The Role of Certified Adjusters
in the NFIP
2011 National Flood Insurance ProgramClaims Adjuster Presentation
2011 NFIP Claim Presentation
Adjuster Qualifications
• Purpose
• Database
- Identification
• 5 Areas of Authorization
- Residential
- Manufactured (Mobile) Home
- Small Commercial
- Large Commercial
- Residential Condominium Building
Association Policy (RCBAP)
2011 NFIP Claim Presentation
Authorization Requirements
• Specialized Knowledge
• Certification is a
Requirement
- Exception:
• Write Your Own (WYO) Staff
Adjusters
2011 NFIP Claim Presentation
Flood Certification Number (FCN)
ACTIVE-2010
2011 NFIP Claim Presentation
NFIP CERTIFICATION FORMS
2011 NFIP Claim Presentation
Certification ContactsIServices
c/o Claims Department
P.O. Box 310
Lanham, MD 20706
Fax Number: 301-577-3421
Obtain application at
http://www.fema.gov/library/viewRecord.do?id=2581
EMAIL: [email protected]
2011 NFIP Claim Presentation
Adjuster Education and Certification
Assurance from WYO companies and adjusting firms that inexperienced adjusters will be supervised
Responsibility of claim accuracy and quality of work
Review of claims prior to payment or denial
Co-signature on estimates, preliminary and final reports
Mandatory annual workshop attendance
Adjuster Certification cutoff date – May 31, 2011
2011 NFIP Claim Presentation
• Authority of the Adjuster
• Knowledge of the Program
• Professionalism
Adjustment Standards and Requirements, continued
2011 NFIP Claim Presentation
Adjustment Standards and Requirements, continued
- Claims Adjustment
- Prompt Contact
- Inspection
- Origin of Loss
- Building Scope and Estimate
- Preliminary Report
- Manufactured (Mobile)Home/Travel Trailer Worksheet
2011 NFIP Claim Presentation
Adjustment Standards and Requirements, continued
Personal Property Identification Advance Payment
2011 NFIP Claim Presentation
Adjustment Standards and Requirements, continued
-Replacement Cost and Actual Cash Value
-Coverage Limitations
-Final Report
-Insured’s Copy
2011 NFIP Claim Presentation
Adjustment Standards and Requirements, continued
- Improper Flood Zones
- Incorrect Building Descriptions and Addresses
- Substantial Improvement
- Improper Named Insured
- Two or more Buildings at the Described Location
- Incorrect Mortgagee
At the time of inspection, any discrepancies noted in the physical
description of the insured risk, the policy or Declaration Page
should be referred to the Carrier
Underwriting Issues
2011 NFIP Claim Presentation
Adjustment Standards and Requirements, continued
-Proper Building Depreciation -Photographs
-Narrative Report -Salvage
-Prior Losses Checked -Proof of Loss
-Progress Notes in File -Timely Reporting
-Subrogation
2011 NFIP Claim Presentation
Adjustment Standards and
Requirements, continued
WYO Errors – Proper
Building Scope and Estimate
Non-judgmental
Judgmental
2011 NFIP Claim Presentation
Proper Building Scope and Estimate
• NFIP Estimate Format
–Unit cost basis
–Room-by-room
–Accurate description of rooms
–Room vs. offsets
–Line-by-line
–Individual line depreciation
–Sales tax (should be included in unit cost)
2011 NFIP Claim Presentation
NFIP Reinspections
• Assist WYO Companies
–Information Needed
–Flood Certification Number (FCN)
–Policy Number
–Prior Loss History
–Declaration Page
–Deductible and Coverage Amounts
–Preliminary Report
–Scope Notes
–Progress Notes
–Final Report
–Photographs
–Copies of Estimates
–Paperwork on
additional damages
–Elevation Certificate
–Narrative
–APDA
– Manufactured (Mobile)
Home Worksheet
2011 NFIP Claim Presentation
Detect Possible Waste & Abuse
• Receipts
• Serial Numbers
• Ownership
• Policies
• Waterlines
• Misrating
• Price Quotes
• Damaged Property
• Cause of Loss
• Late reporting of claim
2011 NFIP Claim Presentation
Report Possible Waste & Abuse
• Immediately reported to the NFIP and the insurance company
• Waste and Abuse Hotline 1-800-323-8603
2011 NFIP Claim Presentation
NFIP Fee Schedule
NFIP Fee Schedule Billing
– Gross Loss
– Increased Cost of Compliance Claims
2011 NFIP Claim Presentation
NFIP Fee Schedule, continued
Erroneous assignment $ 70.00
Closed without payment 275.00
.01 - 1,000.00 375.00
1,000.01 - 5,000.00 600.00
5,000.01 - 10,000.00 800.00
10,000.01 - 15,000.00 925.00
15,000.01 - 25,000.00 1,025.00
25,000.01 - 35,000.00 1,175.00
2011 NFIP Claim Presentation
NFIP Fee Schedule, continued
35,000.01 - 50,000.00 $ 1,400.00
50,000.01 - 100,000.00 3.0%, but not less than $ 1,600.00
100,000.01 - 250,000.00 2.3%, but not less than $ 3,000.00
250,000.01 - and up 2.1%, but not less than $ 5,750.00
2011 NFIP Claim Presentation
Disaster Response
• Adjuster Coordinating Office (ACO)
• Flood Insurance Claims Office (FICO)
• Claims Coordinating Office (CCO)
• Flood Response Office (FRO)
• FEMA/Joint Field Office (JFO)
• FEMA/Area Field Office (AFO)
• FEMA/Disaster Recovery Center (DRC)
2011 NFIP Claim Presentation
Learning Check
• What are the five categories of flood certification?
