SECTION THREE – POLICIES AND PRODUCTS AVAILABLE

This SECTION discusses the NFIP Policy Forms, what is considered a flood, basements and Enclosures, Property Covered and Damages not covered.

This policy is used to insure building and/or personal property on a single family or 2-4 family dwelling. It may also be used to insure individually owned single family dwelling units in a condominium building.

GENERAL PROPERTY POLICY

TYPES OF BUILDINGS COVERED

This policy is used to insured non-residential buildings and other residential structures not classified as single family or two-to-four family dwellings. Examples would include apartment buildings (five or more families), motels, retail stores, municipal buildings, churches and hospitals.

RESIDENTIAL CONDOMINIUM BUILDING ASSOCIATION POLICY (RCBAP)

TYPES OF BUILDINGS COVERED

RCBAP is used to insure condominium buildings in the name of the association that contain one or more residential units and in which at least 75 percent of the total floor area within the building is residential without regard to the number of units or number of floors.

Eligible associations can cover the building, all units within the building, and improvements within the units under the RCBAB. Covered flood damages to building elements, including those within units, are settled on the replacement cost basis.

(See exceptions, including appliances and carpeting, in SECTION VIII General Conditions, V Loss Settlement, 4. Actual Cash Value Settlement on pages 17 and 19 in the RCBAP Form.)

PREFERRED RISK POLICY (PRP)

TYPES OF BUILDINGS COVERED

The Preferred Risk Policy (PRP) is the only NFIP policy that automatically includes building and contents coverage at a set percentage and set deductible for both building and contents coverage at a set percentage and set deductible for both building and contents. The PRP is a low cost policy that eligible residential and non-residential property owners and residential and non-residential renters in low-to-moderate flood risk areas, who have acceptable loss history, can purchase. Additional eligibility guideline and premium information for this easy to write flood insurance policy is located in the Flood Insurance Manual pages PRP 1 to 7.

FLOOD

The term, "Flood," as used in the 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 two or more properties (at least 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 under mining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.

BASEMENT

A Basement is defined as any area of the building, including any sunken room or sunken portion of a room, having its floor below ground level (subgrade) on all sides.

ENCLOSURE

An Enclosure is defined as that portion of an elevated building below the lowest elevated floor, that is either partially or fully enclosed by rigid walls.

ELEVATED BUILDINGS

An Elevated Building is 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.

SINGLE PERIL POLICY

The Standard Flood Insurance Policy (SFIP) is a single-peril (flood) policy that pays for direct physical damage to insured property. The Federal Government backs these single-peril policies covering only flood damage.

Additional Living Expenses, Loss of Use, or Loss of Income coverages are not included under the SFIP.

DAMAGES NOT COVERED

Even if a general condition of flooding was the proximate cause of the loss, the following perils are among those for which damages are not afforded coverage by the SFIP:

Theft
Fire
Windstorm and wind
Explosion
Earthquake
Gradual erosion or any other earth movement (except covered as defined by the policy)

PROPERTY COVERED

Coverage A – Building Covered

A dwelling is considered walled and roofed if it has in place a least two rigid walls and a roof.

Refer to the Standard Flood Insurance Policy forms, in the Flood insurance Manual, Section II Definitions and for items of property covered under Coverage A and coverage limitations in enclosures and basements within Section III Property Covered A 1, 7 and 8.

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 are 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.

A detached garage at the described location is covered. 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.

The policy does not cover any detached garage used or held for residential (i.e., dwelling), business, or farming purposes.

MATERIALS AND SUPPLIES

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.

BUILDING UNDER CONSTRUCTION

A building under construction, alteration or repair at the described location is insured in accordance with the policy Section III Property Covered A 5.a. and b.

MANUFACTURED HOME/TRAVEL TRAILER

A manufactured home or a travel trailer as described in the policy Definitions Section II. B.6.b. and II. B.6.c. is covered and if located in a SFHA, in accordance with Section III Property Covered A.6. a. through c.

COVERED BUILDING PROPERTY ITEMS IN A BASEMENT IN ANY ZONE

a. Any of the following items, if installed in their functioning location and, if necessary for operation, connected to a power source:

Sump Pumps
Cisterns and the water in them
Drywall for walls and ceilings in a basement and the cost of labor to mail it, unfinished and unfloated and not taped, to the framing
Electrical junction and circuit breaker boxes
Electrical outlets and switches
Elevators, dumbwaiters, and related equipment installed below the BFE after September 30, 1987
Fuel tanks and the fuel in them
Heat pumps
Nonflammable insulation in a basement
Pumps and tanks used in solar energy systems
Stairways and staircases attached to the building, not separated from it by elevated walkways
Hot water heaters
Water softeners and the chemicals in them, water filters, and faucets installed as an integral part of the plumbing system
Well water tanks and pumps
Required utility connections for any item in this list
Footings, foundations, posts, pilings, piers, or other foundation walls and anchorage systems required to support a building

b. Clean-up

COVERED BUILDING PROPERTY ITEMS IN AN ENCLOSURE IN SFHAS ONLY

Building property items located in an enclosure below the lowest elevated floor of an elevated Post-FIRM building in an SFHA are covered the same as building items in basements, with the exception of insulation and drywall. Cleanup in such an enclosure is also covered.

