to retain coverage14

Conditions continued

• The policyholder does not pay the additional amount of premium owed to increase coverage to the originally requested amount or to a lesser amount within 30 days of the underpayment notice.

Note: This cancellation code does not apply in the case of an incorrect geolocation or flood zone, due to the exception to general reformation rules described in Section 2: Before You Start. For the portion of the policy term before the date the insurer discovered the incorrect geolocation or flood zone (the “date of discovery”), the policyholder receives the originally requested coverage amount without paying additional premium (or providing additional rating information, if insufficient). Therefore, the insurer cannot cancel the policy.

Cancellation Effective Date The policy effective date.

Policy Terms Eligible for Refund

The term when the insurer discovered the premium was insufficient and, if the policy renewed before reformation occurred, the subsequent renewal term.

Type of Refund

A full premium refund, including fees and surcharges, will apply to the current policy term and subsequent renewal terms if the policy renewed. However, if a claim was paid before discovery of the insufficient premium, the insurer must contact FEMA for additional underwriting and claims guidance.

Required Documentation

A copy of the underpayment letter sent due to reformation of the policy, along with documentation showing the original amount of coverage and premium paid.

G. Other Reason Codes

Reason Code 13 Nullification prior to policy effective date15

Conditions

• The policyholder paid the premium for a policy renewal or a new policy; and

• Before the effective date of the new or renewal policy, the policyholder decided they do not want the policy to go into effect; and

• The property is not subject to a requirement to obtain and maintain flood insurance pursuant to any statute, regulation, or contract.

Cancellation Effective Date The policy is nullified from the effective date of the policy term.

Policy Terms Eligible for Refund Nullified policy term.

Type of Refund

Full premium refund, including fees and surcharges. However, if a claim was paid for the policy, the policyholder must return the claim payment to FEMA, or the insurer must offset the amount of the claim payment from the premiums to be refunded, before the insurer will process the refund.

Required Documentation

A signed statement from the policyholder to nullify the new or renewal policy and that the lender no longer requires flood insurance. See sample verification letter regarding the requirement to maintain flood insurance coverage in Appendix I: Policyholder Communications.

15. 44 CFR Part 61, Appendix A(1)-(3), VIII.B.1.e; 44 CFR § 62.5(a)(3)

6. How To Cancel

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Reason Code 20 SRL written with incorrect insurer16

Conditions A WYO company issues or renews a policy that FEMA requires to be serviced by the NFIP Direct’s Special Direct Facility (SDF) because the policy covers a Severe Repetitive Loss (SRL) property.

Cancellation Effective Date

The cancellation effective date will be the effective date of the policy term when the property was designated as SRL.

Policy Terms Eligible for Refund Current policy term.

Type of Refund Full premium refund including fees and surcharges is sent to the SDF.

Required Documentation

Property address is identified as an SRL property on the FEMA Repetitive Loss list.

Reason Code 21 Continuous lake flooding or closed basin lakes

Conditions • FEMA notification of a continuous lake flooding or closed basin

lakes property. • The cancellation can be for only one term of a policy.

Cancellation Effective Date Must be day after the date of loss.

Policy Terms Eligible for Refund N/A

Type of Refund No premium refund allowed.

Required Documentation FEMA notification of a continuous lake flooding or closed basin lakes property.

Reason Code 22 Cancel and rewrite due to administrative error17

Conditions

Provided there are no paid or pending claims for the applicable policy term(s), the insurer may cancel and rewrite a policy to correct an administrative error, including but not limited to:

• An incorrect policy effective date; • System constraints that prevent a legitimate correction; • A rating correction; or

• Incorrect use of the Dwelling Form when the RCBAP Form was appropriate, or vice versa.

Cancellation Effective Date

The cancellation date and the rewritten policy’s effective date must be the effective date of the policy term when the administrative error first occurred.

Policy Terms Eligible for Refund

In determining the number of policy years for refund eligibility, do not include terms that expired before a lapse in coverage.

Type of Refund Full premium refund including fees and surcharges. The insurer will apply the refund to the newly rewritten policy and refund any excess premium, fees, surcharges, or assessments paid.

Required Documentation Documentation of the administrative error.

16. 44 CFR § 62.5(f)(2) 17. 44 CFR § 62.5(f)(2)

6. How To Cancel

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6. How To Cancel

III. Processing a Cancellation or Nullification Request

A. Signatures The insurer may accept electronic submissions if their business process includes signature authentication and records receipt dates. Please see the Electronic Signatures heading in Section 2: Before You Start for more information.

1. Policyholder’s Signature

In general, all policyholders must sign and date a cancellation or nullification request, except:

• All requests using reason codes 5, 6, 21, 22, 23, 27 and 30.

• Requests using reason code 1, if the building was foreclosed on and the lender is entitled to the refund.

• Requests using reason code 29, if the covered building that was eligible for coverage became ineligible midterm due to physical alteration of the building.

• Request using reason code 4, where the insurer created a duplicate policy.

2. Agent Signature

Agents must sign and date the cancellation or nullification request for all cancellation reason codes, except 6, 21, 22, 23, 27 and 30.

B. Premium Refunds Insurers must process the return premium on policy terms for which they are the insurer of record.

If the premium refund is for more than two policy terms and the insurer is unable to process the additional terms within their system, then the insurer may submit the request and documentation for the additional terms to FEMA for processing. The documentation must include:

• A policy cancellation request and the premium refund calculation for each policy term. • The insurer’s statistical records or declarations pages for each policy term and

evidence of premium payments. • A completed Prior Term Refund (PTR) Worksheet.

Insurers may send requests and documentation to FEMA by email to: [email protected].

FEMA notifies the insurers of the premium refunded and the Expense Allowance due to the NFIP. The insurers must maintain this documentation as part of their underwriting files. FEMA will return rejected refund requests.

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C. Cancellation Processing Outcomes

Reason Code

Signature Required

Premium Refund (Including ICC

and Reserve Fund Assessment) HFIAA Surcharge

Probation Surcharge

Federal Policy Fee

Producer Commission (Direct Business Only)

Policyholder Agent, or

Both Full

Refund Pro-

Rated Full

Refund Pro-

Rated No

Refund Full

Refund No

Refund Full

Refund No

Refund Full

Deduction Pro-

Rated Retained

A. No Insurable Interest

1 * × × × × ×

2 Both × × × × ×

7 Both × × × × × B. Establish Common Expiration Date

3 Both × × × × × C. Duplicate Coverage

4 * ×* ×* ×* ×* ×*

10 Both × × × × ×

26 Both × × × × × D. Not Eligible for Coverage

6 * × × × × ×

27 * × × × × ×

29 * × × × × × E. Lender No Longer Requires Insurance

28 Both × × × × ×

F. Insufficient Premium or Fraud

5 Agent × × × × ×

23 * NO REFUND OF PREMIUM, FEDERAL POLICY FEE, RESERVE FUND ASSESSMENT, OR HFIAA SURCHARGE ALLOWED ×

30 * × × × × × G. Other Reason Codes

13 Both × × × × ×

20 Both × × × × ×

21 * NO REFUND OF PREMIUM, FEDERAL POLICY FEE, RESERVE FUND ASSESSMENT, OR HFIAA SURCHARGE ALLOWED ×

22 * × × × × ×

* See the Signatures heading above. ×* See Reason Code 04 description for when a full refund may apply.

6. How To Cancel

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Appendix A: Policy

NFIP insurers may only use the Standard Flood Insurance Policy (SFIP)1 established by FEMA in federal regulation to sell NFIP flood insurance policies. The SFIP defines the coverages, limitations, and exclusions for NFIP flood insurance policies and includes terms and conditions that are unique to the NFIP.

There are three policy forms:

• The Dwelling Form (see page A-3) • The General Property Form (see page A-34) • The Residential Condominium Building Association Policy (RCBAP) Form (see page A-62)

FEMA updated the SFIP forms in conformance with the requirements stipulated in the final rule FEMA published in July 2020, “Conforming Changes To Reflect the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) and the Homeowners Flood Insurance Affordability Act of 2014 (HFIAA), and Additional Clarifications for Plain Language,” available on the Federal Register.2

Note: There are regulatory changes in the final rule and the majority of the changes are clarifications and changes that codify existing practice, policy or processes and improve readability and uniformity.

The effective date of the SFIPs is October 1, 2021.

See the Policy Forms heading in Section 2: Before You Start for guidance on when to use each form.

1 44 CFR 61.13 2 85 Fed. Reg. 43946 (July 20, 2020)

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Appendix A: Policy

National Flood Insurance Program

Dwelling Form Standard Flood Insurance Policy F-122 / October 2021

ONLINE The NFIP Dwelling Form, SFIP FEMA Form 122, is available at https://www.fema.gov/flood-insurance/find-form/underwriting

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Appendix A: Policy

FEDERAL EMERGENCY MANAGEMENT AGENCY, FEDERAL INSURANCE AND MITIGATION ADMINISTRATION

Standard Flood Insurance Policy

Dwelling Form Please read the policy carefully. The flood insurance provided is subject to limitations, restrictions, and exclusions.

I. AGREEMENT

A. This policy insures the following types of property only:

1. A one to four family residential building, not under a condominium form of ownership;

2. A single-family dwelling unit in a condominium building; and

3. Personal property in a building.

B. The Federal Emergency Management Agency (FEMA) provides flood insurance under the terms of the National Flood Insurance Act of 1968 and its amendments, and Title 44 of the Code of Federal Regulations.

C. We will pay you for direct physical loss by or from flood to your insured property if you:

1. Have paid the full amount due (including applicable premiums, surcharges, and fees);

2. Comply with all terms and conditions of this policy; and

3. Have furnished accurate information and statements.

D. We have the right to review the information you give us at any time and revise your policy based on our review.

E. This policy insures only one building. If you own more than one building, coverage will apply to the single building specifically described in the Flood Insurance Application.

F. Subject to the exception in I.G below, multiple policies with building coverage cannot be issued to insure a single building to one insured or to different insureds, even if separate policies were issued through different NFIP insurers. Payment for damages may only be made under a single policy for building damages under Coverage A– Building Property.

G. A Dwelling Form policy with building coverage may be issued to a unit owner in a condominium building that is also insured under a Residential Condominium

Building Association Policy (RCBAP). However, no more than $250,000 may be paid in combined benefits for a single unit under the Dwelling Form policy and the RCBAP. We will only pay for damage once. Items of damage paid for under an RCBAP cannot also be claimed under the Dwelling Form policy.

II. DEFINITIONS

A. In this policy, “you” and “your” refer to the named insured(s) shown on the Declarations Page of this policy and the spouse of the named insured, if a resident of the same household. Insured(s) also includes: Any mortgagee and loss payee named in the Application and Declarations Page, as well as any other mortgagee or loss payee determined to exist at the time of loss, in the order of precedence. “We,” “us,” and “our” refer to the insurer.

Some definitions are complex because they are provided as they appear in the law or regulations, or result from court cases.

B. Flood, as used in this flood insurance policy, means:

1. A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (one of which is your property) from:

a. Overflow of inland or tidal waters;

b. Unusual and rapid accumulation or runoff of surface waters from any source;

c. Mudflow.

2. Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion

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or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined in B.1.a above.

C. The following are the other key definitions we use in this policy:

1. Act. The National Flood Insurance Act of 1968 and any amendments to it.

2. Actual Cash Value. The cost to replace an insured item of property at the time of loss, less the value of its physical depreciation.

3. Application. The statement made and signed by you or your agent in applying for this policy. The application gives information we use to determine the eligibility of the risk, the kind of policy to be issued, and the correct premium payment. The application is part of this flood insurance policy.

4. Base Flood. A flood having a one percent chance of being equaled or exceeded in any given year.

5. Basement. Any area of a building, including any sunken room or sunken portion of a room, having its floor below ground level on all sides.

6. Building

a. A structure with two or more outside rigid walls and a fully secured roof that is affixed to a permanent site;

b. A manufactured home, also known as a mobile home, is a structure: built on a permanent chassis, transported to its site in one or more sections, and affixed to a permanent foundation; or

c. A travel trailer without wheels, built on a chassis and affixed to a permanent foundation, that is regulated under the community’s floodplain management and building ordinances or laws.

Building does not mean a gas or liquid storage tank, shipping container, or a recreational vehicle, park trailer, or other similar vehicle, except as described in C.6.c above.

7. Cancellation. The ending of the insurance coverage provided by this policy before the expiration date.

8. Condominium. That form of ownership of one or more buildings in which each unit owner has an undivided interest in common elements.

9. Condominium Association. The entity made up of the unit owners responsible for the maintenance and operation of:

a. Common elements owned in undivided shares by unit owners; and

b. Other buildings in which the unit owners have use rights; where membership in the entity is a required condition of ownership.

10. Condominium Building. A type of building for which the form of ownership is one in which each unit owner has an undivided interest in common elements of the building.

11. Declarations Page. A computer-generated summary of information you provided in your application for insurance. The Declarations Page also describes the term of the policy, limits of coverage, and displays the premium and our name. The Declarations Page is a part of this flood insurance policy.

12. Deductible. The amount of an insured loss that is your responsibility and that is incurred by you before any amounts are paid for the insured loss under this policy.

13. Described Location. The location where the insured building(s) or personal property are found. The described location is shown on the Declarations Page.

14. Direct Physical Loss By or From Flood. Loss or damage to insured property, directly caused by a flood. There must be evidence of physical changes to the property.

15. Dwelling. A building designed for use as a residence for no more than four families or a single-family unit in a condominium building.

16. Elevated Building. A building that has no basement and that has its lowest elevated floor raised above ground level by foundation walls, shear walls, posts, piers, pilings, or columns.

17. Emergency Program. The initial phase of a community’s participation in the National Flood Insurance Program. During this phase, only limited amounts of insurance are available under the Act and the regulations prescribed pursuant to the Act.

18. Federal Policy Fee. A flat rate charge you must pay on each new or renewal policy to defray certain administrative expenses incurred in carrying out the National Flood Insurance Program.

19. Improvements. Fixtures, alterations, installations, or additions comprising a part of the dwelling or apartment in which you reside.

20. Mudflow. A river of liquid and flowing mud on the surface of normally dry land areas, as when earth is carried by a current of water. Other earth movements, such as landslide, slope failure, or

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Appendix A: Policy

a saturated soil mass moving by liquidity down a slope, are not mudflows.

21. National Flood Insurance Program (NFIP). The program of flood insurance coverage and floodplain management administered under the Act and applicable Federal regulations in Title 44 of the Code of Federal Regulations, Subchapter B.

22. Policy. The entire written contract between you and us. It includes:

a. This printed form;

b. The application and Declarations Page;

c. Any endorsement(s) that may be issued; and

d. Any renewal certificate indicating that coverage has been instituted for a new policy and new policy term. Only one dwelling, which you specifically described in the application, may be insured under this policy.

23. Pollutants. Substances that include, but are not limited to, any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. “Waste” includes, but is not limited to, materials to be recycled, reconditioned, or reclaimed.

24. Post-FIRM Building. A building for which construction or substantial improvement occurred after December 31, 1974, or on or after the effective date of an initial Flood Insurance Rate Map (FIRM), whichever is later.

25. Principal Residence. The dwelling in which you or your spouse have lived for at least 80 percent of:

a. The 365 days immediately preceding the time of loss; or

b. The period of ownership of you or your spouse, if either you or your spouse owned the dwelling for less than 365 days immediately preceding the time of loss.

26. Probation Surcharge. A flat charge you must pay on each new or renewal policy issued covering property in a community the NFIP has placed on probation under the provisions of 44 CFR 59.24.

27. Regular Program. The final phase of a community’s participation in the National Flood Insurance Program. In this phase, a Flood Insurance Rate Map is in effect and full limits of coverage are available under the Act and the regulations prescribed pursuant to the Act.

28. Special Flood Hazard Area (SFHA). An area having special flood or mudflow, and/or flood-related erosion hazards, and shown on a Flood Hazard Boundary Map or Flood Insurance Rate Map as Zone A, AO, A1–A30, AE, A99, AH, AR, AR/A, AR/ AE, AR/AH, AR/AO, AR/A1–A30, V1–V30, VE, or V.

29. Unit. A single-family residential space you own in a condominium building.

30. Valued Policy. A policy in which the insured and the insurer agree on the value of the property insured, that value being payable in the event of a total loss. The Standard Flood Insurance Policy is not a valued policy.

III. PROPERTY INSURED

A. Coverage A—Building Property

We insure against direct physical loss by or from flood to:

1. The dwelling at the described location, or for a period of 45 days at another location as set forth in III.C.2.b, Property Removed to Safety.