• How is depreciation for building/personal property
addressed in your scope of damages estimate?
• Name 3 possible waste and abuse issues.
• Give an example of a non-judgmental error.
2011 NFIP Claim Presentation
The Standard Flood Insurance Policy (SFIP)
2011 NFIP Claim Presentation
The Standard Flood Insurance Policy (SFIP)
•Three forms
–Dwelling Form
–General Property Form
–Residential Condominium Building
Association Policy (RCBAP)
Effective 12/31/2000
2011 NFIP Claim Presentation
Dwelling Form
Read the policy!
Know the policy!
Coverage is subject to limitations,
restrictions, and exclusions.
2011 NFIP Claim Presentation
Available Amounts of Insurance
Building Coverage
Single Family $250,000
2 - 4 Family $250,000
Personal Property Coverage
Residential $100,000
2011 NFIP Claim Presentation
I. Agreement
• Direct Physical Loss
–Paid the correct premium
–Compliance with policy terms and conditions
–Provided accurate information and statements
2011 NFIP Claim Presentation
II. Definitions
FLOOD
2011 NFIP Claim Presentation
Definition of FloodA general and temporary condition of partial or complete
inundation of two or more acres of normally dry land area or
of two or more properties from the overflow of inland or tidal
waters or from the unusual and rapid accumulation or runoff
of surface waters from any source.
KEY CRITERIA
Condition must be general
Condition must be temporary
Inundation must be present
Occurrence must be accidental
2011 NFIP Claim Presentation
Actual Cash Value (ACV)
Replacement Cost
Less Depreciation
2011 NFIP Claim Presentation
Basement
2011 NFIP Claim Presentation
Building
2011 NFIP Claim Presentation
Condominium Building
2011 NFIP Claim Presentation
Described Location
• Shown on the policy’s Declaration Page
–This is not always the insured’s mailing address
2011 NFIP Claim Presentation
Direct Physical Loss By or From Flood
Loss or damage to insured
property, directly caused by a
flood.
There must be evidence of
physical changes to the
property
2011 NFIP Claim Presentation
Elevated Building
2011 NFIP Claim Presentation
Elevated Building
2011 NFIP Claim Presentation
Enclosure
2011 NFIP Claim Presentation
Improvements
2011 NFIP Claim Presentation
Mudflow
2011 NFIP Claim Presentation
Named Insured
• “You and Your”
- Insured(s) shown on the Declarations Page
- Your spouse, if a resident of the same household
• “Insured(s)”
- Mortgagee or loss payee
2011 NFIP Claim Presentation
Pollutants
2011 NFIP Claim Presentation
Pre-FIRM
Built or substantially improved on or before
December 31, 1974, or before the effective date
of the initial Flood Insurance Rate Map.
2011 NFIP Claim Presentation
Post-FIRM
Built or substantially improved after
December 31, 1974, or on or after the
effective date of the initial Flood
Insurance Rate Map, whichever is later.
2011 NFIP Claim Presentation
Special Flood Hazard Area (SFHA)
2011 NFIP Claim Presentation
Special Flood Hazard Area (SFHA)
Zones that begin with the letter A or V
2011 NFIP Claim Presentation
Flood Insurance Rate Map
2011 NFIP Claim Presentation
Flood Insurance Rate Map
www.MSC.FEMA.gov
FEMA Flood Map Store
2011 NFIP Claim Presentation
FEMA’s Map Service Center
http://www.msc.fema.gov
Where Can I find Flood Maps?
2011 NFIP Claim Presentation
2011 NFIP Claim Presentation
2011 NFIP Claim Presentation
09/28/2009
2011 NFIP Claim Presentation
2011 NFIP Claim Presentation
2011 NFIP Claim Presentation
2011 NFIP Claim Presentation
SEPTEMBER 28, 2009
2011 NFIP Claim Presentation
III. Property Covered
2011 NFIP Claim Presentation
III. Property CoveredCoverage A- Building Property
• Dwelling
• Additions and Extensions
• Detached Garages (Bulletin W-08043)
• Materials and Supplies
• Building Under Construction
– Items that are to become a part of the building (e.g. rebar, footings, and concrete walls )
• Manufactured(Mobile)Home/Travel Trailer
2011 NFIP Claim Presentation
Buildings
Roof
Elevated walkways
Exterior rigid walls
Load-bearing (solid)
interior walls
Stairs
2011 NFIP Claim Presentation
Property Covered, continued
•Property items covered under Coverage A
–Awnings and canopies
–Blinds
–Built-in dishwashers
–Built-in microwave ovens
–Carpet permanently installed over unfinished flooring
2011 NFIP Claim Presentation
Property Covered, continued
•Coverage A
–Page 4 of the Dwelling Form
Built-ins
2011 NFIP Claim Presentation
Property Covered, continued
a. Any of the following items, if installed in their functioning
locations and, if necessary for operation, connected to a
power source:
(1) Central air conditioners
(2) Cisterns and the water in them
(3) Drywall for walls and ceiling in a basement and the cost of
labor to nail it, unfinished and not taped
(4) Electrical junction and circuit breaker boxes
(Complete list under Section III - Property Covered, A.8.,a & b.)
