SECTION SEVEN – REQUIREMENTS OF FLOOD INSURANCE REFORM ACT

SECTION 7, Requirements of the Flood insurance Reform Act of 2004, explains

Point of Sale and Renewal Responsibilities, Renewal Notice, Notification of Coverages Being Purchased, ACV vs. RCV, and other topics

POINT OF SALE AND RENEWAL RESPONSIBLITIES

At the point of sale, always briefly "walk" your clients, whether first-times or renewals, through the main sections of the SFIP—Agreement, Definitions, Property Covered, Property Not Covered, Exclusions, Deductibles, Coinsurance (RCBAP only), General Conditions, Liberalization Clause, What Law Governs, and Claim Guidelines in Case of a Flood.

RENEWAL NOTICE

At least forty-five days prior to the policy expiration, all parties listed on the policy (insured, agent, and mortgagee) are mailed a Renewal Notice. Agents may use this opportunity to discuss the Inflation Factor and any program changes t hat may impact coverages at renewal.

EXAMPLES OF POLICY EXCLUSIONS THAT APPLY

Loss of revenue or profits, interruption of business or production, or any economic loss
Additional living expenses
Loss already in progress
Earth movement/land subsidence, except subsidence of land as explained in the SFIP pages 1 of 19
Mildew or mold damage
Pressure or weight of ice
Freezing or thawing
Sewer backup and seepage (unless flood is the proximate cause)
Testing for monitoring of pollutants
Power, heating, or cooking failure (unless flood is the proximate cause)
Theft, fire, explosion, wind or windstorm

EXPLANATION OF HOW LOSSES WILL BE ADJUSTED (ACV vs. RCV)

The three types of loss settlements have previous been explained and are:

Actual Cash Value Settlements, which includes a deduction for depreciation; Los Settlement on a Replacement Cost Basis, which does not take depreciation; and the Special Loss Settlement applicable to manufactured and mobile homes.

The coinsurance penalty, which is only applicable to the RCBAP and loss settlement examples were explained in SECTION 4. More detailed information is available in each of the policy forms under Loss Settlement and also the Claims Manual.

AGENT RESOURCES

FEMA WEBSITES:

http://www.fema.gov/help/site.shtm

http://www.floodsmart.gov

http://www.training.nfipstat.com

Flood Insurance Manual online

WYO Company List