2. Additions and extensions attached to and in contact with the dwelling by means of a rigid exterior wall, a solid load-bearing interior wall, a stairway, an elevated walkway, or a roof. At your option, additions and extensions connected by any of these methods may be separately insured. Additions and extensions attached to and in contact with the building by means of a common interior wall that is not a solid load-bearing wall

are always considered part of the dwelling and cannot be separately insured.

3. A detached garage at the described location.

Coverage is limited to no more than 10 percent of the limit of liability on the dwelling. Use of this

insurance is at your option but reduces the building

limit of liability. We do not cover any detached garage used or held for use for residential (i.e., dwelling), business, or farming purposes.

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4. Materials and supplies to be used for construction, alteration, or repair of the dwelling or a detached garage while the materials and supplies are stored in a fully enclosed building at the described location or on an adjacent property.

5. A building under construction, alteration, or repair at the described location.

a. If the structure is not yet walled or roofed as described in the definition for building (see II.B.6.a) then coverage applies: (1) Only while such work is in

progress; or (2) If such work is halted, only

for a period of up to 90 continuous days thereafter.

b. However, coverage does not apply until the building is walled and roofed if the lowest floor, including the basement floor, of a non-elevated building or the lowest elevated floor of an elevated building is: (1) Below the base flood ele-

vation in Zones AH, AE, A1–A30, AR, AR/AE, AR/ AH, AR/A1–A30, AR/A, AR/AO; or

(2) Below the base flood ele- vation adjusted to include the effect of wave action in Zones VE or V1–V30.

The lowest floor level is based on the bottom of the lowest horizontal structural member of the floor in Zones VE or V1–V30 or the top of the floor

in Zones AH, AE, A1–A30, AR, AR/AE, AR/AH, AR/ A1–A30, AR/A, and AR/AO.

6. A manufactured home or a travel trailer, as described in the II.C.6. If the manufactured home or travel trailer is in a special flood hazard area, it must be anchored in the following manner at the time of the loss:

a. By over-the-top or frame ties to ground anchors; or

b. In accordance with the manufacturer’s specifications; or

c. In compliance with the community’s floodplain management requirements unless it has been continuously insured by the NFIP at the same described location since September 30, 1982.

7. The following items of property which are insured under Coverage A only:

a. Awnings and canopies;

b. Blinds;

c. Built-in dishwashers;

d. Built-in microwave ovens;

e. Carpet permanently installed over unfinished flooring;

f. Central air conditioners;

g. Elevator equipment;

h. Fire sprinkler systems;

i. Walk-in freezers;

j. Furnaces and radiators;

k. Garbage disposal units;

l. Hot water heaters, including solar water heaters;

m. Light fixtures;

n. Outdoor antennas and aerials fastened to buildings;

o. Permanently installed cupboards, bookcases, cabinets, paneling, and wallpaper;

p. Plumbing fixtures;

q. Pumps and machinery for operating pumps;

r. Ranges, cooking stoves, and ovens;

s. Refrigerators; and

t. Wall mirrors, permanently installed.

8. Items of property below the lowest elevated floor of an elevated post- FIRM building located in Zones

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A1–A30, AE, AH, AR, AR/A, AR/ AE, AR/AH, AR/A1–A30, V1–V30, or VE, or in a basement regardless of the zone. Coverage is limited to the following: a. Any of the following items, if installed in their

functioning locations and, if necessary for operation, connected to a power source:

(1) Central air conditioners;

(2) Cisterns and the water in them;

(3) Drywall for walls and ceilings in a basement and the cost of labor to nail it, unfinished and unfloated and not taped, to the framing;

(4) Electrical junction and circuit breaker boxes;

(5) Electrical outlets and switches;

(6) Elevators, dumbwaiters and related equipment, except for related equipment installed below the base flood elevation after September 30, 1987;

(7) Fuel tanks and the fuel in them;

(8) Furnaces and hot water heaters;

(9) Heat pumps;

(10) Nonflammable insulation in a basement;

(11) Pumps and tanks used in solar energy systems;

(12) Stairways and staircases attached to the building, not separated from it by elevated walkways;

(13) Sump pumps;

(14) Water softeners and the chemicals in them, water filters, and faucets installed as an integral part of the plumbing system;

(15) Well water tanks and pumps;

(16) Required utility connections for any item in this list; and

(17) Footings, foundations, posts, pilings, piers, or other foundation walls and anchorage systems required to support a building.

b. Clean-up.

B. Coverage B—Personal Property

1. If you have purchased personal property coverage, we insure against direct physical loss by or from flood to personal property inside a building at the described location, if:

a. The property is owned by you or your household family members; and

b. At your option, the property is owned by guests or servants.

2. Personal property is also insured for a period of 45 days at another location as set forth in III.C.2.b, Property Removed to Safety.

3. Personal property in a building that is not fully enclosed must be secured to prevent flotation out of the building. If the personal property does float out during a flood, it will be conclusively presumed that it was not reasonably secured. In that case, there is no coverage for such property.

4. Coverage for personal property includes the following property, subject to B.1 above, which is insured under Coverage B only:

a. Air conditioning units, portable or window type;

b. Carpets, not permanently installed, over unfinished flooring;

c. Carpets over finished flooring;

d. Clothes washers and dryers;

e. “Cook-out” grills;

f. Food freezers, other than walk-in, and food in any freezer; and

g. Portable microwave ovens and portable dishwashers.

5. Coverage for items of property below the lowest elevated floor of an elevated post-FIRM building located in Zones A1–A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/ A1–A30, V1–V30, or VE, or in a basement regardless of the zone, is limited to the following items, if installed in their functioning locations and, if necessary for oper ation, connected to a power source:

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a. Air conditioning units, portable or window type;

b. Clothes washers and dryers; and

c. Food freezers, other than walk-in, and food in any freezer.

6. If you are a tenant and have insured personal property under Coverage B in this policy, we will cover such property, including your cooking stove

or range and refrigerator. The policy will also cover improvements made or acquired solely at your expense in the dwelling or apartment in which you reside, but for not more than 10 percent of the limit of liability shown for personal property on the Declarations Page. Use of this

insurance is at your option but reduces the personal property limit of liability.

7. If you are the owner of a unit and have insured personal property under Coverage B in this policy, we will also cover your interior walls, floor, and ceiling (not otherwise insured under a flood insurance policy purchased by your condominium association) for not more than 10 percent of the limit of liability shown for personal property on the Declarations Page. Use of this insurance is at your option but reduces the personal property limit of liability.

8. Special Limits. We will pay no more than $2,500 for any one loss to one or more of the following kinds of personal property:

a. Artwork, photographs, collectibles, or memorabilia, including but not limited to, porcelain or other figures, and sports cards;

b. Rare books or autographed items;

c. Jewelry, watches, precious and semi-precious stones, or articles of gold, silver, or platinum;

d. Furs or any article containing fur that represents its principal value; or

e. Personal property used in any business.

9. We will pay only for the functional value of antiques.

C. Coverage C—Other Coverages

1. Debris Removal

a. We will pay the expense to remove non-owned debris that is on or in insured property and debris of insured property anywhere.

b. If you or a member of your household perform the removal work, the value of your work will be based on the Federal minimum wage.

c. This coverage does not increase the Coverage A or Coverage B limit of liability.

2. Loss Avoidance Measures

a. Sandbags, Supplies, and Labor

(1) We will pay up to $1,000 for costs you incur to protect the insured building from a flood or imminent danger of flood, for the following:

(a) Your reasonable expenses to buy:

(i) Sandbags, including sand to fill them;

(ii) Fill for temporary levees;

(iii) Pumps; and

(iv) Plastic sheeting and lumber used in connection with these items.

(b) The value of work, at the Federal minimum wage, that you or a member of your house-hold perform.

(2) This coverage for Sandbags, Supplies, and Labor only applies if damage to insured property by or from flood is imminent and the threat of flood damage is apparent enough to lead a person of common prudence to anticipate flood damage. One of the following must also occur:

(a) A general and temporary condition of flooding in the area near the described

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location must occur, even if the flood does not reach the building; or

(b) A legally authorized official must issue an evacuation order or other civil order for the community in which the building is located calling for measures to preserve life and property from the peril of flood.

This coverage does not increase the Coverage A or Coverage B limit of liability.

b. Property Removed to Safety

(1) We will pay up to $1,000 for the reasonable expenses you incur to move insured property to a place other than the described location that contains the property in order to protect it from flood or the imminent danger of flood. Reasonable expenses include the value of work, at the Federal minimum wage, you or a member of your household perform.

(2) If you move insured property to a location other than the described location that contains the property in order to protect it from flood or the imminent danger of flood, we will cover such property while at that location for a period of 45 consecutive days from the date you begin to move it there. The personal property that is moved must be placed in a fully enclosed building or otherwise reasonably protected from the elements.

(3) Any property removed, including a moveable home described in II.6.b and c, must be placed above ground level or outside of the special flood hazard area.

(4) This coverage does not increase the Coverage A or Coverage B limit of liability.

3. Condominium Loss Assessments

a. Subject to III.C.3.b below, if this policy insures a condominium unit, we will pay, up to the Coverage A limit of liability, your share of loss assessments charged against you by the condominium association in accordance with the condominium association’s articles of association, declarations and your deed. The assessment must be made because of direct physical loss by or from flood during the policy term, to the unit or to the common elements of the NFIP insured condominium building in which this unit is located.

b. We will not pay any loss assessment: (1) Charged against you and the

condominium association by any governmental body;

(2) That results from a deductible under the insurance purchased by the condominium association insuring common elements;

(3) That results from a loss to personal property, including contents of a condominium building;

(4) In which the total payment combined under all policies exceeds the maximum amount of coverage available under the Act for a single unit in a condominium building where the unit is insured under both a Dwelling Policy and a RCBAP; or

(5) On any item of damage that has already been paid under a RCBAP where a single unit in a condominium building is insured by both a Dwelling Policy and a RCBAP.

c. Condominium Loss Assessment coverage does not increase the Coverage A Limit of Liability and is subject to the maximum coverage limits available for a single-family dwelling under the Act, payable between all

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policies issued and covering the unit, under the Act.

D. Coverage D—Increased Cost of Compliance

1. General

This policy pays you to comply with a State or local floodplain management law or ordinance affecting repair or reconstruction of a building suffering flood damage. Compliance activities eligible for payment are: elevation, floodproofing, relocation, or demolition (or any combination of these activities) of your building. Eligible floodproofing activities are limited to:

a. Non-residential buildings.

b. Residential buildings with basements that satisfy FEMA’s standards published in the Code of Federal Regulations [44 CFR 60.6(b) or (c)].

2. Limit of Liability

We will pay you up to $30,000 under this Coverage D—Increased Cost of Compliance, which only applies to policies with building coverage (Coverage A). Our payment of claims under Coverage D is in addition to the amount of coverage which you selected on the application and which appears on the Declarations Page. But the maximum you can collect under this policy for both Coverage A—Building Property and Coverage D—Increased Cost of Compliance cannot exceed the maximum permitted under the Act. We do not charge a separate deductible for a claim under Coverage D.

3. Eligibility

a. A building insured under Coverage A— Building Property sustaining a loss caused by a flood as defined by this policy must:

(1) Be a “repetitive loss building.” A repetitive loss building is one that meets the following conditions:

(a) The building is insured by a contract of flood insurance issued under the NFIP.

(b) The building has suffered flood damage on two occasions during a 10-year period which ends on the date of the second loss.

(c) The cost to repair the flood damage, on average, equaled or exceeded 25 percent of the market value of the building at the time of each flood loss.

(d) In addition to the current claim, the NFIP must have paid the previous qualifying claim, and the State or community must have a cumulative, substantial damage provision or repetitive loss provision in its floodplain management law or ordinance being enforced against the building; or

(2) Be a building that has had flood damage in which the cost to repair equals or exceeds 50 percent of the market value of the building at the time of the flood. The State or community must have a substantial damage provision in its floodplain management law or ordinance being enforced against the building.

b. This Coverage D pays you to comply with State or local floodplain management laws or ordinances that meet the minimum standards of the National Flood Insurance Program found in the Code of Federal Regulations at 44 CFR 60.3. We pay for compliance activities that exceed those standards under these conditions:

(1) 3.a.1 above.

(2) Elevation or floodproofing in any risk zone to preliminary or advisory base flood elevations provided by FEMA which the State or local government has adopted and is enforcing for flood- damaged buildings in such areas. (This includes compliance activities in B, C, X, or D zones which are being changed to zones with base flood elevations. This also includes compliance activities in zones where base flood elevations are being increased, and a flood-damaged building must comply with the higher advisory base flood elevation.) Increased Cost of Compliance coverage does not apply to situations in B, C, X, or D zones where the community has derived its own elevations and is enforcing elevation or floodproofing requirements for flood- damaged buildings to elevations derived solely by the community.

(3) Elevation or floodproofing above the base flood elevation to meet State or local “free-board” requirements, i.e., that a building must be elevated above the base flood elevation.

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c. Under the minimum NFIP criteria at 44 CFR 60.3(b)(4), States and communities must require the elevation or floodproofing of buildings in unnumbered A zones to the base flood elevation where elevation data is obtained from a Federal, State, or other source. Such compliance activities are eligible for Coverage D.

d. Coverage D will pay for the incremental cost, after demolition or relocation, of elevating or floodproofing a b uilding d uring i ts rebuilding at the same or another site to meet State or local floodplain management laws or ordinances, subject to Coverage D Exclusion 5.g below.

e. Coverage D will pay to bring a flood-damaged building into compliance with State or local floodplain management laws or ordinances even if the building had received a variance before the present loss from the applicable floodplain management requirements.

4. Conditions

a. When a building insured under Coverage A—Building Property sustains a loss caused by a flood, our payment for the loss under this Coverage D will be for the increased cost to elevate, floodproof, relocate, or demolish (or any combination of these activities) caused by the enforcement of current State or local floodplain management ordinances or laws. Our payment for eligible demolition activities will be for the cost to demolish and clear the site of the building debris or a portion thereof caused by the enforcement of current State or local floodplain management

ordinances or laws. Eligible activities for the cost of clearing the site will include those necessary to discontinue utility service to the site and ensure proper abandonment of on-site utilities.

b. When the building is repaired or rebuilt, it must be intended for the same occupancy as the present building unless otherwise required by current floodplain management ordi- nances or laws.

5. Exclusions

Under this Coverage D (Increased Cost of Compliance), we will not pay for:

a. The cost to comply with any flood plain management law or ordinance in communi- ties participating in the Emergency Program.

b. The cost associated with en- forcement of any ordinance or law that requires any insured or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants.

c. The loss in value to any insured building due to the

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requirements of any ordinance or law.

d. The loss in residual value of the undamaged portion of a building demolished as a consequence of enforcement of any State or local floodplain management law or ordinance.

e. Any Increased Cost of Com- pliance under this Coverage D: (1) Until the building is elevated,

floodproofed, demolished, or relocated on the same or to another premises; and

(2) Unless the building is elevated, floodproofed, demolished, or relocated as soon as reasonably possible after the loss, not to exceed two years.

f. Any code upgrade requirements, e.g., plumbing or electrical wiring, not specifically related to the State or local floodplain management law or ordinance.

g. Any compliance activities needed to bring additions or improvements made after the loss occurred into compli- ance with State or local floodp lain management laws or ordinances.

h. Loss due to any ordinance or law that you were required to comply with before the current loss.

i. Any rebuilding activity to standards that do not meet the NFIP’s minimum requirements. This includes any situation where the insured has received from the State or community a variance in connection with the current flood loss to rebuild the property to an elevation below the base flood elevation.

j. Increased Cost of Compliance for a garage or carport.

k. Any building insured under an NFIP Group Flood Insurance Policy.

l. Assessments made by a condo- minium association on individual condominium unit owners to pay increased costs of repairing commonly owned buildings after a flood in compliance with State or local floodplain management ordinances or laws.

6. Other Provisions

a. Increased Cost of Compliance coverage will not be included in the calculation to determine whether coverage meets the 80 percent insurance-to-value requirement for replacement cost coverage as set forth in Art. VII.R (“Loss Settlement”) of this policy.

b. All other conditions and provisions of this policy apply.

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IV. PROPERTY NOT INSURED

We do not insure any of the following: 1. Personal property not inside

a building.

2. A building, and personal property in it, located entirely in, on, or over water or seaward of mean high tide if it was constructed or substantially improved after September 30, 1982.

3. Open structures, including a building used as a boathouse or any structure or building into which boats are floated, and personal property located in, on, or over water.