2011 NFIP Claim Presentation
Building, continued
2011 NFIP Claim Presentation
Building, continued
2011 NFIP Claim Presentation
III. Property Covered
Tenant’s Coverage
–Condo Unit Owner’s Coverage
Coverage B - Personal Property
Page 4 of the Dwelling Form
2011 NFIP Claim Presentation
Special Limits - $2,500
2011 NFIP Claim Presentation
Antiques
Functional Value
2011 NFIP Claim Presentation
–Debris Removal
– Owned anywhere
– Non-owned on or in
insured property
– Removal work
– Federal minimum wage
– Not a separate limit of liability
III. Property Covered
Coverage C - Other Coverages
2011 NFIP Claim Presentation
Who Pays to move this boat?
Coverage C - Other Coverages
III. Property Covered
2011 NFIP Claim Presentation
III. Property Covered
–Sandbags, supplies, labor
–$1,000 costs incurred to protect
–Reasonable expenses
–Property Removed to Safety
Coverage C - Other Coverages
2011 NFIP Claim Presentation
–Condominium Loss Assessments
–Condominium Unit
–Resulting from Flood
–Common Elements
–Loss Assessment Does Not Apply
–Government Body
–Personal Property
–Violation of Policy Conditions
–Maximum Limits of Coverage
–Not an Additional Limit of Liability
III. Property Covered
Coverage C - Other Coverages
2011 NFIP Claim Presentation
Learning Check
• Is Replacement Cost available for a residential duplex?
• Can 10 percent of Coverage A be applied to a Detached
Garage that has a sleeping space in it?
• Two structures are joined by a roof, at the time of a
claim can the insured declare that the two structures be
covered under one or two policies ?
• If a “post-firm, elevated” structure has an attached
garage, what coverages are afforded in the garage
area?
2011 NFIP Claim Presentation
Increased Cost of Compliance
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC)Coverage D
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC)
2011 NFIP Claim Presentation
Increased Cost of Compliance
(ICC), continued
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC), continued
“… damage of any origin [is] sustained by a building whereby the cost of restoring the structure to its before damaged condition would equal or exceed 50 percent of the market value of the structure before the damage occurred.”
(see 44 CFR 59.1)
OR
A structure is eligible for an ICC claim payment if
the community determines that the structure is:
Substantially damaged when:
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC), continued
“… a building covered by a contract for flood insurance that
has incurred flood-related damages on two occasions during
a 10-year period ending on the date of the event for which the
second claim is made, in which the cost of repairing the flood
damage, on the average, equaled or exceeded 25 percent of
the market value of the building at the time of each such flood
event.”
A Repetitive loss structure is:
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC), continued
• Date of Loss
– The date of loss for an ICC claim will be the date of loss
for the underlying flood claim.
– The insured has four (4) years from the date of the
declaration by the state or local official that the structure has
been substantially damaged by flood to complete the ICC
portion of the claim.
– March 14, 2006 W-06019 Memorandum to WYO
Losses after June 1,2005
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC) The Adjuster’s Duty
• Informs the Insured of ICC coverage if the risk appears to
be Substantially Damaged
• Adjuster must submit the APDA information to the NFIP Bureau
and Statistical Agent by fax at (301) 577-3421, mail to P.O. Box 310
Lanham, MD 20706 (W-09057, October 6, 2009)
http://www.nfipiservice.com
• Obtain a copy of the signed construction contract that details
costs to perform the mitigation activity
• Provide the insured with an Increase Cost of Compliance Pamphlet
• Verify mitigation activity is in compliance with floodplain
management guidelines
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC), continued
–Partial payments are permitted
– 50 percent maximum partial payment
available
–Reasonable time for completion not to
exceed four years from date of declaration
–When mitigation procedures are completed
•ICC Claim Payment
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC), continued
Determining Market Value
1. Independent appraisals by a professional appraiser
2. Detailed estimates of the structure’s ACV
3. Property appraisals used for tax assessment
4. The value of buildings taken from NFIP claims data (used as a screening tool)
5. Qualified estimates by local building departments
Acceptable estimates of market value
2011 NFIP Claim Presentation
• Regulate all development in the designated Special Flood Hazard Area (SFHA) in accordance community floodplainmanagement laws
• Ensure NFIP compliance
• Require proper permits (including Federal and State)
• Ensure completed work is compliant with local floodplain
management ordinance
Increased Cost of Compliance (ICC), continued
Role of the Local Official
2011 NFIP Claim Presentation
Role of the Local Official
Increased Cost of Compliance (ICC), continued
• Provide property owner a substantial damage declaration
and remind the owner that ICC coverage could help offset compliance costs.
