PERSONAL LINES
UNDERSTANDING THE UNIQUE FACETS OF FLOOD INSURANCE: FLOOD POLICY FORMS Compared to more common property insurance policies, National Flood Insurance Program (NFIP) policy forms are quite intriguing. First, the Federal government wrote them; and second, they use terms and conditions not found in other property policy forms. The three NFIP coverage forms are highlighted in the following paragraphs. Three Policy Forms Each Standard Flood Insurance Policy (SFIP) form issued by the Federal Emergency Management Agency (FEMA) specifies the terms, conditions, and agreement between FEMA (as the insurer) and the named insured. Major provisions are essentially the same among the three forms with the only differences being the qualifications for coverage, the limits available and the property valuation methods applied.
Dwelling Form Approximately 85 percent of current NFIP policies are written using the dwelling form. It is designed for one- to-four-family structures primarily occupied as a residence. Homeowners, residential renters, owners of two-to-four-unit residential structures, residential townhouse or row house owners, and the owner of an individual unit in a condominium building are eligible for the dwelling form. Property insured on the dwelling form is valued at replacement cost provided two requirements are met: • Property is insured to at least 80 percent of its value or the maximum coverage available—whichever is less; and • The insured lives in the residence at least 80 percent of the year.
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14 | MAY 2022 |
wisconsin INDEPENDENT AGENT
If either of these requirements is not met, the most the insured is going to receive is the property's actual cash value (ACV).