4. Recreational vehicles other than travel trailers described in the Definitions section (see II.B.6.c) whether affixed to a permanent foundation or on wheels.

5. Self-propelled vehicles or ma- chines, including their parts and equipment. However, we do cover self-propelled vehicles or machines not licensed for use on public roads that are:

a. Used mainly to service the described location; or

b. Designed and used to assist handicapped persons, while the vehicles or machines

are inside a building at the described location.

6. Land, land values, lawns, trees, shrubs, plants, growing crops, or animals.

7. Accounts, bills, coins, currency, deeds, evidences of debt, medals, money, scrip, stored value cards, postage stamps, securities, bullion, manuscripts, or other valuable papers.

8. Underground structures and equipm ent, including wells, sep- tic tanks, and septic systems.

9. Those portions of walks, walkways, decks, driveways, patios and other surfaces, all whether protected by a roof or not, located outside the perimeter, exterior walls of the insured building or the building in which the insured unit is located.

10. Containers, including related equipment, such as, but not limited to, tanks containing gases or liquids.

11. Buildings or units and all their contents if more than 49 percent of the actual cash value of the building is below ground, unless the lowest level is at or above the base flood elevation and is below

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ground by reason of earth having been used as insulation material in conjunction with energy efficient building techniques.

12. Fences, retaining walls, sea- walls, bulkheads, wharves, piers, bridges, and docks.

13. Aircraft or watercraft, or their furnishings and equipment.

14. Hot tubs and spas that are not bathroom fixtures, and swimming pools, and their equipment, such

as, but not limited to, heaters, filters, pumps, and pipes, wher- ever located.

15. Property not eligible for flood insurance pursuant to the provisions of the Coastal Barrier Resources Act and the Coastal Barrier Improvement Act and amendments to these acts.

16. Personal property you own in common with other unit owners comprising the membership of a condominium association.

V. EXCLUSIONS

A. We only pay for direct physical loss by or from flood, which means that we do not pay you for:

1. Loss of revenue or profits;

2. Loss of access to the insured property or described location;

3. Loss of use of the insured property or described location;

4. Loss from interruption of business or production;

5. Any additional living expenses incurred while the insured building is being repaired or is unable to be occupied for any reason;

6. The cost of complying with any ordinance or law requiring or

regulating the construction, demolition, remodeling, renova- tion, or repair of property, including removal of any resulting debris. This exclusion does not apply to any eligible activities we describe in Coverage D—Increased Cost of Compliance; or

7. Any other economic loss you suffer.

B. Flood in Progress. If this policy became effective as of the time of a loan closing, as provided by 44 CFR 61.11(b), we will not pay for a loss caused by a flood that is a continuation of a flood that existed prior to coverage becoming effective.

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In all other circumstances, we will not pay for a loss caused by a flood that is a continuation of a flood that existed on or before the day you submitted the application for coverage under this policy and the full amount due. We will determine the date of application using 44 CFR 61.11(f).

C. We do not insure for loss to property caused directly by earth movement even if the earth movement is caused by flood. Some examples of earth movement that we do not cover are:

1. Earthquake;

2. Landslide;

3. Land subsidence;

4. Sinkholes;

5. Destabilization or movement of land that results from accu- mulation of water in subsurface land area; or

6. Gradual erosion.

We do, however, pay for losses from mudflow and land subsidence as a result of erosion that are specifically insured under our definition of flood (see II.B.1.c and II.B.2).

D. We do not insure for direct physical loss caused directly or indirectly by any of the following:

1. The pressure or weight of ice;

2. Freezing or thawing;

3. Rain, snow, sleet, hail, or water spray;

4. Water, moisture, mildew, or mold damage that results primarily from any condition:

a. Substantially confined to the dwelling; or

b. That is within your control, including but not limited to: (1) Design, structural, or

mechanical defects; (2) Failure, stoppage, or

breakage of water or sewer lines, drains, pumps, fixtures, or equipment; or

(3) Failure to inspect and maintain the property after a flood recedes;

5. Water or water-borne material that:

a. Backs up through sewers or drains;

b. Discharges or overflows from a sump, sump pump, or related equipment; or

c. Seeps or leaks on or through the insured property;

unless there is a flood in the area and the flood is the proximate

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cause of the sewer or drain backup, sump pump discharge or overflow, or the seepage of water;

6. The pressure or weight of water unless there is a flood in the area and the flood is the proximate cause of the damage from the pressure or weight of water;

7. Power, heating, or cooling failure unless the failure results from direct physical loss by or from flood to power, heating, or cooling equipment on the described location;

8. Theft, fire, explosion, wind, or windstorm;

9. Anything you or any member of your household do or conspire

to do to deliberately cause loss by flood; or

10. Alteration of the insured property that significantly increases the risk of flooding.

E. We do not insure for loss to any building or personal property located on land leased from the Federal Government, arising from or incident to the flooding of the land by the Federal Government, where the lease expressly holds the Federal Government harmless under flood insurance issued under any Federal Government program.

F. We do not pay for the testing for or monitoring of pollutants unless required by law or ordinance.

VI. DEDUCTIBLES

A. When a loss is insured under this policy, we will pay only that part of the loss that exceeds your deductible amount, subject to the limit of liability that applies. The deductible amount is shown on the Declarations Page.

However, when a building under construction, alteration, or repair does not have at least two rigid exterior walls and a fully secured roof at the time of loss, your deductible amount will be two times the deductible that would otherwise apply to a completed building.

B. In each loss from flood, separate deductibles apply to the building and personal property insured by this policy.

C. The deductible does NOT apply to:

1. III.C.2. Loss Avoidance Measures;

2. III.C.3. Condominium Loss Assessments; or

3. III.D. Increased Cost of Compliance.

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VII. GENERAL CONDITIONS

A. Pair and Set Clause

In case of loss to an article that is part of a pair or set, we will have the option of paying you:

1. An amount equal to the cost of replacing the lost, damaged, or destroyed article, minus its depreciation; or

2. The amount that represents the fair proportion of the total value of the pair or set that the lost, damaged, or destroyed article bears to the pair or set.

B. Other Insurance

1. If a loss insured by this policy is also insured by other insurance that includes flood coverage not issued under the Act, we will not pay more than the amount of insurance you are entitled to for lost, damaged, or destroyed property insured under this policy subject to the following:

a. We will pay only the proportion of the loss that the amount of insurance that applies under this policy bears to the total amount of insurance covering the loss, unless VII.B.1.b or c immediately below applies.

b. If the other policy has a provision stating that it is excess insurance, this policy will be primary.

c. This policy will be primary (but subject to its own deductible)

up to the deductible in the other flood policy (except another policy as described in VII.B.1.b above). When the other deductible amount is reached, this policy will participate in the same proportion that the amount of insurance under this policy bears to the total amount of both policies, for the remainder of the loss.

2. If there is other insurance issued under the Act in the name of your condominium association covering the same property insured by this policy, then this policy will be in excess over the other insurance, except where a condominium loss assessment to the unit owner results from a loss sustained by the condominium association that was not reimbursed under a flood insurance policy written in the name of the association under the Act because the building was not, at the time of loss, insured for an amount equal to the lesser of:

a. 80 percent or more of its full replacement cost; or

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b. The maximum amount of insurance permitted under the Act.

3. The combined coverage payment under the other NFIP insurance and this policy cannot exceed the maximum coverage available under the Act, of $250,000 per single unit.

C. Amendments, Waivers, Assignment

This policy cannot be changed, nor can any of its provisions be waived, without the express written consent of the Federal Insurance Administrator. No action we take under the terms of this policy constitutes a waiver of any of our rights. You may assign this policy in writing when you transfer title of your property to someone else except under these conditions:

a. When this policy insures only personal property; or

b. When this policy insures a building under construction.

D. Insufficient Premium or Rating Information

1. Applicability. The following pro- visions apply to all instances where the premium paid on this policy is insufficient or where the rating information is insufficient, such as where an Elevation Certificate is not provided.

2. Reforming the Policy with Re- duced Coverage. Except as otherwise provided in VII.D.1, if the premium we received from you was not sufficient to buy the kinds and amounts of coverage you requested, we will provide only the kinds and

amounts of coverage that can be purchased for the premium payment we received.

a. For the purpose of determining whether your premium payment is sufficient to buy the kinds and amounts of coverage you requested, we will first deduct the costs of all applicable fees and surcharges.

b. If the amount paid, after deducting the costs of all applicable fees and surcharges, is not sufficient to buy any amount of coverage, your payment will be refunded. Unless the policy is reformed to increase the coverage amount to the amount originally requested pursuant to VII.D.3, this policy will be cancelled, and no claims will be paid under this policy.

c. Coverage limits on the reformed policy will be based upon the amount of premium submitted per type of coverage, but will not exceed the amount originally requested.

3. Discovery of Insufficient Premium or Rating Information. If we discover that your premium payment was not sufficient to buy the requested amount of coverage, the policy will

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be reformed as described in VII.D.2. You have the option of increasing the amount of coverage resulting from this reformation to the amount you requested as follows:

a. Insufficient Premium. If we discover that your premium payment was not sufficient to buy the requested amount of coverage, we will send you, and any mortgagee or trustee known to us, a bill for the required additional premium for the current policy term (or that portion of the current policy term following any endorsement changing the amount of coverage). If it is discovered that the initial amount charged to you for any fees or surcharges is incorrect, the difference will be added or deducted, as applicable, to the total amount in this bill. (1) If you or the mortgagee or

trustee pays the additional premium amount due within 30 days from the date of our bill, we will reform the policy to increase the amount of coverage to the originally requested amount, effective to the beginning

of the current policy term (or subsequent date of any endorsement changing the amount of coverage).

(2) If you or the mortgagee or trustee do not pay the additional amount due with- in 30 days of the date of our bill, any flood insurance claim will be settled based on the reduced amount of coverage.

(3) As applicable, you have the option of paying all or part of the amount due out of a claim payment based on the originally requested amount of coverage.

b. Insufficient Rating Inform- ation. If we determine that the rating information we have is insufficient and prevents us from calculating the additional premium, we will ask you to send the required information. You must submit the information within 60 days of our request. (1) If we receive the information

within 60 days of our request, we will determine the amount of additional premium for the current

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policy term, and follow the procedure in VII.D.3.a above.

(2) If we do not receive the information within 60 days of our request, no claims will be paid until the requested information is provided. Coverage will be limited to the amount of coverage that can be purchased for the payments we received, as determined when the requested infor- mation is provided.

4. Coverage Increases. If we do not receive the amounts requested in VII.D.3.a or the additional information requested in VII.D.3.b by the date it is due, the amount of coverage under this policy can only be increased by endorsement subject to the appropriate waiting period. However, no coverage increases will be allowed until you have provided the information requested in VII.D.3.b.

5. Falsifying Information. How- ever, if we find that you or your agent intentionally did not tell us, or falsified any important fact or circumstance or did anything fraudulent relating to this insurance, the provisions of VIII.A apply.

E. Policy Renewal

1. This policy will expire at 12:01 a.m. on the last day of the policy term.

2. We must receive the payment of the appropriate renewal premium within 30 days of the expiration date.

3. If we find, however, that we did not place your renewal notice into the U.S. Postal Service, or if we did mail it, we made a mistake, e.g., we used an incorrect, incomplete, or illegible address, which delayed its delivery to you before the due date for the renewal premium, then we will follow these procedures:

a. If you or your agent notified us, not later than one year after the date on which the payment of the renewal premium was due, of non-receipt of a renewal notice before the due date for the renewal premium, and we determine that the circumstances in the preceding paragraph apply, we will mail a second bill providing a revised due date, which will be 30 days after the date on which the bill is mailed.

b. If we do not receive the premium requested in the second bill by the revised due date, then we will not renew the policy. In that case, the policy will remain an expired policy as of the expiration date shown on the Declarations Page.

4. In connection with the renewal of this policy, we may ask you during the policy term to recertify, on a Recertification Questionnaire we will provide to you, the rating information used to rate your most recent application for or renewal of insurance.

F. Conditions Suspending or Restricting Insurance

We are not liable for loss that occurs while there is a hazard that is increased by any means within your control or knowledge. G. Requirements in Case of Loss

In case of a flood loss to insured property, you must:

1. Give prompt written notice to us.

2. As soon as reasonably possible, separate the damaged and

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undamaged property, putting it in the best possible order so that we may examine it.

3. Prepare an inventory of damaged property showing the quantity, description, actual cash value, and amount of loss. Attach all bills, receipts, and related documents.

4. Within 60 days after the loss, send us a proof of loss, which is your statement of the amount you are claiming under the policy signed and sworn to by you, and which furnishes us with the following information:

a. The date and time of loss; b. A brief explanation of how the

loss happened; c. Your interest (for example,

“owner”) and the interest, if any, of others in the damaged property;

d. Details of any other insurance that may cover the loss;

e. Changes in title or occupancy of the insured property during the term of the policy;

f. Specifications of damaged buildings and detailed repair estimates;

g. Names of mortgagees or anyone else having a lien,

charge, or claim against the insured property;

h. Details about who occupied any insured building at the time of loss and for what purpose; and

i. The inventory of damaged personal property described in G.3 above.

5. In completing the proof of loss, you must use your own judgment concerning the amount of loss and justify that amount.

6. You must cooperate with the adjuster or representative in the investigation of the claim.

7. The insurance adjuster whom we hire to investigate your claim may furnish you with a proof of loss form, and she or he may help you complete it. However, this is a matter of courtesy only, and you must still send us a proof of loss within 60 days after the loss even if the adjuster does not furnish the form or help you complete it.

8. We have not authorized the adjuster to approve or disapprove claims or to tell you whether we will approve your claim.

9. At our option, we may accept the adjuster’s report of the loss instead of your proof of loss. The adjuster’s report will include information about your loss and the damages you sustained. You must sign the adjuster’s report. At our option, we may require you to swear to the report.

H. Our Options After a Loss

Options we may, in our sole discretion, exercise after loss include the following:

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1. At such reasonable times and places that we may designate, you must:

a. Show us or our representative the damaged property;

b. Submit to examination under oath, while not in the presence of another insured, and sign the same; and

c. Permit us to examine and make extracts and copies of: (1) Any policies of property

insurance insuring you against loss and the deed establishing your ownership of the insured real property;

(2) Condominium association documents including the Declarations of the condo- minium, its Articles of Association or Incorporation, Bylaws, rules and regula- tions, and other relevant documents if you are a unit owner in a condominium building; and

(3) All books of accounts, bills, invoices and other vouchers, or certified copies pertaining to the damaged property if the originals are lost.

2. We may request, in writing, that you furnish us with a complete

inventory of the lost, damaged or destroyed property, including:

a. Quantities and costs; b. Actual cash values or

replacement cost (whichever is appropriate);

c. Amounts of loss claimed; d. Any written plans and spec-

ifications for repair of the damaged property that you can reasonably make available to us; and

e. Evidence that prior flood damage has been repaired.

3. If we give you written notice within 30 days after we receive your signed, sworn proof of loss, we may:

a. Repair, rebuild, or replace any part of the lost, damaged, or destroyed property with material or property of like kind and quality or its functional equivalent; and

b. Take all or any part of the damaged property at the value that we agree upon or its appraised value.

I. No Benefit to Bailee

No person or organization, other than you, having custody of insured property will benefit from this insurance.

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J. Loss Payment

1. We will adjust all losses with you. We will pay you unless some other person or entity is named in the policy or is legally entitled to receive payment. Loss will be payable 60 days after we receive your proof of loss (or within 90 days after the insurance adjuster files the adjuster’s report signed and sworn to by you in lieu of a proof of loss) and:

a. We reach an agreement with you;

b. There is an entry of a final judgment; or

c. There is a filing of an appraisal award with us, as provided in VII.M.

2. If we reject your proof of loss in whole or in part you may:

a. Accept our denial of your claim;

b. Exercise your rights under this policy; or

c. File an amended proof of loss as long as it is filed within 60 days of the date of the loss.

K. Abandonment

You may not abandon to us damaged or undamaged property insured under this policy.

L. Salvage

We may permit you to keep damaged property insured under this policy after a loss, and we will reduce the amount of the loss proceeds payable to you under the policy by the value of the salvage.

M. Appraisal

If you and we fail to agree on the actual cash value or, if applicable, replacement cost of your damaged property to settle upon the amount of loss, then either may demand an appraisal of the loss. In this event, you and we will each choose a competent and impartial appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the insured property is located. The appraisers will separately state the actual cash value, the replacement cost, and the amount of loss to each item. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of actual cash value and loss, or if it applies, the replacement cost and loss.

