National Flood Insurance Program (NFIP)

Question 1

The three standard flood insurance policy coverage forms available are the:

Answer 1

• dwelling form
• general property form
• residential condominium building association policy (RCBAP) form

Question 2

However, even homes in moderate- to low-risk flood zones are exposed to flooding. In fact, 25 percent of flood losses occur in these zones. A “___ __ “ policy is available on property in moderate-risk flood zones.

Answer 2

preferred risk

Question 3

The dwelling form is issued to home owners, residential renters, and owners of residential buildings containing one to four units. In both the NFIP regular and emergency program communities, this form provides building and contents coverage for these eligible properties:

Answer 3

• single-family, noncondominium residences with incidental occupancy limited to less than 50 percent of the total floor area
• two to four family, noncondominium buildings with incidental occupancy limited to less than 25 percent of the total floor area
• dwelling units in residential condominium buildings
• residential townhouses and row houses
• personal contents in a nonresidential buildings

Question 4

The general property form is issued to the owners of residential buildings with five or more units. In both the NFIP regular and emergency program communities, this form provides building and contents coverage for these and similar eligible properties:

Answer 4

• apartment buildings
• residential cooperative buildings
• dormitories
• assisted-living facilities
• hotels, motels, tourist homes, and rooming houses that have more than four units where the normal guest occupancy is six months or more

Question 5

Residential Condominium Building Association Policy Eligibility: This policy is issued to residential condominium associations on behalf of association and unit owners. Available only in NFIP regular program communities, the form provides building coverage and, if desired, coverage of commonly owned contents for residential condominium buildings with __ percent or more of their total floor area in residential use.

Answer 5

75

Question 6

Building Property Eligibility: Flood insurance may be written only on a structure with __ or more outside rigid walls and a fully secured roof affixed to a permanent location. Structures must resist flotation, collapse, and sideways motion.

Answer 6

two

Question 7

Building Property Eligibility: At least __ percent of the actual cash value of the property, including machinery and equipment which are a part of the building, must be above ground level, unless the lowest level is at or above the base flood elevation (BFE) and is below ground because dirt has been used as insulation material in conjunction with energy-efficient building techniques.

Answer 7

51

Question 8

Building Property Eligibility: The BFE indicates the water surface elevation resulting from a flood that has a __ percent chance of equaling or exceeding that level in any one particular year.

Answer 8

one

Question 9

For manufactured homes insured under policies effective on or after October 1, 1982, the home must be ____ . It must also be anchored if located in an SFHA.

Answer 9

affixed to a permanent foundation

Question 10

Flood insurance is essentially a peril policy. Therefore, the definition of flood is critical.

Answer 10

single-peril

Question 11

For coverage to apply, the flood must be a general condition that covers two or more acres of normally dry land area or two or more properties (at least one of which is the insured’s property). In other words…

Answer 11

if the flood is confined to the insured’s property, there may be no coverage.

Question 12

FEMA defines a mudflow—which is, in effect, a type of flood—as

Answer 12

“a river of liquid and flowing mud on the surfaces of normally dry land areas, as when earth is carried by a current of water.”

Question 13

Coverage on building property (Coverage A) applies to the ___ described on the policy declarations page.

Answer 13

dwelling

Question 14

Coverage on building property (Coverage A) applies to the dwelling described on the policy declarations page.
Coverage applies only at the location described on the declarations page or at another location —for up to 45 days—if …

Answer 14

the property is moved there to protect it from the imminent danger of flood.

Question 15

Covered Personal Property (Coverage B): If personal property coverage (Coverage B of the policy) has been purchased, it applies only to ___ described in the application.

Answer 15

personal property that is inside the fully enclosed building

Question 16

The personal property provisions of the dwelling form specify that coverage is provided for property owned by the named insured or household family members. It also covers, at the insured’s option, property owned by ___ or ___ .

Answer 16

guests or servants

Question 17

Covered Property and Additional Coverages: Covered Building Property

Answer 17

(Coverage A)

Question 18

Covered Property and Additional Coverages: Covered Personal Property

Answer 18

(Coverage B)

Question 19

Covered Property and Additional Coverages: Other Coverages

Answer 19

(Coverage C)

Question 20

Covered Property and Additional Coverages: Increased Cost of Compliance

Answer 20

(Coverage D)

Question 21

Key Exclusions: No coverage is provided for

Answer 21

loss of use of the covered property,
lost revenue or profits,
loss from interruption of business or production,
or any other economic loss.

Question 22

Key Exclusions: Also not covered is any increase in the cost of repair or rebuilding that is the result of ordinances regulating construction or repair of buildings, other than as provided in the …

Answer 22

$30,000 increased cost of compliance coverage.

Question 23

Key Exclusions: In addition, no coverage is provided for any loss to property caused directly by earth movement even if the earth movement is

Answer 23

caused by flood.

Question 24

Coverage Limits:

In many cases, the maximum amount of flood insurance available in the regular program is less than the

Answer 24

total insurable value of the property.

Question 25

Loss Settlement Valuation and Coinsurance for Dwelling Form and RCBAP Form
The dwelling form and the RCBAP offer the following three methods of settling losses, and each is used for a different type of property:

Answer 25

• replacement cost
• special loss settlement
• actual cash value

Question 26

For the dwelling form, the replacement cost valuation applies to a single-family dwelling in most cases. The insurer agrees to pay or replace the damaged dwelling after applying the deductible and without deduction for depreciation, but not more than the least of these: (3)

Answer 26

• the building limit on the declarations page;
• the replacement cost of the damaged part of the dwelling, with materials of like kind and quality;
• the necessary amount spent to repair or replace the damaged part of the dwelling for like use.

Question 27

For the dwelling form, this loss settlement applies to a single-family dwelling that is a manufactured or mobile home or is a travel trailer and serves as the insured’s principal residence.

Answer 27

Special Loss Settlement

Question 28

For the dwelling form, this applies to a single-family dwelling in most cases. The insurer agrees to pay or replace the damaged dwelling after applying the deductible and without deduction for depreciation,

Answer 28

Replacement Cost

Question 29

Special Loss Settlement : For a total loss, the insurer pays the least of of these:(3)

Answer 29

• the replacement cost of the dwelling;
• 1.5 times the actual cash value of the dwelling; or
• the building limit shown on the declarations page.

Question 30

Special Loss Settlement: For a partial loss, if the insurer determines it is economically feasible to repair the dwelling to its predamage condition, the loss will be settled based on the replacement cost ACV provisions.

Answer 30

replacement cost

Question 31

Coinsurance: The NFIP has an unusual ? percent coinsurance clause.

Answer 31

80

Question 32

Because full insurance to replacement cost value is not always available, the NFIP’s coinsurance clause is modified in a way that essentially eliminates any coinsurance __ for a policyholder who has purchased the maximum available limit.

Answer 32

penalty

Question 33

Loss Settlement Valuation for the General Property Form: This form has a single loss settlement provision. The policy will pay the least of the following amounts, after applying the deductible:

Answer 33

• the applicable limit of insurance under the flood insurance policy;
• the actual cash value;
• the amount it would cost to repair or replace the property with material of like kind and quality within a reasonable period of time after the loss occurs.