2011 NFIP Claim Presentation
Information a Claims Representative will need from
the local official
Increased Cost of Compliance (ICC), continued
• The basis for the community’s determination of substantial
damage or repetitive loss, in writing
• A copy of the applicable repetitive loss provision in the
community’s floodplain management ordinance
• If the building is in a B, C, X, or D Zone, documentation as
to why the building is required to undertake the mitigationaction
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC)continued
• Be in writing
• Amount of damages
• Market Value
• Flood Zone
• Date of local floodplain management ordinance
• Permit required
Substantial Damage and Repetitive Loss Declaration should:
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC)
• Does ICC apply to a substantially damaged building,
which is in compliance at the time of loss?
Learning Check
• Do all buildings insured by the NFIP qualify for ICC?
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC)
Exceptions:
Buildings insured under the Group Flood Insurance Policy.
Units insured under a condo unit owner policy.
Buildings in Emergency Program
Learning Check
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC)
Maximum Coverage Available Under ICC:
• $30,000
• No separate deductible
• Payment amount can not exceed the statutory maximum:
$250,000 - single family
$500,000 - non-residential
$250,000 - residential condo x no. of units.
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC)
Should mortgagee name(s) be included on the ICC partial and final payment checks?
Learning Check
No, ICC payments are subject to Coverage D
and do not require naming a mortgage.
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC)
• To the community when it is in conjunction with a FEMA project
such as the Hazard Mitigation Grant Program (HMGP).
Learning Check
There is no “assignment of Coverage D” except:
2011 NFIP Claim Presentation
Increased Cost of Compliance (ICC)
The Building/Local Official is the Authority in
determining Substantial Damage.
Learning Check
Who determines substantial damage?
2011 NFIP Claim Presentation
2011 National Flood Insurance ProgramClaims Adjuster Presentation
2011 NFIP Claim Presentation
The Standard Flood Insurance Policy
(SFIP) Property Not Covered
2011 NFIP Claim Presentation
IV. Property Not Covered
• Personal property not inside a fully enclosed building
• Building and personal property located entirely in, on, or over water
• Recreational Vehicles
-Exception: travel trailers
• Self-propelled Vehicles or Machines including their parts and equipment…
• Open Structures
•Boathouses
2011 NFIP Claim Presentation
Property Not Covered, continued
• Underground structures…
• Those portions of walks,
walkways, decks, driveways,
patios, and other surfaces,
…located outside the
perimeter, exterior walls of the
insured building…
• Containers, including related equipment…
• Buildings or units and their contents if more than 49percent of the ACV is belowground
2011 NFIP Claim Presentation
Property Not Covered, continued
• Fences, retaining walls, sea walls, bulkheads, wharves, piers, and docks
• Aircraft or watercraft, their furnishings and equipment
• Swimming pools and their equipment
• Coastal Barrier Resources Act property
• Hot tubs and spas not bathroom fixtures
• Condominium property
owned in common
2011 NFIP Claim Presentation
Exclusions
2011 NFIP Claim Presentation
V. Exclusions
•Loss of Use
–Including loss of revenue and access
• Business Interruption
• Additional Living Expenses
• Cost of Compliance
–Except for ICC coverage
• Any other Economic Loss
2011 NFIP Claim Presentation
Exclusions, continued
•Flood Already in Progress
–Policy Term
•Additional Coverage
•Earth Movement
–Earthquake
–Landslide
–Land Subsidence
–Sinkholes
–Destabilization or Movement of Land
–Gradual Erosion
2011 NFIP Claim Presentation
Exclusions, continued
•Pressure or weight of ice
•Freezing or thawing
•Rain, snow, sleet, hail, or water spray
•Water, moisture, mildew, or mold damage
–Confined to the dwelling
–Within your control
–Failure, stoppage, or breakage
–Failure to inspect and maintain
2011 NFIP Claim Presentation
Mold
2011 NFIP Claim Presentation
Exclusions, continued
• Water or waterborne
material
–Sewer backup
–Sump pump
–Seepage
• Pressure or weight of water
• Power, heating, or
cooling failure
• Theft, fire, explosion, wind, or windstorm
• Intentional flooding
• Increased risk
• Federal Government
• Testing for or monitoringof pollutants
2011 NFIP Claim Presentation
Hydrostatic Pressure
2011 NFIP Claim Presentation
Learning Check
• During your investigation of a flood loss, should you
document other damage to the structure from a source
other than flood?
• Under what conditions would the NFIP pay for
testing/monitoring of a condition of mold?
