Flood insurance policy example

Flood insurance policy example

Flood insurance policy example The Plain Truth about FloodInsurance and FloodplainManagementPresentation OutlineWhat is a Flood?Flood Insurance Basic

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Flood insurance policy example

The Plain Truth about Flood
Insurance and Floodplain
Management
Presentation Outline
What is a Flood?
Flood Insurance Basics
How the NFIP Works?
Risk of Flooding
I.I.I. Pulse Study Results on Flood insurance
NFIP Reforms
Questions/Discussion
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 Anywhere it rains,
it can flood.
 Many conditions
can result in a
flood
– hurricanes,
overtopped levees,
melted snow and
the rapid
accumulations of
rainfall.
3
What is a Flood ?
Flood Insurance Basics
Flood damage is excluded under standard homeowners and renters insurance
policies. However, flood coverage is available in the form of a separate policy both
from the National Flood Insurance Program (NFIP) and from a few private
insurers.
Congress created the NFIP in 1968 in response to the rising cost of taxpayerfunded disaster relief for flood victims and the increasing amount of damage
caused by floods.
The NFIP makes federally backed flood insurance available in communities that
agree to adopt and enforce floodplain management ordinances to reduce future
flood damage.
The NFIP provides coverage for up to $250,000 for the structure of the home and
up to $100,000 for personal possessions. The NFIP policy provides replacement
cost coverage for the structure of the home but only actual cash value for personal
possessions.
The NFIP does not cover additional living expenses. And, the coverage for
basements is limited to the systems in the house (heating, etc.) that make a home
habitable.
4
Flood Insurance Basics
There is a 30-day waiting period before the coverage takes
effect.
Excess flood insurance is also available from some private
insurers for those who need additional insurance protection
over and above the basic policy or whose community does
not participate in the NFIP.
Excess flood insurance is available in all parts of the
country—in high risk flood zones along the coast and close to
major rivers as well as in areas of lower risk—wherever the
federal program is available. It can be purchased from
specialized companies through independent insurance
agents, or from regular homeowners insurance companies
that have arrangements with a specialized insurer to provide
coverage to their policyholders.
5
69 Percent of NFIP Polices
are for Single Family Homes
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FloodSmart.gov – Provides Information on the
Risk of Flood and Cost of the Policy
7
NFIP Makes it Easy to Find a Flood Insurance Agent
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How the NFIP Works
The NFIP is administered by FEMA, part of the Department of
Homeland Security. Flood insurance was initially only available
through insurance agents who dealt directly with the federal program.
The direct policy program has been supplemented since 1983 with a
private/public cooperative arrangement, known as “Write Your Own,”
through which a pool of insurance companies issue policies and
adjust flood claims on behalf of the federal government under their
own names, charging the same premium as the direct program.
Participating insurers receive an expense allowance for policies
written and claims processed.
The federal government retains responsibility for underwriting losses.
Today, most policies are issued through the Write-Your-Own
program..
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More on the NFIP
As of October 2015, 79 insurance companies participated
in the Write Your Own program, started in 1983, in which
insurers issue policies and adjust flood claims on behalf
of the federal government under their own names.
As of August 2015, 67 percent of policies covered single
family homes, 21 percent covered condominiums, and 6
percent covered businesses and other non-residential
properties. Two- to four-family units and other residential
policies accounted for the remainder.
Superstorm Sandy, which occurred in October 2012,
resulted in $8.0 billion in NFIP payouts as of October
2015, second only to 2005’s Hurricane Katrina with $16.3
billion in payouts.
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Risk of Flooding

Flooding is the most common and costly natural disaster in
the U.S.
It causes an average of $50 billion in economic losses
each year.
Most U.S. natural disasters declared by the president
involve flooding.
Ninety percent of all natural disasters in the U.S, involve
flooding.
Everyone should consider purchasing flood insurance and
find out their flood insurance risk.
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HURRICANE-RELATED FLOODING
A 2013 study of coastal areas by Core Logic found that
4.2 million homes, with $1.1 trillion in total property
exposure, are at risk of damage caused by hurricane
storm surge flooding.
In the Atlantic Coast region alone, there are
approximately 2.4 million homes at risk, valued at more
than $793 billion.
Total exposure along the Gulf Coast is $354 billion, with
1.8 million homes at risk for potential storm-surge
damage..
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Residential Exposure to
Hurricane Storm
-Surge
Damage  Residential properties in Florida
have the most exposure to
hurricane storm surge damage,
followed by New York, New
Jersey, Virginia and Louisiana,
according to Core Logic.
 Among the most densely
populated metropolitan areas,
the New York City metro area,
which includes Long Island and
the New Jersey coast, has the
highest exposure to potential
storm surge damage ($206
billion).
 The next four areas in terms of
exposure were Miami ($100
billion), Virginia Beach ($73
billion), Tampa ($55 billion) and
New Orleans ($43 billion).
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I.I.I. Pulse Study Results on Flood
Insurance
Despite the fact that
flooding is the most
common and costly
natural disaster in the
U.S., the majority said
they did not have a
flood insurance policy.
Only 14 percent said
they had a policy – a
statistic that has
remained fairly
consistent in recent
years. 15
Public Understanding of Flood Insurance
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Nearly One Quarter of Homeowners incorrectly thought their
homeowners insurance policy would cover flood damage
Flood Insurance Take-up Rates
The percentage of homeowners
purchasing Flood insurance has
remained consistent
The South had the Highest
Proportion of Homeowners with
a flood insurance policy
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The percentage of homeowners
purchasing Flood insurance has
remained consistent
The South had the Highest
Proportion of Homeowners with
a flood insurance policy
National Flood Insurance Reforms
In March 2014 Congress rescinded many of the rate
increases called for by The Biggert-Waters Flood
Insurance Reform Act, passed two years earlier.
The original act sought to make the federal flood
insurance program more financially self-sufficient by
eliminating rate subsidies that many property owners in
high-risk areas receive.
The new law reduces some rate increases already
implemented, prevents some future increases and puts a
surcharge on all policyholders.
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National Flood Insurance Reforms
It also ends a provision in Biggert-Waters that removed a
subsidy once a home was sold. People who purchased
homes after Biggert-Waters became law will receive a
refund. Many lawmakers in coastal states were concerned
that the higher cost of flood insurance would have a
negative impact on the real estate industry.
The subsidy will now be covered by a $25 surcharge on
homeowners flood policies and a $250 surcharge on
insurance for nonresidential properties and secondary
(vacation) homes.
According to data from FEMA, most current flood
insurance policyholders (81 percent, or 4.5 million) pay
rates based on the true risk of flood damage and so were
not affected by Biggert-Waters or the subsequent rollback.
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National Flood Insurance Reforms
The 2014 law prevents any policyholder from seeing an annual
rate increase exceeding 18 percent. This will result in refunds
in some cases. Refunds began in October 2014. FEMA has a
fact sheet on who is eligible for refunds.
The law also reinstates a practice known as grandfathering,
meaning that properties re-categorized as being at a higher
risk of flooding under FEMA’s revised maps would not be
subject to large increases.
Properties most affected by the rate hikes w

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