Each party will:

1. Pay its own appraiser; and

2. Bear the other expenses of the appraisal and umpire equally.

N. Mortgage Clause

1. The word “mortgagee” includes trustee.

2. Any loss payable under Coverage A—Building Property will be paid to any mortgagee of whom we have actual notice, as well as any other mortgagee or loss payee determined to exist at the time of loss, and you, as interests appear. If more than one mortgagee is named, the order of payment will be the same as the order of precedence of the mortgages.

3. If we deny your claim, that denial will not apply to a valid claim of the mortgagee, if the mortgagee:

a. Notifies us of any change in the ownership or occupancy, or substantial change in risk of which the mortgagee is aware;

b. Pays any premium due under this policy on demand if you have neglected to pay the premium; and

c. Submits a signed, sworn proof of loss within 60 days after receiving notice from us of your failure to do so.

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4. All of the terms of this policy apply to the mortgagee.

5. The mortgagee has the right to receive loss payment even if the mortgagee has started foreclosure or similar action on the building.

6. If we decide to cancel or not renew this policy, it will continue in effect for the benefit of the mortgagee only for 30 days after we notify the mortgagee of the cancellation or non-renewal.

7. If we pay the mortgagee for any loss and deny payment to you, we are subrogated to all the rights of the mortgagee granted under the mortgage on the property. Subrogation will not impair the right of the mortgagee to recover the full amount of the mortgagee’s claim.

O. Suit Against Us

You may not sue us to recover money under this policy unless you have complied with all the requirements of the policy. If you do sue, you must start the suit within one year after the date of the written denial of all or part of the claim, and you must file the suit in the United States District Court of the district in which the insured property was located at the time of loss. This

requirement applies to any claim that you may have under this policy and to any dispute that you may have arising out of the handling of any claim under the policy. P. Subrogation

Whenever we make a payment for a loss under this policy, we are subrogated to your right to recover for that loss from any other person. That means that your right to recover for a loss that was partly or totally caused by someone else is automatically transferred to us, to the extent that we have paid you for the loss. We may require

you to acknowledge this transfer in writing. After the loss, you may not give up our right to recover this money or do anything that would prevent us from recovering it. If you make any claim against any person who caused your loss and recover any money, you must pay us back first before you may keep any of that money. Q. Continuous Lake Flooding

1. If an insured building has been flooded by rising lake waters continuously for 90 days or more and it appears reasonably certain that a continuation of this flooding will result in an insured loss to the insured building equal to or greater than the building policy limits plus the deductible or the maximum payable under the policy for any one building loss, we will pay you the lesser of these two amounts without waiting for the further

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damage to occur if you sign a release agreeing:

a. To make no further claim under this policy;

b. Not to seek renewal of this policy;

c. Not to apply for any flood insurance under the Act for property at the described location;

d. Not to seek a premium refund for current or prior terms.

If the policy term ends before the insured building has been flooded continuously for 90 days, the provisions of this paragraph Q.1 will apply when the insured building suffers a covered loss before the policy term ends.

2. If your insured building is subject to continuous lake flooding from a closed basin lake, you may elect to file a claim under either paragraph Q.1 above or Q.2 (A “closed basin lake” is a natural lake from which water leaves primarily through evaporation and whose surface area now exceeds or has exceeded one square mile at any time in the recorded past. Most of the nation’s closed basin lakes are in the western half of the United

States where annual evaporation exceeds annual precipitation and where lake levels and surface areas are subject to considerable fluctuation due to wide variations in the climate. These lakes may overtop their basins on rare occasions.) Under this paragraph Q.2, we will pay your claim as if the building is a total loss even though it has not been continuously inundated for 90 days, subject to the following conditions:

a. Lake floodwaters must damage or imminently threaten to damage your building.

b. Before approval of your claim, you must: (1) Agree to a claim payment

that reflects your buying back the salvage on a negotiated basis; and

(2) Grant the conservation easement described in FEMA’s “Policy Guidance for Closed Basin Lakes” to be recorded in the office of the local recorder of deeds. FEMA, in consultation with the community in which the property is located, will identify on a map an area or areas

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of special consideration (ASC) in which there is a potential for flood damage from continuous lake flooding. FEMA will give the community the agreed- upon map showing the ASC. This easement will only apply to that portion of the property in the ASC. It will allow certain agricultural and recreational uses of the land. The only structures it will allow on any portion of the property within the ASC are certain simple agricultural and recreational structures. If any of these allowable structures are insurable buildings under the NFIP and are insured under the NFIP, they will not be eligible for the benefits of this paragraph Q.2. If a U.S. Army Corps of Engineers certified flood control project or otherwise certified flood control project later protects the property, FEMA will, upon request, amend the ASC to remove areas protected by those projects. The restrictions of the easement will then no longer apply to any portion of the

property removed from the ASC; and

(3) Comply with paragraphs Q.1.a through Q.1.d above.

c. Within 90 days of approval of your claim, you must move your building to a new location outside the ASC. FEMA will give you an additional 30 days to move if you show there is sufficient reason to extend the time.

d. Before the final payment of your claim, you must acquire an elevation certificate and a floodplain development permit from the local floodplain ad- ministrator for the new location of your building.

e. Before the approval of your claim, the community having jurisdiction over your build- ing must: (1) Adopt a permanent land use

ordinance, or a temporary moratorium for a period not to exceed 6 months to be followed immediately by a permanent land use ordinance that is consistent with the provisions specified in the easement required in paragraph Q.2.b above;

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(2) Agree to declare and report any violations of this ordinance to FEMA so that under Section 1316 of the National Flood Insurance Act of 1968, as amended, flood insurance to the building can be denied; and

(3) Agree to maintain as deed- restricted, for purposes compatible with open space or agricultural or recreational use only, any affected property the community acquires an interest in. These deed restrictions must be consistent with the provisions of paragraph Q.2.b above, except that, even if a certified project protects the property, the land use restrictions continue to apply if the property was acquired under the Hazard Mitigation Grant Program or the Flood Mitigation Assistance Program. If a non-profit land trust organization receives the property as a donation, that organization must maintain the property as deed-restricted, consistent

with the provisions of paragraph Q2.b above.

f. Before the approval of your claim, the affected State must take all action set forth in FEMA’s “Policy Guidance for Closed Basin Lakes.”

g. You must have NFIP flood insurance coverage con tin- uously in effect from a date established by FEMA until you file a claim under paragraph Q.2. If a subsequent owner buys NFIP insurance that goes into effect within 60 days of the date of transfer of title, any gap in coverage during that 60-day period will not be a violation of this continuous coverage requirement. For the purpose of honoring a claim under this paragraph Q.2, we will not consider to be in effect any increased coverage that became effective after the date established by FEMA. The exception to this is any in- creased coverage in the amount suggested by your insurer as an inflation adjustment.

h. This paragraph Q.2 will be in effect for a community when the FEMA Regional Administrator for the affected region provides

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to the community, in writing, the following:

(1) Confirmation that the community and the State are in compliance with the conditions in paragraphs Q.2.e and Q.2.f above; and

(2) The date by which you must have flood insurance in effect.

R. Loss Settlement

1. Introduction

This policy provides three methods of settling losses: Replacement Cost, Special Loss Settlement, and Actual Cash Value. Each method is used for a different type of property, as explained in paragraphs a–c below.

a. Replacement Cost Loss Set tlement, described in R.2 below, applies to a single- family dwelling provided:

(1) It is your principal residence; and

(2) At the time of loss, the amount of insurance in this policy that applies to the dwelling is 80 percent or more of its full replacement cost immediately before the loss, or is the maximum amount of insurance avail- able under the NFIP.

b. Special Loss Settlement, described in R.3 below, applies to a single-family dwelling that is a manufactured or mobile home or a travel trailer.

c. Actual Cash Value Loss Settlement applies to a single-family dwelling not subject to replacement cost or special loss settlement, and to the property listed in R.4 below.

2. Replacement Cost Loss Settlement

The following loss settlement conditions apply to a single-family dwelling described in R.1.a above:

a. We will pay to repair or replace the damaged dwelling after application of the deductible and without deduction for depreciation, but not more than the least of the following amounts:

(1) The building limit of liability shown on your Declarations Page;

(2) The replacement cost of that part of the dwelling damaged, with materials of like kind and quality and for like use; or

(3) The necessary amount actually spent to repair or replace the damaged part of the dwelling for like use.

b. If the dwelling is rebuilt at a new location, the cost described above is limited to the cost that would have been incurred if the dwelling had been rebuilt at its former location.

c. When the full cost of repair or replacement is more than $1,000, or more than 5 percent of the whole amount of insurance that applies to the dwelling, we will not be liable for any loss under R.2.a above or R.4.a.2 below unless and until actual repair or replacement is completed.

d. You may disregard the replacement cost conditions above and make claim under this policy for loss to dwellings on an actual cash value basis. You may then make claim for any additional liability according to R.2.a, b, and c above, provided you notify us of your intent to do so within 180 days after the date of loss.

e. If the community in which your dwelling is located has been converted from the Emergency Program to the Regular Program during the current policy term, then we will consider the maximum amount of available NFIP insurance to be the amount that was available at the beginning of the current policy term.

3. Special Loss Settlement

a. The following loss settlement conditions apply to a single-family dwelling that:

(1) is a manufactured or mobile home or a travel trailer, as defined in II.C.6.b and c;

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(2) is at least 16 feet wide when fully assembled and has an area of at least 600 square feet within its perimeter walls when fully assembled; and

(3) is your principal residence as specified in R.1.a.1 above.

b. If such a dwelling is totally destroyed or damaged to such an extent that, in our judgment, it is not economically feasible to repair, at least to its pre-damage condition, we will, at our discretion pay the least of the following amounts:

(1) The lesser of the replacement cost of the dwelling or 1.5 times the actual cash value; or

(2) The building limit of liability shown on your Declarations Page.

c. If such a dwelling is partially damaged and, in our judgment, it is economically feasible to repair it to its pre-damage condition, we will settle the loss according to the Replacement Cost conditions in R.2 above.

4. Actual Cash Value Loss Settlement

The types of property noted below are subject to actual cash value (or in the case of R.4.a.2., below, proportional) loss settlement.

a. A dwelling, at the time of loss, when the amount of insurance on the dwelling is both less than 80 percent of its full replacement cost immediately before the loss and less than the maximum amount of insurance available under the NFIP. In that case, we will pay the greater of the following amounts, but not more than the amount of insurance that applies to that dwelling:

(1) The actual cash value, as defined in II.C.2, of the damaged part of the dwelling; or

(2) A proportion of the cost to repair or replace the damaged part of the dwelling, without deduction for physical depreciation and after application of the deductible.

This proportion is determined as follows: If 80 percent of the full replacement cost of the dwelling is less than the

maximum amount of insurance available under the NFIP, then the proportion is determined by dividing the actual amount of insurance on the dwelling by the amount of insurance that represents 80 percent of its full replacement cost. But if 80 percent of the full replacement cost of the dwelling is greater than the maximum amount of insurance available under the NFIP, then the proportion is determined by dividing the actual amount of insurance on the dwelling by the maximum amount of insurance available under the NFIP.

b. A two-, three-, or four-family dwelling.

c. A unit that is not used exclusively for single- family dwelling purposes.

d. Detached garages.

e. Personal property.

f. Appliances, carpets, and carpet pads.

g. Outdoor awnings, outdoor antennas or aerials of any type, and other outdoor equipment.

h. Any property insured under this policy that is abandoned after a loss and remains as debris anywhere on the described location.

i. A dwelling that is not your principal residence.

5. Amount of Insurance Required

To determine the amount of insurance required for a dwelling immediately before the loss, we do not include the value of:

a. Footings, foundations, piers, or any other structures or devices that are below the undersurface of the lowest basement floor and support all or part of the dwelling;

b. Those supports listed in R.5.a above, that are below the surface of the ground inside the foundation walls if there is no basement; and

c. Excavations and underground flues, pipes, wiring, and drains.

Note: The Coverage D—Increased Cost of Compliance limit of liability is not included in the determination of the amount of insurance required.

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VIII. POLICY NULLIFICATION, CANCELLATION, AND NON-RENEWAL

A. Policy Nullification for Fraud, Misrepresentation, or Making False Statements

1. With respect to all insureds under this policy, this policy is void and has no legal force and effect if at any time, before or after a loss, you or any other insured or your agent have, with respect to this policy or any other NFIP insurance: a. Concealed or misrepre-

sented any material fact or circumstance;

b. Engaged in fraudulent conduct; or

c. Made false statements.

2. Policies voided under A.1 cannot be renewed or replaced by a new NFIP policy.

3. Policies are void as of the date the acts described in A.1 above were committed.

4. Fines, civil penalties, and impris- onment under applicable Federal laws may also apply to the acts of fraud or concealment described above.

B. Policy Nullification for Reasons Other Than Fraud

1. This policy is void from its inception, and has no legal force or effect, if:

a. The property listed on the application is located in a community that was not participating in the NFIP on this policy’s inception date and did not join or reenter the program during the policy term and before the loss occurred;

b. The property listed on the application is otherwise not eligible for coverage under the NFIP at the time of the initial application;

c. You never had an insurable interest in the property listed on the application;

d. You provided an agent with an application and payment, but the payment did not clear; or

e. We receive notice from you, prior to the policy effective date, that you have deter- mined not to take the policy and you are not subject to a requirement to obtain and maintain flood insurance pursuant to any statute, regu- lation, or contract.

2. In such cases, you will be entitled to a full refund of all premium, fees, and surcharges received. However, if a claim was paid for a policy that is void, the claim payment must be returned to FEMA or offset from the premiums to be refunded before the refund will be processed.

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C. Cancellation of the Policy by You

1. You may cancel this policy in accordance with the terms and conditions of this policy and the applicable rules and regulations of the NFIP.

2. If you cancel this policy, you may be entitled to a full or partial refund of premium, surcharges, or fees under the terms and conditions of this policy and the applicable rules and regulations of the NFIP.

D. Cancellation of the Policy by Us

1. Cancellation for Underpayment of Amounts Owed on Policy. This policy will be cancelled, pursuant to VII.D.2, if it is determined that the premium amount you paid is not sufficient to buy any amount of coverage, and you do not pay the additional amount of premium owed to increase the coverage to the originally requested amount within the required time period.

2. Cancellation Due to Lack of an Insurable Interest.

a. If you no longer have an insurable interest in the insured property, we will cancel this policy. You will cease to have an insurable interest if: (1) For building coverage,

the building was sold, destroyed, or removed.

(2) For contents coverage, the contents were sold or transferred ownership, or the contents were

completely removed from the described location.

b. If your policy is cancelled for this reason, you may be entitled to a partial refund of premium under the applicable rules and regulations of the NFIP.

3. Cancellation of Duplicate Policies a. Except as allowed under Article

I.G, your property may not be insured by more than one NFIP policy, and payment for damages to your property will only be made under one policy.

b. Except as allowed under Article I.G, if the property is insured by more than one NFIP policy, we will cancel all but one of the policies. The policy, or policies, will be selected for cancellation in accordance with 44 CFR 62.5 and the applicable rules and guidance of the NFIP.

c. If this policy is cancelled pursuant to VIII.D.4.b, you may be entitled to a full or partial refund of premium, surcharges, or fees under the terms and conditions of this policy and the applicable rules and regulations of the NFIP.

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4. Cancellation Due to Physical Alteration of Property a. If the insured building has

been physically altered in such a manner that it is no longer eligible for flood insurance cov- erage, we will cancel this policy.

b. If your policy is cancelled for this reason, you may be entitled to a partial refund of premium under the terms and conditions

of this policy and the appli- cable rules and regulations of the NFIP.

E. Non-Renewal of the Policy by Us

Your policy will not be renewed if:

1. The community where your insured property is located is suspended or stops participating in the NFIP;

2. Your building is otherwise ineligible for flood insurance under the Act;

3. You have failed to provide the information we requested for the purpose of rating the policy within the required deadline.

IX. LIBERALIZATION CLAUSE

If we make a change that broadens your coverage under this edition of our policy, but does not require any additional premium, then that change will automatically apply to your insurance as of the date we implement the

change, provided that this implementation date falls within 60 days before or during the policy term stated on the Declarations Page.

X. WHAT LAW GOVERNS

This policy and all disputes arising from the insurer’s policy issuance, policy administration, or the handling of any claim under the policy are governed exclusively by the flood

insurance regulations issued by FEMA, the National Flood Insurance Act of 1968, as amended (42 U.S.C. 4001, et

seq.), and Federal common law.

In Witness Whereof, we have signed this policy below and hereby enter into this Insurance Agreement.