2011 NFIP Claim Presentation
VI. Deductibles
•Shown on Declaration Page
–Separate deductibles for building andcontents
•Buildings Under Construction
–Deductible doubled
•Does Not Apply to
–Loss Avoidance Measures
–Condominium Loss Assessment
–Increased Cost of Compliance
2011 NFIP Claim Presentation
VI. Deductibles-
October 1, 2009 Changes
The standard deductibles for Pre and Post-FIRM properties in Non-Special Hazard Areas (B,C,X.A99 & D) will be increased from $500.00 to $1,000.00.
The standard deductible for Pre-FIRM properties in Special Flood Hazard Areas (A&V zones), will be increased from $1,000.00 to $2,000.00.
The standard deductible for Post-FIRM properties in Special Flood Hazard Areas (A&V zones), will be increased from $500.00 to $1,000.00.
Regular Program
2011 NFIP Claim Presentation
VI. Deductibles-
October 1, 2009 Changes
The standard deductible will be increased from $1,000.00 to
$2,000.00 for all Pre and Post-FIRM properties.
Emergency Program:
Regular Program, Continued
The standard deductible for Pre-FIRM properties in Special
Flood Hazard Areas (A&V zones) and rated using elevation
certificate figures will be increased from $500.00 to $1,000.00.
2011 NFIP Claim Presentation
VII. General Conditions
A. Pairs and Sets
– Settlement
– ACV of article
– Value of that portion as it relates to the set
2011 NFIP Claim Presentation
General Conditions, continued
B. Concealment or Fraud
–Policy voidance, fines, civil
penalties, and imprisonment
2011 NFIP Claim Presentation
General Conditions, continued
•Not Eligible for Coverage
–Non-participating community
–Property not eligible for coverage
2011 NFIP Claim Presentation
General Conditions, continued
C. Other Insurance
• Prorated
–Primary up to other deductible
–Unless the SFIP is primary
–Other policy states it is excess coverage
2011 NFIP Claim Presentation
General Conditions, continued
– Condominium Units
–RCBAP is primary
–Dwelling Form is excess
C. Other Insurance
2011 NFIP Claim Presentation
General Conditions, continued
G. Reduction and Reformation of Coverage
– Must be corrected and correct premium
paid (Bulletin W-05021)
– Policy limits vs. premium paid
– Notice to WYO underwriting must be sent
2011 NFIP Claim Presentation
General Conditions, continued
I. Conditions Suspending or Restricting Insurance
–Increased hazard within the control or knowledge of
the insured
2011 NFIP Claim Presentation
General Conditions, continued
J. Requirements in Case of Loss(insured failed to comply)
–Non-Waiver Agreement
–Reservation of Rights
2011 NFIP Claim Presentation
General Conditions, continued
L. No Benefit to Bailee
- Bailee Goods
- No Coverage
M. Loss Payment
- Proof of Loss, 60 days from receipt by the company to pay claim
- Signed form, 90 days
-Received within 60 days from date of loss
(Including Supplements)
2011 NFIP Claim Presentation
General Conditions, continued
N. Abandonment
–Insured may not abandon damaged or undamaged
property to us
2011 NFIP Claim Presentation
General Conditions, continued
O. Salvage
- Insured’s option
- Reduced payment
- Insured buyback
2011 NFIP Claim Presentation
General Conditions, continued
P. Appraisal
–Insured and adjuster fail to agree on price
–Two appraisers
–Umpire
2011 NFIP Claim Presentation
General Conditions, continued
Q. Mortgage Clause
–Mortgagee’s interest is protected
R. Suit Against Us–Filed in US District Court within 12
months of denial letter
S. Subrogation–Insured’s right to recover is transferred
to the insurer if the loss is paid under the SFIP
2011 NFIP Claim Presentation
General Conditions, continued
T. Continuous Lake Flooding
• 90 continuous days
• Total loss
Closed Basin Lakes
• Total loss
2011 NFIP Claim Presentation
General Conditions, continued
U. Duplicate Policies Not Allowed
–Insured’s choice
–Combine policy coverage limits
Effective date is the date of the later of the two policies
2011 NFIP Claim Presentation
General Conditions, continued
V. Loss Settlement
–Replacement Cost
–Special Loss
–Actual Cash Value
2011 NFIP Claim Presentation
General Conditions, continued
ACV
• A 2-, 3-, or 4-family dwelling
• Unit not used exclusively for single family dwelling
• Detached garages
• Personal property
• Appliances, carpets, and carpet pads
• Outdoor awnings, antennas or aerials of any type, other equipment
• Abandoned property (debris at described location)
• Dwelling not primary residence
2011 NFIP Claim Presentation
Amount of Insurance Required
•Not included in calculation:
–Footings, foundations, piers, other structures
or devices that are below the lowest floor and
that support all or part of the dwelling
–If no basement, supports listed above that are
inside the foundation walls
–Excavations and underground flues, pipes,
wiring, and drains
–ICC limit of liability
2011 NFIP Claim Presentation
VIII. Liberalization Clause
•Broadened coverage
–No requirement for additional premium
–Automatically applies to insurance if change
implementation date is within 60 days before,
or during, the policy term
–Additional premium required
–Does not fall within this clause
2011 NFIP Claim Presentation
IX. What Law Governs
• Federal Government
–Regulations issued by FEMA
–National Flood Insurance Act of 1968, as
amended
–Federal common law• Not subject to state insurance departments or
state and local courts
2011 NFIP Claim Presentation
Pop Quiz
2011 NFIP Claim Presentation
General Property Form
Read the policy!
