Flood Insurance Coverage in Detail
You’re All Wet!
SRMC
Fall Conference 2012
Jim Mahurin
RULES
•
Primary flood coverage source is federal
Property eligibility is fixed
“Building” is a defined term
Personal Property eligibility is limited
More Rules
•
Definitions apply to eligibility
“Building” includes structures with permanent
walls from the floor to ceiling that have no
openings – but share a common ceiling
Apartments with common roof and solid walls in
stairwell eligible for multiple policies on one
structure
Private Flood
•
Very limited number of private flood providers
•
Federal program drives coverage provided by
private market
•
The majority will not entertain property
within, OR IN PROXIMITY TO flood Zone A
Very Important Slide
•
__________________________
Flood Zone A boundary
One percent (1%) probability measure
A MEASURE OF THE WATERSHED – NOT DEPTH
Very Important Slide
•
___________________________
•
Base Food Elevation
•
One percent (1%) probability measure
Very Important Slide
•
_____________________________
BFE is 1% measure -- 100 year flood zone
______________________________
One (1) foot below BFE is 25 to 40 year zone
______________________________
Two (2) feet below BFE is 10 – 20 year zone
Average Flood Damage
•
Water touches base of building 19%
•
Water one foot inside building 22%
•
Water two feet inside building 31%
•
Water six feet inside building 80%
Federal Flood Is Inadequate
•
Homes – Dwelling $250,000
•
Contents $100,000
•
Commercial – Building $500,000
•
Contents $500,000
•
Business Income - $ Zero
Private Flood
Expressly exclude all Zone A property
Primary coverage with modest deductible
applying to all other property
Follow coverage terms of NFIP policies
Private Flood 2
•
Expressly exclude all Zone A and B property
•
Primary coverage with modest deductible
applying to all other property
Private Flood 3
•
Excess Flood over Zone A NFIP maximum
limits WITH MANDATE FOR PRIMARY
COVERAGE
•
Primary flood with modest deductible
applying to all other property
Private Flood 4
Excess Flood over Zone A NFIP maximum
limits with no requirement to maintain
underlying
•
Primary flood with modest deductible
applying to all other property
•
Replacement Cost/Business Interruption, etc.
Primary Flood 5
•
Excess Flood over Zone A NFIP maximum
limits
•
$1,000,000 (or other modest sublimit) over all
property within 1,000 feet of Zone A (or all
property in Zone B)
•
The sublimit applying to 1,000 feet (or Zone B)
isn’t disclosed
Private Flood 6
•
Sublimit available is often modest
•
Business interruption is not freely available
•
Many Excess Flood policies exclude Debris
Removal – a major cost item
Rules Revisited
•
Remember the solid floor to ceiling rule
•
Many buildings have these walls – or you can
make them
•
Allows purchase of multiple NFIP policies on
structure
Private Flood Revisited
•
Inland Marine can be used to provide primary
coverage:
•
Computers
•
Valuable Papers
•
Mobile Equipment
•
Antiques/Art/Wine/Guns/Sporting eqpt., etc
Flood Damage Reduction
•
Minimal elevation is a major reduction in
exposure. Elevated entire floor in warehouse.
•
Elevate high valued property, i.e., computers,
power distribution, nice offices, etc.
•
Establish plans to move vehicles and
equipment
Private Excess Flood Market
•
Very few companies providing coverage by
late 1990’s. Primary major market excess flood
carrier underwriting requirements were very
strict by 1997.
•
Market tightened again following five major
hurricanes in 2003 and 2004. Hurricane
Katrina occurred in 2005.
Private Excess Flood Market
•
Very small number of providers with Excess
Flood in Zone A – as sublimit to property
program.
•
Smaller number of Excess Flood providers of
stand alone coverage
•
Significant percentage were marginal carriers.
Flood Determination Letters
•
Electronic Flood Determination Letters have a
very high error rate.
•
High percentage of buildings located in
boundary areas of Zone A are identified as
Zone B or Zone C property.
•
Excess Flood policies voided if
misclassification is found in application.