Administrator, Federal Insurance and Mitigation Administration

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National Flood Insurance Program

General Property Form Standard Flood Insurance Policy F-123 / October 2021

ONLINE The NFIP General Property Form, SFIP FEMA Form 123, is available at https://www.fema.gov/flood-insurance/find-form/underwriting

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FEDERAL EMERGENCY MANAGEMENT AGENCY, FEDERAL INSURANCE AND MITIGATION ADMINISTRATION

Standard Flood Insurance Policy

General Property Form Please read the policy carefully. The flood insurance provided is subject to limitations, restrictions, and exclusions.

I. AGREEMENT

A. Coverage Under This Policy

1. Except as provided in I.A.2, this policy provides coverage for multifamily buildings (residential buildings designed for use by 5 or more families that are not condominium buildings), non-residential buildings, and their contents.

2. There is no coverage for a residential condominium building in a regular program community, except for personal property coverage for a unit in a condominium building.

B. The Federal Emergency Management Agency (FEMA) provides flood insurance under the terms of the National Flood Insurance Act of 1968 and its amendments, and Title 44 of the Code of Federal Regulations.

C. We will pay you for direct physical loss by or from flood to your insured property if you:

1. Have paid the full amount due (including applicable premiums, surcharges, and fees);

2. Comply with all terms and conditions of this policy; and

3. Have furnished accurate information and statements.

D. We have the right to review the information you give us at any time and revise your policy based on our review.

E. This policy insures only one building. If you own more than one building, coverage will apply to the single building specifically described in the Flood Insurance Application.

F. Multiple policies with building coverage cannot be issued to insure a single building to one insured or to different insureds, even if issued through different NFIP

insurers. Payment for damages may only be made under a single policy for building damages under Coverage A— Building Property.

II. DEFINITIONS

A. In this policy, “you” and “your” refer to the named insured(s) shown on the Declarations Page of this policy. Insured(s) also includes: Any mortgagee and loss payee named in the Application and Declarations Page, as well as any other mortgagee or loss payee determined to exist at the time of loss, in the order of precedence. “We,” “us,” and “our” refer to the insurer.

Some definitions are complex because they are provided as they appear in the law or regulations, or result from court cases.

B. Flood, as used in this flood insurance policy, means:

1. A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (one of which is your property) from:

a. Overflow of inland or tidal waters;

b. Unusual and rapid accumulation or runoff of surface waters from any source;

c. Mudflow.

2. Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined in B.1.a above.

C. The following are the other key definitions we use in this policy:

1. Act. The National Flood Insurance Act of 1968 and any amendments to it.

2. Actual Cash Value. The cost to replace an insured item of property at the time of loss, less the value of its physical depreciation.

3. Application. The statement made and signed by you or your agent in applying for this policy. The application gives information we use to determine the eligibility of the risk, the kind of policy to be issued, and the correct premium payment. The application is part of this flood insurance policy.

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4. Base Flood. A flood having a one percent chance of being equaled or exceeded in any given year.

5. Basement. Any area of a building, including any sunken room or sunken portion of a room, having its floor below ground level on all sides.

6. Building

a. A structure with two or more outside rigid walls and a fully secured roof that is affixed to a permanent site;

b. A manufactured home, also known as a mobile home, is a structure built on a permanent chassis, transported to its site in one or more sections, and affixed to a permanent foundation; or

c. A travel trailer without wheels, built on a chassis and affixed to a permanent foundation, that is regulated under the community’s floodplain management and building ordinances or laws.

Building does not mean a gas or liquid storage tank, shipping container, or a recreational vehicle, park trailer, or other similar vehicle, except as described in C.6.c above.

7. Cancellation. The ending of the insurance coverage provided by this policy before the expiration date.

8. Condominium. That form of ownership of one or more buildings in which each unit owner has an undivided interest in common elements.

9. Condominium Association. The entity made up of the unit owners responsible for the maintenance and operation of:

a. Common elements owned in undivided shares by unit owners; and

b. Other buildings in which the unit owners have use rights where membership in the entity is a required condition of unit ownership.

10. Condominium Building. A type of building for which the form of ownership is one in which each unit owner has an undivided interest in common elements of the building.

11. Declarations Page. A computer-generated summary of information you provided in your application for insurance. The Declarations Page also describes the term of the policy, limits of coverage, and displays the premium and our name. The Declarations Page is a part of this flood insurance policy.

12. Deductible. The fixed amount of an insured loss that is your responsibility and that is incurred by you before any amounts are paid for the insured loss under this policy.

13. Described Location. The location where the insured building(s) or personal property are

found. The described location is shown on the Declarations Page.

14. Direct Physical Loss By or From Flood. Loss or damage to insured property, directly caused by a flood. There must be evidence of physical changes to the property.

15. Elevated Building. A building that has no basement and that has its lowest elevated floor raised above ground level by foundation walls, shear walls, posts, piers, pilings, or columns.

16. Emergency Program. The initial phase of a community’s participation in the National Flood Insurance Program. During this phase, only limited amounts of insurance are available under the Act and the regulations prescribed pursuant to the Act.

17. Federal Policy Fee. A flat rate charge you must pay on each new or renewal policy to defray certain administrative expenses incurred in carrying out the National Flood Insurance Program.

18. Improvements. Fixtures, alterations, installations, or additions comprising a part of the dwelling or apartment in which you reside.

19. Mudflow. A river of liquid and flowing mud on the surface of normally dry land areas, as when earth is carried by a current of water. Other earth movements, such as landslide, slope failure, or a saturated soil mass moving by liquidity down a slope, are not mudflows.

20. National Flood Insurance Program (NFIP). The program of flood insurance coverage and floodplain management administered under the Act and applicable Federal regulations in Title 44 of the Code of Federal Regulations, Subchapter B.

21. Policy. The entire written contract between you and us. It includes:

a. This printed form;

b. The application and Declarations Page;

c. Any endorsement(s) that may be issued; and

d. Any renewal certificate indicating that coverage has been instituted for a new policy and new policy term. Only one building, which you specifically described in the application, may be insured under this policy.

22. Pollutants. Substances that include, but are not limited to, any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. “Waste” includes, but is not limited to, materials to be recycled, reconditioned, or reclaimed.

23. Post-FIRM Building. A building for which construction or substantial improvement occurred after December 31, 1974, or on or after the effective date of an initial Flood Insurance Rate Map (FIRM), whichever is later.

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24. Probation Surcharge. A flat charge you must pay on each new or renewal policy issued covering property in a community the NFIP has placed on probation under the provisions of 44 CFR 59.24.

25. Regular Program. The final phase of a community’s participation in the National Flood Insurance Program. In this phase, a Flood Insurance Rate Map is in effect and full limits of coverage are available under the Act and the regulations prescribed pursuant to the Act.

26. Residential Condominium Building. A condominium building, containing one or more family units and in which at least 75 percent of the floor area is residential.

27. Special Flood Hazard Area (SFHA). An area having special flood or mudflow, and/or flood-related erosion hazards, and shown on a Flood Hazard Boundary Map or Flood Insurance Rate Map as Zone A, AO, A1–A30, AE, A99, AH, AR, AR/A, AR/AE, AR/ AH, AR/AO, AR/A1–A30, V1–V30, VE, or V.

28. Stock means merchandise held in storage or for sale, raw materials, and in-process or finished goods, including supplies used in their packing or shipping. Stock does not include any property not insured under Section IV. Property Not Insured, except the following:

a. Parts and equipment for self-propelled vehicles;

b. Furnishings and equipment for watercraft;

c. Spas and hot-tubs, including their equipment; and

d. Swimming pool equipment.

29. Unit. A single-family residential or non-residential space you own in a condominium building.

30. Valued Policy. A policy in which the insured and the insurer agree on the value of the property insured, that value being payable in the event of a total loss. The Standard Flood Insurance Policy is not a valued policy.

III. PROPERTY INSURED

A. Coverage A—Building Property

We insure against direct physical loss by or from flood to:

1. The building described on the Declarations Page at the described location. If the building is a condominium building and the named insured is the condominium association, Coverage A includes all units within the building and the improvements within the units, provided the units are owned in common by all unit owners.

2. Building property located at another location for a period of 45 days at another location, as set forth in III.C.2.b, Property Removed to Safety.

3. Additions and extensions attached to and in contact with the building by means of a rigid exterior wall, a solid load-bearing interior wall, a stairway, an elevated walkway, or a roof. At your option, additions and extensions connected by any of these methods may be separately insured. Additions and extensions attached to and in contact with the building by means of a common interior wall that is not a solid load-bearing wall are always considered part of the building and cannot be separately insured.

4. The following fixtures, machinery, and equipment, which are insured under Coverage A only:

a. Awnings and canopies;

b. Blinds;

c. Carpet permanently installed over unfinished flooring;

d. Central air conditioners;

e. Elevator equipment;

f. Fire extinguishing apparatus;

g. Fire sprinkler systems;

h. Walk-in freezers;

i. Furnaces;

j. Light fixtures;

k. Outdoor antennas and aerials attached to buildings;

l. Permanently installed cupboards, bookcases, paneling, and wallpaper;

m. Pumps and machinery for operating pumps;

n. Ventilating equipment;

o. Wall mirrors, permanently installed; and

p. In the units within the building, installed:

(1) Built-in dishwashers;

(2) Built-in microwave ovens;

(3) Garbage disposal units;

(4) Hot water heaters, including solar water heaters;

(5) Kitchen cabinets;

(6) Plumbing fixtures;

(7) Radiators;

(8) Ranges;

(9) Refrigerators; and

(10) Stoves.

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5. Materials and supplies to be used for construction, alteration, or repair of the insured building while the materials and supplies are stored in a fully enclosed building at the described location or on an adjacent property.

6. A building under construction, alteration, or repair at the described location.

a. If the structure is not yet walled or roofed as described in the def- inition for building (see II.B.6.a.) then coverage applies: (1) Only while such work is in

progress; or (2) If such work is halted, only

for a period of up to 90 continuous days thereafter.

b. However, coverage does not apply until the building is walled and roofed if the lowest floor, including the basement floor, of a non-elevated building or the lowest elevated floor of an elevated building is: (1) Below the base flood ele-

vation in Zones AH, AE, A1– A30, AR, AR/AE, AR/AH, AR/ A1–A30, AR/A, AR/AO; or

(2) Below the base flood elevation adjusted to include the effect of wave action in Zones VE or V1–V30.

The lowest floor level is based on the bottom of the lowest horizontal structural member of the floor in Zones VE or V1–V30 or the top of the floor in Zones AH, AE, A1–A30, AR, AR/AE, AR/ AH, AR/A1–A30, AR/A, and AR/AO.

7. A manufactured home or a travel trailer, as described in the II.C.6. If the manufactured home or travel trailer is in a special flood hazard area, it

must be anchored in the following manner at the time of the loss:

a. By over-the-top or frame ties to ground anchors; or

b. In accordance with the manufacturer’s specifications; or

c. In compliance with the community’s floodplain management requirements unless it has been continuously insured by the NFIP at the same described location since September 30, 1982.

8. Items of property below the lowest elevated floor of an elevated post- FIRM building located in zones A1–A30, AE, AH, AR, AR/A, AR/ AE, AR/AH, AR/A1–A30, V1–V30, or VE, or in a basement regardless of the zone. Coverage is limited to the following: a. Any of the following items, if installed in their

functioning locations and, if necessary for operation, connected to a power source:

(1) Central air conditioners;

(2) Cisterns and the water in them;

(3) Drywall for walls and ceilings in a basement and the cost of labor to nail it, unfinished and unfloated and not taped, to the framing;

(4) Electrical junction and circuit breaker boxes;

(5) Electrical outlets and switches;

(6) Elevators, dumbwaiters, and related equipment, except for related equipment installed below the base flood elevation after September 30, 1987;

(7) (Fuel tanks and the fuel in them;

(8) Furnaces and hot water heaters;

(9) Heat pumps;

(10) Nonflammable insulation in a basement;

(11) Pumps and tanks used in solar energy systems;

(12) Stairways and staircases attached to the building, not separated from it by elevated walkways;

(13) Sump pumps;

(14) Water softeners and the chemicals in them, water filters, and faucets installed as an integral part of the plumbing system;

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(15) Well water tanks and pumps;

(16) Required utility connections for any item in this list; and

(17) Footings, foundations, posts, pilings, piers, or other foundation walls and anchorage systems required to support a building.

b. Clean-up.

B. Coverage B—Personal Property

1. If you have purchased personal property coverage, we insure, subject to B.2–4 below, against direct physical loss by or from flood to personal property inside the fully enclosed insured building:

a. Owned solely by you, or in the case of a condominium, owned solely by the condominium association and used exclusively in the conduct of the business affairs of the condominium association; or

b. Owned in common by the unit owners of the condominium association.

2. We also insure such personal property for 45 days while stored at a temporary location, as set forth in III.C.2.b, Property Removed to Safety.

3. When this policy insures personal property, coverage will be either for household personal property or other than household personal property, while within the insured building, but not both.

a. If this policy insures household personal property, it will insure household personal property usual to a living quarters, that:

(1) Belongs to you, or a member of your household, or at your option:

(a) Your domestic worker;

(b) Your guest; or

(2) You may be legally liable for.

b. If this policy insures other than household personal property, it will insure your:

(1) Furniture and fixtures;

(2) Machinery and equipment;

(3) Stock; and

(4) Other personal property owned by you and used in your business, subject to IV, Property Not Insured.

4. Coverage for personal property includes the following property, subject to B.1.a and B.1.b above, which is insured under Coverage B, only:

a. Air conditioning units, portable or window type;

b. Carpets, not permanently installed, over unfinished flooring;

c. Carpets over finished flooring;

d. Clothes washers and dryers;

e. “Cook-out” grills;

f. Food freezers, other than walk-in, and food in any freezer;

g. Outdoor equipment and furniture stored inside the insured building;

h. Ovens and the like; and

i. Portable microwave ovens and portable dishwashers.

5. Coverage for items of property below the lowest elevated floor of an elevated post-FIRM build- ing located in Zones A1–A30, AE, AH, AR, AR/A, AR/AE, AR/ AH, AR/A1–A30, V1–V30, or VE, or in a basement regardless of the zone, is limited to the following items, if installed in their func tioning locations and, if necessary for operation, con- nected to a power source: a. Air conditioning units, portable or window type;

b. Clothes washers and dryers; and

c. Food freezers, other than walk-in, and food in any freezer.

6. Special Limits. We will pay no more than $2,500 for any loss to one or more of the following kinds of personal property: a. Artwork, photographs, collectibles, or

memorabilia, including but not limited to, porcelain or other figures, and sports cards.

b. Rare books or autographed items.

c. Jewelry, watches, precious and semi-precious stones, or articles of gold, silver, or platinum.

d. Furs or any article containing fur that represents its principal value.

7. We will pay only for the functional value of antiques.

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8. If you are a tenant, you may apply up to 10 percent of the Coverage B limit to improvements:

a. Made a part of the building you occupy; and

b. You acquired, or made at your expense, even though you cannot legally remove.

This coverage does not increase the amount of insurance that applies to insured personal property.

9. If you are a condominium unit owner, you may apply up to 10 percent of the Coverage B limit to cover loss to interior:

a. walls, b. floors, and c. ceilings, that are not insured under a policy issued to the condominium association insuring the condo- minium building. This coverage does not increase the amount of insurance that applies to insured personal property.

10. If you are a tenant, personal property must be inside the fully enclosed building.

C. Coverage C—Other Coverages

1. Debris Removal

a. We will pay the expense to remove non-owned debris that is on or in insured property and debris of insured property anywhere.

b. If you or a member of your household perform the removal work, the value of your work will be based on the Federal minimum wage.

c. This coverage does not increase the Coverage A or Coverage B limit of liability.

2. Loss Avoidance Measures

a. Sandbags, Supplies, and Labor

(1) We will pay up to $1,000 for costs you incur to protect the insured building from a flood or imminent danger of flood, for the following:

(a) Your reasonable expenses to buy:

(i) Sandbags, including sand to fill them;

(ii) Fill for temporary levees;

(iii) Pumps; and

(iv) Plastic sheeting and lumber used in connection with these items.

(b) The value of work, at the Federal minimum wage, that you perform.

(2) This coverage for Sandbags, Supplies, and Labor only applies if damage to insured property by or from flood is imminent and the threat of flood damage is apparent enough to lead a person of common prudence to anticipate flood damage. One of the following must also occur:

(a) A general and temporary condition of flooding in the area near the described location must occur, even if the flood does not reach the building; or

(b) A legally authorized official must issue an evacuation order or other civil order for the community in which the building is located calling for measures to preserve life and property from the peril of flood.