Know the policy!
Coverage is subject to
limitations, restrictions,
and exclusions.
2011 NFIP Claim Presentation
General Property Form, continued
• Insures non-residential and other residential
property and their contents
–Other residential
– Hotels, motels (occupancy six months or more)
– Tourist homes, rooming houses (more than five or more
lodgers)
– Residential (except hotels and motels) more than four
dwelling units
– Incidental business occupancy is permitted if less than
25% of total floor area
2011 NFIP Claim Presentation
General Property Form, continued
Available Amounts of Insurance
Non-Residential $500,000
Residential $100,000
Other Residential $250,000
Non-Residential $500,000
Building Coverage
Personal Property Coverage
2011 NFIP Claim Presentation
II. Definitions
27. Stock
– Merchandise held in storage or for sale, raw materials,
and in-process finished goods including supplies used in
their packaging and shipping
General Property Form, continued
2011 NFIP Claim Presentation
General Property Form, continuedDefinitions, continued
•Stock includes
–Parts and equipment for self-propelled vehicles
–Furnishings and equipment for watercraft
–Spas and hot tubs, including their equipment
–Swimming pool equipment
2011 NFIP Claim Presentation
General Property Form, continuedIII. Property Covered
•Coverage A - Building Property
–Awnings and canopies
–Blinds
–Carpet
–permanently installed over unfinished floor
–Central air conditioners
–Elevator equipment
–Fire sprinkler system
see page 3 of 18 of the General Property Form
2011 NFIP Claim Presentation
General Property Form, continued Property Covered, continued
•Coverage B
–Building/Personal Property policy
– Personal property must be within a fully enclosed
insured building
•Personal Property only policy
–Located within the described building
2011 NFIP Claim Presentation
General Property Form, continuedOther Coverages
Coverage C
•Pollution Damage
–Direct loss from flood
–$10,000 limit
–Not an additional limit of liability
–Cannot exceed property value
–Does not include testing or monitoring
2011 NFIP Claim Presentation
General Property Form, continued
• Personal property owned or in the care, custody, or
control of a unit owner
- Except as described under Coverage B
• A residential condominium building
IV. Property Not Covered
2011 NFIP Claim Presentation
Condominiums
•Two types
–Residential Condominium Building Association Policy (RCBAP)
–General Property Form
General Property Form, continued
2011 NFIP Claim Presentation
Condominiums
•Tenant coverage
-10 percent extension
•Timeshares
Coverage
–General Property
–RCBAP
General Property Form, continued
2011 NFIP Claim Presentation
Residential Condominium
Building Association Policy
(RCBAP)
Read the policy!
Know the policy!
Coverage is subject to
limitations, restrictions, and
exclusions.
2011 NFIP Claim Presentation
RCBAP, continued
• Insures a residential condominium building
2011 NFIP Claim Presentation
The maximum building coverage for
a Residential Condominium Building
Association policy is $250,000 times
the number of units.
Available Amounts of Insurance
RCBAP, continued
2011 NFIP Claim Presentation
RCBAP Adjusting Issues
•Adjuster should obtain a copy of:
–The condominium master documents that are
applicable
–Insurance documents
–Adjusters must provide a detailed industry acceptable
replacement cost evaluation
–List of unit owners
–List of additional insurance
–Underwriting issues must be reported to the company immediately
Adjuster must be RCBAP certified by the NFIP
2011 NFIP Claim Presentation
RCBAP, continued
• Co-insurance Clause (80%)
Did
X Amount of Loss = Loss Payment
Should (apply deductible)
200,000
180,000X 150,000 = 135,000
(135,000-500=134,500)
2011 NFIP Claim Presentation
Learning Check
• Under what conditions can a General Property Form
provide Replacement Cost Coverage?
• Under a General Property Form for non-residential
property , a tenant has building coverage. Should the
adjuster obtain the lease agreement for the file?
• A condominium association has $670,000.00 in
coverage. The building has a replacement cost of
$1,200,000.00. How much would be paid on
a$125,000.00 loss with a $10,000.00 deductible?
2011 NFIP Claim Presentation
Learning Check Answer
$1,200,000X80% = 960,000.00
They should have had to meet 80% minimum required prior to
applying co-penalty.
670,000/960,000= 70% ITV
70%X 125,000.00 = 87,500.00 – deductible of 10,000.00 =
$77,500.00 claim payable
2011 NFIP Claim Presentation
Flood Insurance Reform Act of 2004
2011 NFIP Claim Presentation
Flood Insurance Reform Act of 2004
“… provide simple and complete information to
policyholders at the time of purchase, renewal
and at the time of a flood loss.”
