A potentially catastrophic exposure for many insureds in Florida is flooding yet all property policies routinely exclude flood from coverage. The major provider of flood insurance is the Feral Government, through the National Flood Insurance Program (NFIP). May private insurance carriers also provide this coverage which is backed 100% by the NFIP.
The definition of a Flood is:
Amount of Insurance Available
|Emergency Program Total Coverage|
|Single Family Dwelling||50,000||200,000||250,000||35,000|
|2-4 Family Dwelling||50,000||200,000||250,000||35,000|
|All other residential||135,000||115,000||500,000||100,000|
|All other properties||135,000||365,000||500,000||100,000|
Flood Insurance through the NFIP is only available on" eligible" buildings or eligible" contents within eligible" buildings and only if the building or contents is located within and eligible" community.
Not every community is automatically eligible for the NFIP. First they must apply for admittance to the program and request a study of the areas flood potential. This study results in a Flood Hazard Boundary Map being developed, and limited coverage amounts become available. At this point, the community is said to be in the Emergency Program.
A more detailed study of the community is then undertaken, resulting in the publishing of a Flood Insurance Rate Map (FIRM). This will make much higher limits of coverage available, but only if the community n ow agrees to pass ordinances designed to lessen or eliminate future flooding. Once these requirements are met the community is said to be in the Regular Program.
Eligible Building: Must be a structure with two or more outside rigid walls and a fully secured roof, affixed to a permanent site, with 50% or more of the value above ground level. It must be located in an eligible community.
Eligible Contents: Must be located in a fully enclosed building or secured to prevent flotation out of the building. Certain specific property in basements and under elevated floors of buildings is excluded from coverage.Insurance Forms Available from the NFIP Dwelling Form - this is for 1-4 family dwellings Preferred Risk Policy (PRP) - This is only available in low risk flood zones and has specific coverage limit combinations.
General Property Form- applies for all buildings not eligible under the Dwelling Form.
Residential Condominium Building Association Policy Form (RCBAP) - form applies for any condominium association with one or more residential units if (1) at least 75% of total floor area is residential and (2) the building is in a Regulator program Community.
Valuation of Losses
Replacement cost applies to single family building losses for an individual insured’s principal residence and building losses in the Residential Condominium Building Association Policy. All other flood losses are valued at actual cash value.
Private Flood Insurers
In 2012 Congress passed the Biggert-Waters Reform Act which brought significant reform measures to the NFIP. These changes lead to Congress passing the Homeowners Flood Insurance Affordability At of 2014. Because of these changes the Florida legislature passed the Senate Bill 542, which streamlined the process of private insurance carriers to write flood insurance in Florida. This new legislation provides an alternative to the NFIP. The new legislation allows private carriers to write four different types of flood coverages.
Standard Coverage - only covers losses from the peril of flood as defined by the NFIP.
Preferred Coverage - includes the same coverage as the standard policy but also covers flood losses caused by water intrusion from outside the structure that is not otherwise covered under the standard definition of flood.
Customized Coverage-must include coverage that is broader that the standard coverage.
Supplemental Coverage- provides coverage designed to supplement a flood policy from the NFIP or from an insurer issuing a standard or preferred coverage.
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