This coverage does not increase the Coverage A or Coverage B limit of liability.

b. Property Removed to Safety

(1) We will pay up to $1,000 for the reasonable expenses you incur to move insured property to a place other than the described location that contains the property in order to protect it from flood or the imminent danger of flood. Reasonable expenses include the value of work, at the Federal minimum wage, you or a member of your household perform.

(2) If you move insured property to a location other than the described location that contains the property in order to protect it from flood or the imminent danger of flood, we will cover such property while at that location for a period of 45 consecutive days from the date you begin to move it there. The personal property that is moved must be placed in a fully enclosed building

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or otherwise reasonably protected from the elements.

(3) Any property removed, including a moveable home described in II.6, must be placed above ground level or outside of the special flood hazard area.

(4) This coverage does not increase the Coverage A or Coverage B limit of liability.

3. Pollution Damage

We will pay for damage caused by pollutants to insured property if the discharge, seepage, migration, release, or escape of the pollutants

is caused by or results from flood. The most we will pay under this coverage is $10,000. This coverage does not increase the Coverage A or Coverage B limits of liability. Any payment under this provision when combined with all other payments for the same loss cannot exceed the replacement cost or actual cash value, as appropriate, of the insured property.

This coverage does not include the testing for or monitoring of pollutants unless required by law or ordinance.

D. Coverage D—Increased Cost of Compliance

1. General

This policy pays you to comply with a State or local floodplain management law or ordinance affecting repair or reconstruction of a building suffering flood damage. Compliance activities eligible for payment are: elevation, floodproofing, relocation, or demolition (or any combination of these activities) of your building. Eligible floodproofing activities are limited to:

a. Non-residential buildings.

b. Residential buildings with basements that satisfy FEMA’s standards published in the Code of Federal Regulations [44 CFR 60.6(b) or (c)].

2. Limits of Liability

We will pay you up to $30,000 under this Coverage D (Increased Cost of Compliance), which only applies to policies with building coverage (Coverage A). Our payment of claims under Coverage D is in addition to the amount of coverage which you selected on the application and which appears on the Declarations Page. However, the maximum you can collect under this policy for both Coverage A (Building Property) and Coverage D (Increased Cost of Compliance) cannot exceed the maximum permitted under the

Act. We do NOT charge a separate deductible for a claim under Coverage D.

3. Eligibility

a. A building insured under Coverage A (Building Property) sustaining a loss caused by a flood as defined by this policy must:

(1) Be a “repetitive loss building.” A repetitive loss building is one that meets the following conditions:

(a) The building is insured by a contract of flood insurance issued under the NFIP.

(b) The building has suffered flood damage on two occasions during a 10-year period which ends on the date of the second loss.

(c) The cost to repair the flood damage, on average, equaled or exceeded 25 percent of the market value of the building at the time of each flood loss.

(d) In addition to the current claim, the NFIP must have paid the previous qualifying claim, and the State or community must have a cumulative, substantial damage provision or repetitive loss provision in its floodplain management law or ordinance being enforced against the building; or

(2) Be a building that has had flood damage in which the cost to repair equals or exceeds 50 percent of the market value of the building at the time of the flood. The State or community must have a substantial damage provision in its floodplain management law or ordinance being enforced against the building.

b. This Coverage D pays you to comply with State or local floodplain management laws or ordinances that meet the minimum standards of the National Flood Insurance Program found in the Code of Federal Regulations at 44 CFR 60.3. We pay for compliance activities that exceed those standards under these conditions:

(1) 3.a.1 above.

(2) Elevation or floodproofing in any risk zone to preliminary or advisory base flood elevations provided by FEMA which the State or local government has adopted and is enforcing for flood-damaged buildings in such areas. (This includes compliance activities in B, C, X, or D zones which are being changed to zones with base flood elevations. This also includes compliance

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activities in zones where base flood elevations are being increased, and a flood-damaged building must comply with the higher advisory base flood elevation.) Increased Cost of Compliance coverage does not apply to situations in B, C, X, or D zones where the community has derived its own elevations and is enforcing elevation or floodproofing requirements for flood- damaged buildings to elevations derived solely by the community.

(3) Elevation or floodproofing above the base flood elevation to meet State or local “free-board” requirements, i.e., that a building must be elevated above the base flood elevation.

c. Under the minimum NFIP criteria at 44 CFR 60.3(b)(4), States and communities must require the elevation or floodproofing of buildings in unnumbered A zones to the base flood elevation where elevation data is obtained from a Federal, State, or other source. Such compliance activities are also eligible for Coverage D.

d. This coverage will pay for the incremental cost, after demolition or relocation, of elevating or floodproofing a building during its rebuilding at the same or another site to meet State or local floodplain management laws or ordinances, subject to the exclusion at III.D.5.g.

e. This coverage will pay to bring a flood-damaged building into compliance with State or local floodplain management laws or ordinances even if the building had received a variance before the present loss from the applicable floodplain management requirements.

4. Conditions

a. When a building insured under Coverage A—Building Property sustains a loss caused by a flood, our payment for the loss under this Coverage D will be for the increased cost to elevate, floodproof, relocate, or demolish (or any combination of these activities) caused by the enforcement of current

State or local floodplain man- agement ordinances or laws. Our payment for eligible dem- olition activities will be for the cost to demolish and clear the site of the building debris or a portion thereof caused by the enforcement of current State or local floodplain management ordinances or laws. Eligible activities for the cost of clear- ing the site will include those necessary to discontinue util- ity service to the site and ensure proper abandonment of on-site utilities.

b. When the building is repaired or rebuilt, it must be intended for the same occupancy as the present building unless otherwise required by current floodplain management ordi- nances or laws.

5. Exclusions

Under this Coverage D (Increased Cost of Compliance), we will not pay for: a. The cost to comply with any

floodplain management law or ordinance in communi- ties participating in the Emergency Program.

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b. The cost associated with enforcement of any ordinance or law that requires any insured or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants.

c. The loss in value to any insured building due to the requirements of any ordinance or law.

d. The loss in residual value of the undamaged portion of a building demolished as a consequence of enforcement of any State or local floodplain management law or ordinance.

e. Any Increased Cost of Com- pliance under this Coverage D: (1) Until the building is elevated,

floodproofed, demolished, or relocated on the same or to another premises; and

(2) Unless the building is elevated, floodproofed, de- molished, or relocated as soon as reasonably possible after the loss, not to exceed two years.

f. Any code upgrade require- ments, e.g., plumbing or electrical wiring, not specifi-

cally related to the State or local floodplain management law or ordinance.

g. Any compliance activities needed to bring additions or improvements made after the loss occurred into compliance with State or local floodplain management laws or ordinances.

h. Loss due to any ordinance or law that you were required to comply with before the current loss.

i. Any rebuilding activity to standards that do not meet the NFIP’s minimum requirements. This includes any situation where the insured has received from the State or community a variance in connection with the current flood loss to rebuild the property to an elevation below the base flood elevation.

j. Increased Cost of Compliance for a garage or carport.

k. Any building insured under an NFIP Group Flood Insur- ance Policy.

l. Assessments made by a condo- minium association on individual condominium unit owners to pay increased costs of repairing commonly owned buildings after a flood in compliance with State

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or local floodplain management ordinances or laws.

6. Other Provisions

All other conditions and provisions of the policy apply.

IV. PROPERTY NOT INSURED

We do not insure any of the following property:

1. Personal property not inside the fully enclosed building.

2. A building, and personal property in it, located entirely in, on, or over water or seaward of mean high tide if it was constructed or substantially improved after September 30, 1982.

3. Open structures, including a building used as a boathouse or any structure or building into which boats are floated, and personal property located in, on, or over water.

4. Recreational vehicles other than travel trailers described in the II.C.6.c, whether affixed to a per- manent foundation or on wheels.

5. Self-propelled vehicles or machines, including their parts and equipment. However, we do cover self-propelled vehicles or machines not licensed for use on public roads and are:

a. Used mainly to service the described location; or

b. Designed and used to assist handicapped persons, while the vehicles or machines are inside a building at the de- scribed location.

6. Land, land values, lawns, trees, shrubs, plants, growing crops, or animals.

7. Accounts, bills, coins, currency, deeds, evidences of debt, medals, money, scrip, stored value cards, postage stamps, securities, bullion, manuscripts, or other valuable papers.

8. Underground structures and equipment, including wells, septic tanks, and septic systems.

9. Those portions of walks, walkways, decks, driveways, patios, and other surfaces, all whether protected by a roof or not, located outside the perimeter, exterior walls of the insured building.

10. Containers, including related equipment, such as, but not limited to, tanks containing gases or liquids.

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11. Buildings or units and all their contents if more than 49 percent of the actual cash value of the building is below ground, unless the lowest level is at or above the base flood elevation and is below ground by reason of earth having been used as insulation material in conjunction with energy effi- cient building techniques.

12. Fences, retaining walls, sea- walls, bulkheads, wharves, piers, bridges, and docks.

13. Aircraft or watercraft, or their furnishings and equipment.

14. Hot tubs and spas that are not bathroom fixtures, and swimming pools, and their equipment, such as, but not limited to, heaters,

filters, pumps, and pipes, wher- ever located.

15. Property not eligible for flood insurance pursuant to the provisions of the Coastal Barrier Resources Act and the Coastal Barrier Improvement Act and amendments to these Acts.

16. Personal property owned by or in the care, custody or control of a unit owner, except for property of the type and under the circumstances set forth under III. Coverage B—Personal Property of this policy.

17. A residential condominium building located in a Regular Program community.

V. EXCLUSIONS

A. We only pay for “direct physical loss by or from flood,” which means that we do not pay you for:

1. Loss of revenue or profits;

2. Loss of access to the insured property or described location;

3. Loss of use of the insured property or described location;

4. Loss from interruption of business or production;

5. Any additional living expenses incurred while the insured building is being repaired or is unable to be occupied for any reason;

6. The cost of complying with any ordinance or law requiring or regulating the construction, de- molition, remodeling, renovation, or repair of property, including removal of any resulting debris. This exclusion does not apply to

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any eligible activities we describe in Coverage D—Increased Cost of Compliance; or

7. Any other economic loss you suffer.

B. Flood in Progress. If this policy became effective as of the time of a loan closing, as provided by 44 CFR 61.11(b), we will not pay for a loss caused by a flood that is a continuation of a flood that existed prior to coverage becoming effective. In all other circumstances, we will not pay for a loss caused by a flood that is a continuation of a flood that existed on or before the day you submitted the application for coverage under this policy and the correct premium. We will determine the date of application using 44 CFR 611.11(f).

C. We do not insure for loss to property caused directly by earth movement even if the earth move- ment is caused by flood. Some examples of earth movement that we do not cover are:

1. Earthquake;

2. Landslide;

3. Land subsidence;

4. Sinkholes;

5. Destabilization or movement of land that results from

accumulation of water in subsurface land areas; or

6. Gradual erosion.

We do, however, pay for losses from mudflow and land subsidence as a result of erosion that are specifically insured under our definition of flood (see II.B.1.c and II.B.2).

D. We do not insure for direct physical loss caused directly or indirectly by:

1. The pressure or weight of ice;

2. Freezing or thawing;

3. Rain, snow, sleet, hail, or water spray;

4. Water, moisture, mildew, or mold damage that results primarily from any condition:

a. Substantially confined to the insured building; or

b. That is within your control including, but not limited to: (1) Design, structural, or

mechanical defects; (2) Failures, stoppages, or

breakage of water or sewer lines, drains, pumps, fixtures, or equipment; or

(3) Failure to inspect and maintain the property after a flood recedes;

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5. Water or water-borne material that:

a. Backs up through sewers or drains;

b. Discharges or overflows from a sump, sump pump, or related equipment; or

c. Seeps or leaks on or through the insured property;

unless there is a flood in the area and the flood is the proximate cause of the sewer or drain backup, sump pump discharge or overflow, or the seepage of water;

6. The pressure or weight of water unless there is a flood in the area and the flood is the proximate cause of the damage from the pressure or weight of water;

7. Power, heating, or cooling failure unless the failure results from direct physical loss by or

from flood to power, heating, or cooling equipment on the described location;

8. Theft, fire, explosion, wind, or windstorm;

9. Anything you or any member of your household do or conspires to do to deliberately cause loss by flood; or

10. Alteration of the insured property that significantly increases the risk of flooding.

E. We do not insure for loss to any building or personal property located on land leased from the Federal Government, arising from or incident to the flooding of the land by the Federal Government, where the lease expressly holds the Federal Government harmless under flood insurance issued under any Federal Government program.

VI. DEDUCTIBLES

A. When a loss is insured under this policy, we will pay only that part of the loss that exceeds your deductible amount, subject to the limit of liability that applies. The deductible amount is shown on the Declarations Page.

However, when a building under construction, alteration, or repair does not have at least two rigid exterior walls and a fully secured roof at the time of loss, your deductible

amount will be two times the deductible that would otherwise apply to a completed building.

B. In each loss from flood, separate deductibles apply to the building and personal property insured by this policy.

C. The deductible does NOT apply to:

1. III.C.2. Loss Avoidance Measures; or

2. III.D. Increased Cost of Compliance.

VII. GENERAL CONDITIONS

A. Pair and Set Clause 1. An amount equal to the cost of replacing the lost, damaged, or destroyed article, minus its depreciation; or

In case of loss to an article that is part of a pair or set, we will have the option of paying you:

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2. The amount that represents the fair proportion of the total value of the pair or set that the lost, damaged, or destroyed article bears to the pair or set.

B. Other Insurance

1. If a loss insured by this policy is also insured by other insurance that includes flood coverage not issued under the Act, we will not pay more than the amount of insurance that you are entitled to for lost, damaged, or destroyed property insured under this policy subject to the following:

a. We will pay only the proportion of the loss that the amount of insurance that applies under this policy bears to the total amount of insurance covering the loss, unless VII.B.1.b or c below applies.

b. If the other policy has a provision stating that it is excess insurance, this policy will be primary.

c. This policy will be primary (but subject to its own deductible) up to the deductible in the other flood policy (except another policy as described in VII.B.1.b above). When the other deductible amount is reached, this policy will participate in the same proportion that the amount of insurance under

this policy bears to the total amount of both policies, for the remainder of the loss.

2. Where this policy insures a condominium association and there is a National Flood Insurance Program flood insurance policy in the name of a unit owner that insures the same loss as this policy, then this policy will be primary.

C. Amendments, Waivers, Assignment

This policy cannot be changed, nor can any of its provisions be waived, without the express written consent of the Federal Insurance Administrator. No action that we take under the terms of this policy can constitute a waiver of any of our rights. You may assign this policy in writing when you transfer title of your property to someone else except under these conditions:

1. When this policy insures only personal property; or

2. When this policy insures a building under construction.

D. Insufficient Premium or Rating Information

1. Applicability. The following pro- visions apply to all instances where the premium paid on this policy is insufficient or where the rating i nformation i s i nsufficient, such as where an Elevation Certificate is not provided.

2. Reforming the Policy with Re- duced Coverage. Except as otherwise provided in VII.D.1 and VII.D.4, if the premium we received from you was not sufficient to buy the kinds and amounts of coverage you requested, we will provide only the kinds and

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amounts of coverage that can be purchased for the premium payment we received.

a. For the purpose of determining whether your premium payment is sufficient to buy the kinds and amounts of coverage you requested, we will first deduct the costs of all applicable fees and surcharges.

b. If the amount paid, after deducting the costs of all applicable fees and surcharges, is not sufficient to buy any amount of coverage, your payment will be refunded. Unless the policy is reformed to increase the coverage amount to the amount originally requested pursuant to VII.D.3, this policy will be cancelled, and no claims will be paid under this policy.

c. Coverage limits on the reformed policy will be based upon the amount of premium submitted per type of coverage, but will not exceed the amount originally requested.

3. Discovery of Insufficient Pre- mium or Rating Information. If we discover that your premium payment was not sufficient to buy

the requested amount of coverage, the policy will be reformed as described in VII.D.2. You have the option of increasing the amount of coverage resulting from this reformation to the amount you requested as follows: a. Insufficient Premium. If we

discover that your premium payment was not sufficient to buy the requested amount of coverage, we will send you, and any mortgagee or trustee known to us, a bill for the required additional premium for the current policy term (or that portion of the current policy term following any endorsement changing the amount of coverage). If it is discovered that the initial amount charged to you for any fees or surcharges is incorrect, the difference will be added or deducted, as applicable, to the total amount in this bill. (1) If you or the mortgagee or

trustee pay the additional amount due within 30 days from the date of our bill, we will reform the policy to increase the amount of coverage to the originally requested amount, effective

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to the beginning of the current policy term (or subsequent date of any endorsement changing the amount of coverage).