2011 NFIP Claim Presentation
Flood Insurance Reform Act of 2004
Exact Coverage being Purchased
Exact Exclusions from Coverages
How Items are Valued
Loss History of Property – Number and Dollars
Section 202. Supplemental Forms
2011 NFIP Claim Presentation
Flood Insurance Reform Act of 2004
Sent to the Insured
Received Policy, Supplemental Forms, and Personal Property
not covered by Building Property coverage, but is available
To be signed by the Insured at the time of purchase and renewal,
acknowledging…
– policyholder has been given a copy of the flood policy,
– any supplemental forms, and
– has been informed to purchase coverage for
contents/possessions.
Section 203. Acknowledgement Form
2011 NFIP Claim Presentation
Flood Insurance Reform Act of 2004
Section 204. Flood Insurance Claims Handbook
Easy to read, but complete, given to the Policyholder
at the time of purchase, renewal and at the time of loss
and to all insurance companies, agents and adjusters
Contain all Information about Claims
Proof of Loss Requirements
Settlements
Filing
Settling a Claim under NFIP
2011 NFIP Claim Presentation
Flood Insurance Reform Act of 2004
Formal Appeals Process
Adjusters, Agent, Adjuster’s Supervisor
WYO Companies
FEMA
Section 205. Appeals of Decision Relating to
Flood Insurance Coverage
2011 NFIP Claim Presentation
ADJUSTER AUDIT ISSUES
2011 NFIP Claim Presentation
AUDIT ISSUES
1. Incorrect Estimate/Worksheet Calculation
Estimates are line by line, room by room using unit costs
Depreciation to both building/contents line by line
Rooms should be described and identified
Typically overhead /profit is not applied-at least three trades
Include only building items on the building
estimate/worksheet
Qualifications for R/C clearly documented
2011 NFIP Claim Presentation
AUDIT ISSUES
2. Insufficient Damage documentation
Invoices may be needed to adequately support a commercial
inventory – Salvor or CPA
Photographs should adequately document the claimed
damages – also undamaged elements/contents
2011 NFIP Claim Presentation
AUDIT ISSUES
3. Payment Processing Errors
The adjuster should make all payment recommendations
clear
Other claim documents including the estimate/worksheet,
final report, and Proof of Loss should support the
recommendations
2011 NFIP Claim Presentation
AUDIT ISSUES
4. Covered loss exceeded the value of certain items
Care is taken when Special Limits are claimed
Loss Avoidance Measures should be supported with invoices
Property removed to Safety claims should be supported with
invoices
2011 NFIP Claim Presentation
AUDIT ISSUES
5 Case Loss Reserving
The reserving system mandates that reports be timely and
reflect true reserves
Stat reserves by WYO
The NFIP Preliminary Report should refine the case loss
reserve amount
FEMA Bulletin W-08095
December 22, 2008FEMA Bulletin W-10008
February 4, 2010
Updated FEMA Bulletin W-10100
December 17, 2010
2011 NFIP Claim Presentation
Adjusting Issues
Technical Bulletins for WYO:
W-04011
Claims Payments on Enclosures at or above the BFE
W-04020
Flood Insurance Claims Guide
W-04091
Flood Insurance Claims Guidance (Elevated Building Slabs)
W-06019
Waiver of the Two-Year Limit for ICC
W-08008
Elevation Wind/Water Investigative Tips
2011 NFIP Claim Presentation
Adjusting Issues, continued
W-08043
Claims Guidance Detached Garages
W-08052
NFIP Adjuster Fee Schedule
W-08070
Claims Guidance-Hurricane Gustav and Ike
W-08095 / W-10008 / W- 10100
NFIP Case Loss Reserving Procedures
Technical Bulletins for WYO:
2011 NFIP Claim Presentation
Adjusting Issues, continued
W-09002
Formal Appeals Process – Issuance of Denial Letter
W-10017
Wind Vs Water – Adjusting Process
W-10065
Oil in Flood Water
Technical Bulletins for WYO:
www.nfipiservice.com
2011 NFIP Claim Presentation
Adjusting Issues, continued
Contents Manipulation Personal Property Coverage
purchased
Room by room lump sum not
allowed in estimates
Invoice/receipt needed if
recommended
Removal/storage not
included
2011 NFIP Claim Presentation
Adjusting Issues, continued
• Repair vs. Replacement
• Repetitive Losses
• Reserves
• Water Depth
2011 NFIP Claim Presentation
Adjusting Issues, continued
Water Depth
7’
Water Depth
Equals (+) 2’
2011 NFIP Claim Presentation
Remediation Issues
Prior to signing with
remediation contractor
Consult with the flood
adjuster or flood insurer
2011 NFIP Claim Presentation
Adjusting Issues, continued
Heating, Ventilation,
Air Conditioning
(HVAC)
2011 NFIP Claim Presentation
Adjusting Issues, continued
Elevators
2011 NFIP Claim Presentation
Adjusting Issues, continued
•Foundation elements
–Slab under elevated building
•Direct physical loss by or from
flood
–All earth movement is excluded