OTHER COVERAGES

The SFIP pays up to $1,000 for costs incurred to protect the insured building from flood or the imminent danger of flood.

Other coverages, including coverage provided for in Loss Avoidance Measures, such as Sand Bagging, are explained in more detail within the Flood Insurance Policy.

The SFIP also pays:

Reasonable expenses to move insured property to a place other than the described location.
at Federal minimum wage

At the option of the insured, the expenses to remove debris caused directly by a flood, will be covered by the NFIP and reduce the policy limit.

This includes:

Non-owned debris on or in insured property
Owned debris located anywhere
Within the limits of the coverage, expenses incurred for debris removal including the value of the insured's labor and the labor of members of the insured's household at prevailing Federal minimum wage rates.

These optional other coverages do not increase the building or contents limits of liability.

IMPROVEMENTS AND BETTERMENTS

If the tenant has personal property coverage, the SFIP covers cooking stove, range, and refrigerator if these items are owned by the tenant.

10% of personal property coverage will cover other tenant installed improvements.

EXAMPLES OF PROPERTY NOT COVERED

The following is a partial list of building and personal property items that are excluded under all three policy forms:

Fences, retaining walls, sera walls, bulkheads, wharves, piers, bridges & docks
Building or units and all their contents if more than 49 percent of the actual cash value of the building or unit is below ground, unless the lowest level is at or able the Base Flood Elevation and is below ground by reason of earth having been used as insulation material in conjunction with energy efficient building techniques
Land values, lawns, treed, shrubs, plants, growing crops or animals
Underground structures and equipment, including wells, septic tanks, and septic systems
Property in the open
Walks, walkways, decks driveways, patios, and other surfaces located outside the perimeter, exterior walls or an insured building
Self-propelled vehicles or machines, including their parts and equipment
Recreational vehicles other than travel trailers described in the policy, whether affixed to a permanent foundation or on wheels
Aircraft and watercraft, including their furnishing and equipment
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, wherever located

Please read the Flood Insurance Policy for more complete information.

SPECIAL LIMITS

The $2,500 maximum limit applies to the entire class of property, meaning that if one item is damaged the maxi8mum loss settlement would be $2,500. If all such special limits items were damaged the maximum loss settlement would be $2,500. These special limits items would typically be covered under a valuable items policy.

Artwork, photographs, collectibles, or memorabilia, including but not limited to, porcelain or other figures, and sports cards;
Rare books or autographed items;
Jewelry, watches, previous and semi-precious stones, or articles of gold, silver, or platinum;
Furs or any article containing fur which represents its principal value;
Personal property used in any business.

DECKS

The SFIP has specifically excluded coverage for decks. Stairways and staircases are covered if directly attached to the insured building, as are stairways and staircases attached to decks or walkways for ingress and egress.

The maximum allowance for steps and landing is 16 square feet.

ADDITIONAL LIVING EXPENSES

Additional Living Expenses, Loss of Use, or Loss of Income coverages are not included under the SFIP

INCREASED COST OF COMPLIANCE

Regular Program policyholders in Special Flood Hazard Areas can get up to $30,000 to help pay the costs to bring their home or business into compliance with their community floodplain ordinance.

Eligibility criteria are described in the General Rules section of the Flood Insurance Manual.

ICC Brochures are available at: www.fema.gov/pdf/nfip/f66f3_icc.pdf

QUIZ

1. A basement is defined as an area of a building, including a sunken room or sunken portion of a room, having a floor subgrade on all sides.

A. True

B. False

2. 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 is considered a(an):

A. Elevated building

B. Basement or enclosure

C. Appurtenant structure

D. Deck

3. The SFIP pays up to _____________ costs incurred for measures to protect the insured building from flood or the imminent danger of flood.

A. $2,500

B. $1,000

C. $32,000

D. $5,000

4. Up to 10% of personal property coverage can be used to cover eligible tenant installed improvements.

A. True

B. False

5. There is a $2500 limit for the loss of artwork, photographs, collectibles, memorabilia, sports cards, rare books, or autographed items.

A. True

B. False

ANSWERS TO QUIZ

1A 2A 3B 4A 5A