(2) If you or the mortgagee or trustee do not pay the additional amount due within 30 days of the date of our bill, any flood insurance claim will be settled based on the reduced amount of coverage.

(3) As applicable, you have the option of paying all or part of the amount due out of a claim payment based on the originally requested amount of coverage.

b. Insufficient Rating Infor ma- tion. If we determine that the rating information we have is insufficient and prevents us from calculating the additional premium, we will ask you to send the required information. You must submit the information within 60 days of our request. (1) If we receive the information

within 60 days of our request, we will determine the amount of additional premium for the current

policy term and follow the procedure in VII.D.3.a above.

(2) If we do not receive the information within 60 days of our request, no claims will be paid until the requested information is prov ided. Coverage will be limited to the amount of coverage that can be purchased for the payments we received, as determined when the requested infor- mation is provided.

4. Coverage Increases. If we do not receive the amounts requested in VII.D.3.a or the additional information requested in VII.D.3.b by the date it is due, the amount of coverage under this policy can only be increased by endorsement subject to the appropriate waiting period. However, no coverage increases will be allowed until you have provided the information requested in VII.D.3.b is provided.

5. Falsifying Information. However, if we find that you or your agent intentionally did not tell us, or falsified, any important fact or circumstance or did anything fraudulent relating to this insurance, the provisions of VIII.A apply.

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E. Policy Renewal

1. This policy will expire at 12:01 a.m. on the last day of the policy term.

2. We must receive the payment of the appropriate renewal premium within 30 days of the expiration date.

3. If we find, however, that we did not place your renewal notice into the U.S. Postal Service, or if we did mail it, we made a mistake, e.g., we used an incorrect, incomplete, or illegible address, which delayed its delivery to you before the due date for the renewal premium, then we will follow these procedures:

a. If you or your agent notified us, not later than one year after the date on which the payment of the renewal premium was due, of non-receipt of a renewal notice before the due date for the renewal premium, and we determine that the circumstances in the preceding paragraph apply, we will mail a second bill providing a revised due date, which will be 30 days after the date on which the bill is mailed.

b. If we do not receive the premium requested in the second bill by the revised due date, then we will not renew the policy. In that case, the policy will remain as an expired policy as of the expiration date shown on the Declarations Page.

4. In connection with the renewal of this policy, we may ask you during the policy term to recertify, on a Recertification Questionnaire that we will provide to you, the rating information used to rate your most recent application for or renewal of insurance.

F. Conditions Suspending or Restricting Insurance

We are not liable for loss that occurs while there is a hazard that is increased by any means within your control or knowledge. G. Requirements in Case of Loss

In case of a flood loss to insured property, you must:

1. Give prompt written notice to us.

2. As soon as reasonably possible, separate the damaged and undamaged property, putting it

in the best possible order so that we may examine it.

3. Prepare an inventory of damaged property showing the quantity, description, actual cash value, and amount of loss. Attach all bills, receipts, and related documents.

4. Within 60 days after the loss, send us a proof of loss, which is your statement of the amount you are claiming under the policy signed and sworn to by you, and which furnishes us with the following information:

a. The date and time of loss; b. A brief explanation of how the

loss happened; c. Your interest (for example,

“owner”) and the interest, if any, of others in the damaged property;

d. Details of any other insurance that may cover the loss;

e. Changes in title or occupancy of the insured property during the term of the policy;

f. Specifications of damaged buildings and detailed repair estimates;

g. Names of mortgagees or anyone else having a lien,

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charge, or claim against the insured property;

h. Details about who occupied any insured building at the time of loss and for what purpose; and

i. The inventory of damaged personal property described in G.3 above.

5. In completing the proof of loss, you must use your own judgment concerning the amount of loss and justify that amount.

6. You must cooperate with the adjuster or representative in the investigation of the claim.

7. The insurance adjuster whom we hire to investigate your claim may furnish you with a proof of loss form, and she or he may help you complete it. However, this is a matter of courtesy only, and you must still send us a proof of loss within 60 days after the loss even if the adjuster does not furnish the form or help you complete it.

8. We have not authorized the adjuster to approve or disapprove claims or to tell you whether we will approve your claim.

9. At our option, we may accept the adjuster’s report of the loss instead of your proof of loss. The adjuster’s report will include information about your loss and the damages you sustained. You must sign the adjuster’s report. At our option, we may require you to swear to the report.

H. Our Options After a Loss

Options we may, in our sole discretion, exercise after loss include the following:

1. At such reasonable times and places that we may designate, you must:

a. Show us or our representative the damaged property;

b. Submit to examination under oath, while not in the presence of another insured, and sign the same; and

c. Permit us to examine and make extracts and copies of: (1) Any policies of property

insurance insuring you against loss and the deed establishing your ownership of the insured real property;

(2) Condominium association documents including the Declarations of the con- dominium, its Articles of Association or Incorporation, Bylaws, rules and regula- tions, and other relevant documents if you are a unit owner in a condominium building; and

(3) All books of accounts, bills, invoices and other vouchers, or certified copies pertaining to the damaged property if the originals are lost.

2. We may request, in writing, that you furnish us with a complete inventory of the lost, damaged or destroyed property, including:

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a. Quantities and costs; b. Actual cash values or

replacement cost (whichever is appropriate);

c. Amounts of loss claimed; d. Any written plans and

specifications for repair of the damaged property that you can reasonably make available to us; and

e. Evidence that prior flood damage has been repaired.

3. If we give you written notice within 30 days after we receive your signed, sworn proof of loss, we may:

a. Repair, rebuild, or replace any part of the lost, damaged, or destroyed property with material or property of like kind and quality or its functional equivalent; and

b. Take all or any part of the damaged property at the value that we agree upon or its appraised value.

I. No Benefit to Bailee

No person or organization, other than you, having custody of insured property will benefit from this insurance. J. Loss Payment

1. We will adjust all losses with you. We will pay you unless some other person or entity is named in the

policy or is legally entitled to receive payment. Loss will be payable 60 days after we receive your proof of loss (or within 90 days after the insurance adjuster files the adjuster’s report signed and sworn to by you in lieu of a proof of loss) and:

a. We reach an agreement with you;

b. There is an entry of a final judgment; or

c. There is a filing of an appraisal award with us, as provided in VII.M.

2. If we reject your proof of loss in whole or in part you may:

a. Accept our denial of your claim;

b. Exercise your rights under this policy; or

c. File an amended proof of loss as long as it is filed within 60 days of the date of the loss.

K. Abandonment

You may not abandon damaged or undamaged insured property to us.

L. Salvage

We may permit you to keep damaged insured property after a loss, and we will reduce the amount of the loss proceeds payable to you under the policy by the value of the salvage.

M. Appraisal

If you and we fail to agree on the actual cash value of the damaged property so as to determine the amount of loss, either may demand an appraisal of the loss. In this event, you and we will each choose a competent and impartial appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the insured property is located. The appraisers will separately state the actual cash value and the amount of loss to each item. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of actual cash value and loss.

Each party will:

1. Pay its own appraiser; and

2. Bear the other expenses of the appraisal and umpire equally.

N. Mortgage Clause

1. The word “mortgagee” includes trustee.

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2. Any loss payable under Coverage A—Building Property will be paid to any mortgagee of whom we have actual notice, as well as any other mortgagee or loss payee determined to exist at the time of loss, and you, as interests appear. If more than one mortgagee is named, the order of payment will be the same as the order of precedence of the mortgages.

3. If we deny your claim, that denial will not apply to a valid claim of the mortgagee, if the mortgagee:

a. Notifies us of any change in the ownership or occupancy, or substantial change in risk of which the mortgagee is aware;

b. Pays any premium due under this policy on demand if you have neglected to pay the premium; and

c. Submits a signed, sworn proof of loss within 60 days after receiving notice from us of your failure to do so.

4. All terms of this policy apply to the mortgagee.

5. The mortgagee has the right to receive loss payment even if the mortgagee has started

foreclosure or similar action on the building.

6. If we decide to cancel or not renew this policy, it will continue in effect for the benefit of the mortgagee only for 30 days after we notify the mortgagee of the cancellation or non-renewal.

7. If we pay the mortgagee for any loss and deny payment to you, we are subrogated to all the rights of the mortgagee granted under the mortgage on the property. Subrogation will not impair the right of the mortgagee to recover the full amount of the mortgagee’s claim.

O. Suit Against Us

You may not sue us to recover money under this policy unless you have complied with all the requirements of the policy. If you do sue, you must start the suit within one year of the date of the written denial of all or part of the claim, and you must file the suit in the United States District Court of the district in which the insured property was located at the time of loss. This requirement applies to any claim that you may have under this policy and to any dispute that you may have arising out of the handling of any claim under the policy.

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P. Subrogation

Whenever we make a payment for a loss under this policy, we are subrogated to your right to recover for that loss from any other person. That means that your right to recover for a loss that was partly or totally caused by someone else is automatically transferred to us, to the extent that we have paid you for the loss. We may require

you to acknowledge this transfer in writing. After the loss, you may not give up our right to recover this money or do anything that would prevent us from recovering it. If you make any claim against any person who caused your loss and recover any money, you must pay us back first before you may keep any of that money. Q. Continuous Lake Flood

1. If an insured building has been flooded by rising lake waters continuously for 90 days or more and it appears reasonably certain that a continuation of this flooding will result in an insured loss to the insured building equal to or greater than the building policy limits plus the deductible or the maximum payable under the policy for any one building loss, we will pay you the lesser of these two amounts without waiting for the further damage to occur if you sign a release agreeing:

a. To make no further claim under this policy;

b. Not to seek renewal of this policy;

c. Not to apply for any flood insurance under the Act for property at the described location;

d. Not to seek a premium refund for current or prior terms.

If the policy term ends before the insured building has been flooded continuously for 90 days, the provisions of this paragraph Q.1 will apply when the insured building suffers a covered loss before the policy term ends.

2. If your insured building is subject to continuous lake flooding from a closed basin lake, you may elect to file a claim under either paragraph Q.1 above or Q.2 (A “closed basin lake” is a natural lake from which water leaves primarily through evaporation and whose surface area now exceeds or has exceeded one square mile at any time in the recorded past. Most of the nation’s closed basin lakes are in the western half of the United States where annual evaporation exceeds annual precipitation and where lake levels and surface areas are subject to considerable fluctuation due to wide variations in the climate. These lakes may overtop their basins on rare occasions.) Under this paragraph Q.2, we

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will pay your claim as if the building is a total loss even though it has not been continuously inundated for 90 days, subject to the fol- lowing conditions:

a. Lake floodwaters must damage or imminently threaten to damage your building.

b. Before approval of your claim, you must: (1) Agree to a claim payment

that reflects your buying back the salvage on a negotiated basis; and

(2) Grant the conservation easement described in FEMA’s “Policy Guidance for Closed Basin Lakes” to be recorded in the office of the local recorder of deeds. FEMA, in consultation with the community in which the property is located, will identify on a map an area or areas of special consideration (ASC) in which there is a potential for flood damage from continuous lake flooding. FEMA will give the community the agreed-upon map showing the ASC. This easement will only apply to that portion of the property in the ASC. It

will allow certain agricultural and recreational uses of the land. The only structures it will allow on any portion of the property within the ASC are certain simple agricultural and recreational structures. If any of these allowable structures are insurable buildings under the NFIP and are insured under the NFIP, they will not be eligible for the benefits of this paragraph Q.2. If a U.S. Army Corps of Engineers certified flood control project or otherwise certified flood control project later protects the property, FEMA will, upon request, amend the ASC to remove areas protected by those projects. The restrictions of the easement will then no longer apply to any portion of the property removed from the ASC; and

(3) Comply with paragraphs Q.1.a through Q.1.d above.

c. Within 90 days of approval of your claim, you must move your building to a new location outside the ASC. FEMA will give you an additional 30 days

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to move if you show there is sufficient reason to extend the time.

d. Before the final payment of your claim, you must acquire an elevation certificate and a floodplain development permit from the local floodplain administrator for the new location of your building.

e. Before the approval of your claim, the community having jurisdiction over your building must: (1) Adopt a permanent land use

ordinance, or a temporary moratorium for a period not to exceed 6 months to be followed immediately by a permanent land use ordinance that is consistent with the provisions specified in the easement required in paragraph Q.2.b above;

(2) Agree to declare and report any violations of this ordinance to FEMA so that under Section 1316 of the National Flood Insurance Act of 1968, as amended, flood insurance to the building can be denied; and

(3) Agree to maintain as deed- restricted, for purposes

compatible with open space or agricultural or recreational use only, any affected property the community acquires an interest in. These deed restrictions must be consistent with the provisions of paragraph Q.2.b above, except that, even if a certified project protects the property, the land use restrictions continue to apply if the property was acquired under the Hazard Mitigation Grant Program or the Flood Mitigation Assistance Program. If a non-profit land trust organization receives the property as a donation, that organization must maintain the property as deed-restricted, consistent with the provisions of paragraph Q2.b. above.

f. Before the approval of your claim, the affected State must take all action set forth in FEMA’s “Policy Guidance for Closed Basin Lakes.”

g. You must have NFIP flood insurance coverage continuously in effect from

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a date established by FEMA until you file a claim under paragraph Q.2. If a subsequent owner buys NFIP insurance that goes into effect within 60 days of the date of transfer of title, any gap in coverage during that 60-day period will not be a violation of this continuous coverage requirement. For the purpose of honoring a claim under this paragraph Q.2, we will not consider to be in effect any increased coverage that became effective after the date established by FEMA. The exception to this is any in- creased coverage in the amount suggested by your insurer as an inflation adjustment.

h. This paragraph Q.2 will be in effect for a community when the FEMA Regional Administrator for the affected region provides to the community, in writing, the following: (1) Confirmation that the

community and the State are in compliance with the conditions in paragraphs Q.2.e and Q.2.f above; and

(2) The date by which you must have flood insurance in effect.

R. Loss Settlement

We will pay the least of the following amounts after application of the deductible:

1. The applicable amount of insurance under this policy;

2. The actual cash value; or

3. The amount it would cost to repair or replace the property with material of like kind and quality within a reasonable time after the loss.

VIII. POLICY NULLIFICATION, CANCELLATION, AND NON-RENEWAL

A. Policy Nullification for Fraud, Misrepresentation, or Making False Statements

1. With respect to all insureds under this policy, this policy is void and has no legal force and effect if at any time, before or after a loss, you or any other insured or your agent have, with respect to this policy or any other NFIP insurance:

a. Concealed or misrepre- sented any material fact or circumstance;

b. Engaged in fraudulent conduct; or

c. Made false statements. 2. Policies voided under A.1 cannot

be renewed or replaced by a new NFIP policy.

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3. Policies are void as of the date the acts described in A.1 above were committed.

4. Fines, civil penalties, and impris- onment under applicable Federal laws may also apply to the acts of fraud or concealment described above.

B. Policy Nullification for Reasons Other Than Fraud

1. This policy is void from its inception, and has no legal force or effect, if:

a. The property listed on the application is located in a community that was not participating in the NFIP on this policy’s inception date and did not join or reenter the program during the policy term and before the loss occurred;

b. The property listed on the application is otherwise not eligible for coverage under the NFIP at the time of the initial application;

c. You never had an insurable interest in the property listed on the application;

d. You provided an agent with an application and payment, but the payment did not clear; or

e. We receive notice from you, prior to the policy effective

date, that you have determined not to take the policy and you are not subject to a requirement to obtain and maintain flood insurance pursuant to any statute, regulation, or contract.

2. In such cases, you will be entitled to a full refund of all premium, fees, and surcharges received. However, if a claim was paid for a policy that is void, the claim payment must be returned to FEMA or offset from the premiums to be refunded before the refund will be processed.

C. Cancellation of the Policy by You

1. You may cancel this policy in accordance with the terms and conditions of this policy and the applicable rules and regulations of the NFIP.

2. If you cancel this policy, you may be entitled to a full or partial refund of premium, surcharges, or fees under the terms and conditions of this policy and the applicable rules and regulations of the NFIP.

D. Cancellation of the Policy by Us

1. Cancellation for Underpayment of Amounts Owed on Policy. This policy will be cancelled, pursuant to VII.D.2, if it is determined that the premium amount you paid is not sufficient to buy any amount of coverage, and you do not pay the additional amount of premium owed to increase the coverage to the originally requested amount within the required time period.

2. Cancellation Due to Lack of an Insurable Interest.

a. If you no longer have an insurable interest in the insured property, we will cancel this policy. You will

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cease to have an insurable interest if: (1) For building coverage,

the building was sold, destroyed, or removed.