•Litigation
–Use experts
-Engineers, FEMA, WYO company staff
–Review with insured their duties after a loss
–Use current documentation
-Adjuster Claims Manual
-Standard Flood Insurance
Policy
–Commercial claims
–Business inventory
generally means the hiring
of a CPA
2011 NFIP Claim Presentation
Adjusting Issues, continuedDuties after a loss
•Duties of the Adjuster
–Investigate
–Evaluate
–Explain coverage to insured
–Report
–Litigation support
•Duties of the Policyholder
–Give prompt written notice of loss
–Mitigate the loss
–Cooperate with the adjuster
(see the policy forms for complete list)
•Duties of the Insurer−Process claim
−FIRA requirements
−Policy reformation
−Approve or deny
claim
−Options after loss
2011 NFIP Claim Presentation
Adjusting Issues, continuedFoundations/Slabs
2011 NFIP Claim Presentation
Adjusting Issues, continuedFoundations/Slabs
FEMA Bulletin W-04091
November 19, 2004
2011 NFIP Claim Presentation
Adjusting Issues, continued
Look inside the house for:
1) Cracks in drywall on walls and ceiling
2) Doors that stick
3) Gaps between walls and ceilings
4) Nails that are coming out of the drywall
5) Windows that are not square or are sticking
6) Floors that are cracked or not level
7) Gaps between walls and floors
Foundation / Basement
2011 NFIP Claim Presentation
Adjusting Issues, continued
Pre-existing Damages
Look outside the house for:
• Cracks in the masonry
• Gaps between bricks, doors and windows
• Bricks leaning away from garage doors
• Gaps between fireplace and house
• Sagging roof line
• Paint, caulking, vegetation in cracks
2011 NFIP Claim Presentation
Adjusting Flood Losses
Basement
2011 NFIP Claim Presentation
The definition of basement is: any area of the building having
it’s floor sub-grade (below ground level) on all sides.
Basement, continuedAdjusting Flood Losses
2011 NFIP Claim Presentation
Do basement coverage restrictions apply in each of these
structures?
Basement, continued
Adjusting Flood Losses
2011 NFIP Claim Presentation
REMEMBER !!!
Basements
2011 NFIP Claim Presentation
There is Restricted
Coverage
in all
Basements
2011 NFIP Claim Presentation
PORCH DEFINETION
1. porch, structure, construction
usage: a structure attached to
the exterior of a building often
forming a covered entrance
2011 NFIP Claim Presentation
Elevated Buildings
2011 NFIP Claim Presentation
Elevated Buildings, continued
2011 NFIP Claim Presentation
Elevated Buildings, continued
2011 NFIP Claim Presentation
Elevated Buildings, continued
• Base Flood Elevation (BFE)
• Top of Bottom Floor
• Top of Next Higher Floor
• Highest Adjacent Grade (HAG)
• Lowest Adjacent Grade(LAG)
The Elevation Certificate
2011 NFIP Claim Presentation
Elevated Buildings, continued The Elevation Certificate
2011 NFIP Claim Presentation
Elevated Buildings, continued The Elevation Certificate – Building Photographs
2011 NFIP Claim Presentation
Elevated Buildings, continued
• Diagrams 1A,1B,2
The Elevation Certificate - Building Diagrams
2011 NFIP Claim Presentation
Elevated Buildings, continued The Elevation Certificate - Building Diagrams
•Diagrams 3,4,5,6
2011 NFIP Claim Presentation
Elevated Buildings, continued The Elevation Certificate - Building Diagrams
•Diagrams 7,8,9
2011 NFIP Claim Presentation
Is it Wind or Water?
Wind/Water Investigative Tips
W-08008
2011 NFIP Claim Presentation
Is it Wind or Water?, continued
•Tornado damage
•Building construction
–Wind resistance
–Take photos
–debris
–tiedowns
–connectors
–Was it elevated?
–Ask neighbors
2011 NFIP Claim Presentation
Is it Wind or Water?, continued
2011 NFIP Claim Presentation
Is it Wind or Water?, continued
2011 NFIP Claim Presentation
Is it Wind or Water?, continued
2011 NFIP Claim Presentation
REVIEW!!!!!!!
2011 NFIP Claim Presentation
FLOOD CRITIQUE
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2011 NFIP Claim Presentation
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2011 NFIP Claim Presentation
Where to get help!
WWW.FEMA.GOV
WWW.MSC.FEMA.GOV
FEMA Flood Map Store
2011 NFIP Claim Presentation
Resources
• Adjuster Claims Manual
• NFIP Flood Manual
• Community Status Book
www.fema.gov
• WYO Bulletins
• Preliminary Damage Assessment
• Adjuster Certification Application
www.nfipiservice.com
• Current Effective Maps/Historical Maps
www.msc.fema.gov
2011 NFIP Claim Presentation
Resources
Adjuster Certifications
Mail:
NFIP Bureau & Statistical
Agent Certification
Coordinator
P.O. Box 310
Lanham, MD 207030310
Fax:
301 577-3421
2011 NFIP Claim Presentation
All attendees will be receiving an email with a link to a survey and feedback form.
Please Take Time to complete and help us improve our training effort!
THANKS
Evaluations - Online