Substantial Damage
Buildings damaged by flood to 50% of their
market value must be elevated
This comprehensive presentation delves into the intricacies of flood insurance coverage, from primary sources to specific rules and regulations. Key topics include federal flood coverage, property eligibility criteria, private flood insurance limitations, important flood zone measurements, average flood damage statistics, and the limitations of federal flood insurance. The importance of adhering to coverage terms and considerations for properties in Flood Zone A are also highlighted.
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Presentation Transcript
Youre All Wet! SRMC Fall Conference 2012 Jim Mahurin
RULES Primary flood coverage source is federal Property eligibility is fixed Building is a defined term Personal Property eligibility is limited
More Rules Definitions apply to eligibility Building includes structures with permanent walls from the floor to ceiling that have no openings but share a common ceiling Apartments with common roof and solid walls in stairwell eligible for multiple policies on one structure
Private Flood Very limited number of private flood providers Federal program drives coverage provided by private market The majority will not entertain property within, OR IN PROXIMITY TO flood Zone A
Very Important Slide __________________________ Flood Zone A boundary One percent (1%) probability measure A MEASURE OF THE WATERSHED NOT DEPTH
Very Important Slide ___________________________ Base Food Elevation One percent (1%) probability measure
Very Important Slide _____________________________ BFE is 1% measure -- 100 year flood zone ______________________________ One (1) foot below BFE is 25 to 40 year zone ______________________________ Two (2) feet below BFE is 10 20 year zone
Average Flood Damage Water touches base of building 19% Water one foot inside building 22% Water two feet inside building 31% Water six feet inside building 80%
Federal Flood Is Inadequate Homes Dwelling $250,000 Contents $100,000 Commercial Building $500,000 Contents $500,000 Business Income - $ Zero
Private Flood Expressly exclude all Zone A property Primary coverage with modest deductible applying to all other property Follow coverage terms of NFIP policies
Private Flood 2 Expressly exclude all Zone A and B property Primary coverage with modest deductible applying to all other property
Private Flood 3 Excess Flood over Zone A NFIP maximum limits WITH MANDATE FOR PRIMARY COVERAGE Primary flood with modest deductible applying to all other property
Private Flood 4 Excess Flood over Zone A NFIP maximum limits with no requirement to maintain underlying Primary flood with modest deductible applying to all other property Replacement Cost/Business Interruption, etc.
Primary Flood 5 Excess Flood over Zone A NFIP maximum limits $1,000,000 (or other modest sublimit) over all property within 1,000 feet of Zone A (or all property in Zone B) The sublimit applying to 1,000 feet (or Zone B) isn t disclosed
Private Flood 6 Sublimit available is often modest Business interruption is not freely available Many Excess Flood policies exclude Debris Removal a major cost item
Rules Revisited Remember the solid floor to ceiling rule Many buildings have these walls or you can make them Allows purchase of multiple NFIP policies on structure
Private Flood Revisited Inland Marine can be used to provide primary coverage: Computers Valuable Papers Mobile Equipment Antiques/Art/Wine/Guns/Sporting eqpt., etc
Flood Damage Reduction Minimal elevation is a major reduction in exposure. Elevated entire floor in warehouse. Elevate high valued property, i.e., computers, power distribution, nice offices, etc. Establish plans to move vehicles and equipment
Private Excess Flood Market Very few companies providing coverage by late 1990 s. Primary major market excess flood carrier underwriting requirements were very strict by 1997. Market tightened again following five major hurricanes in 2003 and 2004. Hurricane Katrina occurred in 2005.
Private Excess Flood Market Very small number of providers with Excess Flood in Zone A as sublimit to property program. Smaller number of Excess Flood providers of stand alone coverage Significant percentage were marginal carriers.
Flood Determination Letters Electronic Flood Determination Letters have a very high error rate. High percentage of buildings located in boundary areas of Zone A are identified as Zone B or Zone C property. Excess Flood policies voided if misclassification is found in application.
Substantial Damage Buildings damaged by flood to 50% of their market value must be elevated