(2) For contents coverage, the contents were sold or transferred ownership, or the contents were completely removed from the described location.

b. If your policy is cancelled for this reason, you may be entitled to a partial refund of premium under the applicable rules and regulations of the NFIP.

3. Cancellation of Duplicate Policies. a. Your property may not be

insured by more than one NFIP policy, and payment for damages to your property will only be made under one policy.

b. If the property is insured by more than one NFIP policy, we will cancel all but one of the policies. The policy, or policies, will be selected for cancellation in accordance with 44 CFR 62.5 and the applicable rules and guidance of the NFIP.

c. If this policy is cancelled pursuant to VIII.D.4.b, you may be entitled to a full or partial refund of premium, surcharges, or fees under the terms and conditions of this policy and the applicable rules and regulations of the NFIP.

4. Cancellation Due to Physical Alteration of Property a. If the insured building has

been physically altered in such a manner that it is no longer eligible for flood insurance cov- erage, we will cancel this policy.

b. If your policy is cancelled for this reason, you may be entitled to a partial refund of premium under the terms and conditions of this policy and the applicable rules and regulations of the NFIP.

E. Non-Renewal of the Policy by Us

Your policy will not be renewed if:

1. The community where your insured property is located is suspended or stops participating in the NFIP;

2. Your building is otherwise ineligible for flood insurance under the Act;

3. You have failed to provide the information we requested for the purpose of rating the policy within the required deadline.

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IX. LIBERALIZATION CLAUSE

If we make a change that broadens your coverage under this edition of our policy, but does not require any additional premium, then that change will automatically apply to your

insurance as of the date we implement the change, provided that this implementation date falls within 60 days before or during the policy term stated on the Declarations Page.

X. WHAT LAW GOVERNS

This policy and all disputes arising from the insurer’s policy issuance, policy administration, or the handling of any claim under the policy are governed exclusively by the flood

insurance regulations issued by FEMA, the National Flood Insurance Act of 1968, as amended (42 U.S.C. 4001, et seq.), and Federal common law.

In Witness Whereof, we have signed this policy below and hereby enter into this Insurance Agreement.

Administrator, Federal Insurance and Mitigation Administration

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National Flood Insurance Program

Residential Condominium Building Association Policy Standard Flood Insurance Policy F-144 / October 2021

ONLINE The NFIP RCBAP SFIP FEMA Form 144, is available at https://www.fema.gov/flood-insurance/find-form/underwriting

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FEDERAL EMERGENCY MANAGEMENT AGENCY, FEDERAL INSURANCE AND MITIGATION ADMINISTRATION

Standard Flood Insurance Policy

Residential Condominium Building Association Policy

Please read the policy carefully. The flood insurance provided is subject to limitations, restrictions, and exclusions.

I. AGREEMENT

A. This policy insures only a residential condominium building in a regular program community. If the community reverts to emergency program status during the policy term and remains as an emergency program community at time of renewal, this policy cannot be renewed.

B. The Federal Emergency Management Agency (FEMA) provides flood insurance under the terms of the National Flood Insurance Act of 1968 and its amendments, and Title 44 of the Code of Federal Regulations.

C. We will pay you for direct physical loss by or from flood to your insured property if you:

1. Have paid the full amount due (including applicable premiums, surcharges, and fees);

2. Comply with all terms and conditions of this policy; and

3. Have furnished accurate information and statements.

D. We have the right to review the information you give us at any time and revise your policy based on our review.

E. This policy insures only one building. If you own more than one building, coverage will apply to the single building specifically described in the Flood Insurance Application.

F. Subject to the exception in Section I.G below, multiple policies with building coverage cannot be issued to insure a single building to one insured or to different insureds, even if issued through different NFIP insurers. Payment for damages may only be made under a single policy for building damages under Coverage A—Building Property.

G. A Dwelling Form policy with building coverage may be issued to a unit owner in a condominium building that is also insured under a Residential Condominium

Building Association Policy (RCBAP). However, no more than $250,000 may be paid in combined benefits for a single unit under the Dwelling Form and the RCBAP. We will only pay for damage once. Items of damage paid for under a RCBAP cannot also be claimed under the Dwelling Form policy.

II. DEFINITIONS

A. In this policy, “you” and “your” refer to the named insured(s) shown on the Declarations Page of this policy. The named insured must also include the building owner if building coverage is purchased. Insured(s) includes: any mortgagee and loss payee named in the Application and Declarations Page, as well as any other mortgagee or loss payee determined to have an existing interest at the time of loss, in the order of precedence. “We,” “us,” and “our” refer to the insurer.

Some definitions are complex because they are provided as they appear in the law or regulations, or result from court cases.

B. Flood, as used in this flood insurance policy, means:

1. A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (one of which is your property) from:

a. Overflow of inland or tidal waters,

b. Unusual and rapid accumulation or runoff of surface waters from any source,

c. Mudflow

2. Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water

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exceeding anticipated cyclical levels which result in a flood as defined in B.1.a above.

C. The following are the other key definitions we use in this policy:

1. Act. The National Flood Insurance Act of 1968 and any amendments to it.

2. Actual Cash Value. The cost to replace an insured item of property at the time of loss, less the value of its physical depreciation.

3. Application. The statement made and signed by you or your agent in applying for this policy. The application gives information we use to determine the eligibility of the risk, the kind of policy to be issued, and the correct premium payment. The application is part of this flood insurance policy.

4. Base Flood. A flood having a one percent chance of being equaled or exceeded in any given year.

5. Basement. Any area of a building, including any sunken room or sunken portion of a room, having its floor below ground level on all sides.

6. Building.

a. A structure with two or more outside rigid walls and a fully secured roof that is affixed to a permanent site;

b. A manufactured home, also known as a mobile home, is a structure built on a permanent chassis, transported to its site in one or more sections, and affixed to a permanent foundation); or

c. A travel trailer without wheels, built on a chassis and affixed to a permanent foundation, that is regulated under the community’s floodplain management and building ordinances or laws.

Building does not mean a gas or liquid storage tank, shipping container, or a recreational vehicle, park trailer, or other similar vehicle, except as described in C.6.c above.

7. Cancellation. The ending of the insurance coverage provided by this policy before the expiration date.

8. Condominium. That form of ownership of one or more buildings in which each unit owner has an undivided interest in common elements.

9. Condominium Association. The entity made up of the unit owners responsible for the maintenance and operation of:

a. Common elements owned in undivided shares by unit owners; and

b. Other buildings in which the unit owners have use rights; where membership in the entity is a required condition of ownership.

10. Condominium Building. A type of building for which the form of ownership is one in which each unit owner has an undivided interest in common elements of the building.

11. Declarations Page. A computer-generated summary of information you provided in your application for insurance. The Declarations Page also describes the term of the policy, limits of coverage, and displays the premium and our name. The Declarations Page is a part of this flood insurance policy.

12. Deductible. The fixed amount of an insured loss that is your responsibility and that is incurred by you before any amounts are paid for the insured loss under this policy.

13. Described Location. The location where the insured building or personal property are found. The described location is shown on the Declarations Page.

14. Direct Physical Loss By or From Flood. Loss or damage to insured property, directly caused by a flood. There must be evidence of physical changes to the property.

15. Elevated Building. A building that has no basement and that has its lowest elevated floor raised above ground level by foundation walls, shear walls, posts, piers, pilings, or columns.

16. Emergency Program. The initial phase of a community’s participation in the National Flood Insurance Program. During this phase, only limited amounts of insurance are available under the Act and the regulations prescribed pursuant to the Act.

17. Federal Policy Fee. A flat rate charge you must pay on each new or renewal policy to defray certain administrative expenses incurred in carrying out the National Flood Insurance Program.

18. Improvements. Fixtures, alterations, installations, or additions comprising a part of the residential condominium building, including improvements in the units.

19. Mudflow. A river of liquid and flowing mud on the surface of normally dry land areas, as when earth is carried by a current of water. Other earth movements, such as landslide, slope failure, or a saturated soil mass moving by liquidity down a slope, are not mudflows.

20. National Flood Insurance Program (NFIP). The program of flood insurance coverage and floodplain management administered under the Act and applicable Federal regulations in Title 44 of the Code of Federal Regulations, Subchapter B.

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21. Policy. The entire written contract between you and us. It includes:

a. This printed form;

b. The application and Declarations Page;

c. Any endorsement(s) that may be issued; and

d. Any renewal certificate indicating that coverage has been instituted for a new policy and new policy term. Only one building, which you specifically described in the application, may be insured under this policy.

22. Pollutants. Substances that include, but are not limited to, any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. “Waste” includes, but is not limited to, materials to be recycled, reconditioned, or reclaimed.

23. Post-FIRM Building. A building for which construction or substantial improvement occurred after December 31, 1974, or on or after the effective date of an initial Flood Insurance Rate Map (FIRM), whichever is later.

24. Probation Surcharge. A flat charge you must pay on each new or renewal policy issued covering property in a community the NFIP has placed on probation under the provisions of 44 CFR 59.24.

25. Regular Program. The final phase of a community’s participation in the National Flood Insurance Program. In this phase, a Flood Insurance Rate Map is in effect and full limits of coverage are available under the Act and the regulations prescribed pursuant to the Act.

26. Residential Condominium Building. A building, condominium, containing one or more family units and in which at least 75 percent of the floor area is residential.

27. Special Flood Hazard Area (SFHA). An area having special flood or mudflow, and/or flood-related erosion hazards, and shown on a Flood Hazard Boundary Map or Flood Insurance Rate Map as Zone A, AO, A1–A30, AE, A99, AH, AR, AR/A, AR/AE, AR/ AH, AR/AO, AR/A1–A30, V1–V30, VE, or V.

28. Unit. A single-family residential space in a residential condominium building.

29. Valued Policy. A policy in which the insured and the insurer agree on the value of the property insured, that value being payable in the event of a total loss. The Standard Flood Insurance Policy is not a valued policy.

III. PROPERTY INSURED

A. Coverage A—Building Property

We insure against direct physical loss by or from flood to:

1. The residential condominium building described on the Declarations Page at the described location, including all units within the building and the improvements within the units.

2. We also insure such building property for a period of 45 days at another location, as set forth in III.C.2.b, Property Removed to Safety.

3. Additions and extensions attached to and in contact with the building by means of a rigid exterior wall, a solid load-bearing interior wall, a stairway, an elevated walkway, or a roof. At your option, additions and extensions connected by any of these methods may be separately insured. Additions and extensions attached to and in contact with the building by means of a common interior wall that is not a solid load-bearing wall are always considered part of the building and cannot be separately insured.

4. The following fixtures, machinery and equipment, including its units, which are insured under Coverage A only:

a. Awnings and canopies;

b. Blinds;

c. Carpet permanently installed over unfinished flooring;

d. Central air conditioners;

e. Elevator equipment;

f. Fire extinguishing apparatus;

g. Fire sprinkler systems;

h. Walk-in freezers;

i. Furnaces;

j. Light fixtures;

k. Outdoor antennas and aerials fastened to buildings;

l. Permanently installed cupboards, bookcases, paneling, and wallpaper;

m. Pumps and machinery for operating pumps;

n. Ventilating equipment;

o. Wall mirrors, permanently installed; and

p. In the units within the building, installed:

(1) Built-in dishwashers;

(2) Built-in microwave ovens;

(3) Garbage disposal units;

(4) Hot water heaters, including solar water heaters;

(5) Kitchen cabinets;

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(6) Plumbing fixtures;

(7) Radiators;

(8) Ranges;

(9) Refrigerators; and

(10) Stoves.

5. Materials and supplies to be used for construction, alteration or repair of the insured building while the materials and supplies are stored in a fully enclosed building at the described location or on an adjacent property.

6. A building under construction, alteration, or repair at the described location.

a. If the structure is not yet walled or roofed as described in the def- inition for building (see II.B.6.a.) then coverage applies: (1) Only while such work is in

progress; or (2) If such work is halted, only

for a period of up to 90 continuous days thereafter.

b. However, coverage does not apply until the building is walled and roofed if the lowest floor, including the basement floor, of a non-elevated building or the lowest elevated floor of an ele- vated building is: (1) Below the base flood

elevation in Zones AH, AE, A1–30, AR, AR/AE, AR/AH, AR/A1–30, AR/A, AR/AO; or

(2) Below the base flood elevation adjusted to include the effect of wave action in Zones VE or V1–30.

The lowest floor level is based on the bottom of the lowest horizontal structural member of the floor in Zones VE or V1–V30 or top of the floor in Zones AH, AE, A1–A30, AR, AR/AE, AR/AH, AR/A1–A30, AR/A, and AR/AO.

7. A manufactured home or a travel trailer, as described in the II.C.6. If the manufactured home is in a special flood hazard area, it must be anchored in the following manner at the time of the loss:

a. By over-the-top or frame ties to ground anchors; or

b. In accordance with the manufacturer’s specifications; or

c. In compliance with the community’s floodplain management requirements unless it has been continuously insured by the NFIP at the same described location since September 30, 1982.

8. Items of property below the lowest elevated floor of an elevated post- FIRM building located in zones A1–A30, AE, AH, AR, AR/A, AR/ AE, AR/AH, AR/A1–A30, V1–V30, or VE, or in a basement, regardless of the zone. Coverage is limited to the following: a. Any of the following items, if installed in their

functioning locations and, if necessary for operation, connected to a power source:

(1) Central air conditioners;

(2) Cisterns and the water in them;

(3) Drywall for walls and ceilings in a basement and the cost of labor to nail it, unfinished and unfloated and not taped, to the framing;

(4) Electrical junction and circuit breaker boxes;

(5) Electrical outlets and switches;

(6) Elevators, dumbwaiters, and related equipment, except for related equipment installed below the base flood elevation after September 30, 1987;

(7) Fuel tanks and the fuel in them;

(8) Furnaces and hot water heaters;

(9) Heat pumps;

(10) Nonflammable insulation in a basement;

(11) Pumps and tanks used in solar energy systems;

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(12) Stairways and staircases attached to the building, not separated from it by elevated walkways;

(13) Sump pumps;

(14) Water softeners and the chemicals in them, water filters, and faucets installed as an integral part of the plumbing system;

(15) Well water tanks and pumps;

(16) Required utility connections for any item in this list; and

(17) Footings, foundations, posts, pilings, piers, or other foundation walls and anchorage systems required to support a building.

b. Clean-up.

B. Coverage B—Personal Property

1. If you have purchased personal property coverage, we insure, subject to B.2 and B.3 below, against direct physical loss by or from flood to personal property that is inside the fully enclosed insured building and is:

a. Owned by the unit owners of the condominium association in common, meaning property in which each unit owner has an undivided ownership interest; or

b. Owned solely by the condominium association and used exclusively in the conduct of the business affairs of the condominium association.

2. We also insure such personal property for 45 days while stored at a temporary location, as set forth in III.C.2.b, Property Removed to Safety.

3. Coverage for personal property includes the following property, subject to B.1. above, which is insured under Coverage B only:

a. Air conditioning units, portable or window type;

b. Carpets, not permanently installed, over unfinished flooring;

c. Carpets over finished flooring;

d. Clothes washers and dryers;

e. “Cook-out” grills;

f. Food freezers, other than walk-in, and food in any freezer;

g. Outdoor equipment and furniture stored inside the insured building;

h. Ovens and the like; and

i. Portable microwave ovens and portable dishwashers.

4. Coverage for items of property in a building enclosure below the lowest elevated floor of an elevated post-FIRM building located in zones A1–A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1–A30, V1– V30, or VE, or in a basement, re- gardless of the zone, is limited to the following items, if installed in their functioning locations and, if necessary for operation, connected to a power source:

a. Air conditioning units, portable or window type;

b. Clothes washers and dryers; and

c. Food freezers, other than walk-in, and food in any freezer.

5. Special Limits. We will pay no more than $2,500 for any one loss to one or more of the following kinds of personal property: a. Artwork, photographs, collectibles, or

memorabilia, including but not limited to, porcelain or other figures, and sports cards;

b. Rare books or autographed items;

c. Jewelry, watches, precious and semi-precious stones, or articles of gold, silver, or platinum;

d. Furs or any article containing fur which represents its principal value.

6. We will pay only for the functional value of antiques.

C. Coverage C—Other Coverages

1. Debris Removal

a. We will pay the expense to remove non-owned debris that is on or in insured property and debris of insured property anywhere.

b. If you or a member of your household perform the removal work, the value of your work will be based on the Federal minimum wage.

c. This coverage does not increase the Coverage A or Coverage B limit of liability.

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