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NFIP Rule ChangesThe following changes to the NFIP were implemented effective October 1, 2006. For more details about these changes, refer to the NFIP's Flood Insurance Manual accessible online or order a hardcopy subscription for $25 from FEMA's Map Service Center (MSC). To order by phone, call the MSC toll free at 800-358-9616 or fax your order to the MSC at 800-358-9620.Severe Repetitive Loss Program Properties that flood repeatedly cause financial hardship for the owners and have a significant, adverse financial impact on the NFIP, as well. In 2000, the NFIP established a Special Direct Facility (SDF) to identify those insured properties most prone to repeated flooding and to enable easier tracking of mitigation activities that would remove these properties from harm's way. In response to legislation in the Flood Insurance Reform Act (FIRA) of 2004, the NFIP has now created a new category of repetitive loss--Severe Repetitive Loss (SRL) properties--for identification and mitigation. See " Tracking Severe Repetitive Losses" for a description of this new program and how it impacts those policies already held in the SDF. The Flood Insurance Manual contains a new SRL section about Severe Repetitive Loss properties that provides details about changes in the SDF's policies and procedures. The new definition for Severe Repetitive Loss properties is on page DEF 8 of the manual. New Photo Requirements FEMA is making it easier to correctly rate policies for elevated buildings by requiring that all Elevation Certificates certified on or after January 1, 2007, or later be accompanied by at least two recent photographs. Preferred Risk Policies and Prior Losses Preferred Risk Policies (PRPs) offer eligible NFIP policyholders financial protection from flooding at a moderate cost. A building's eligibility for the PRP is based on several requirements, including its flood loss history. If one of the following conditions exists, regardless of any change(s) in ownership of the building, then the building is not eligible for the PRP:
FEMA has clarified the PRP eligibility criteria pertaining to receipt of Federal flood disaster relief payments. Federal flood disaster relief payments (including loans and grants) are counted only if the building suffered flood damage. A flood insurance claim payment (building and/or contents) and a Federal flood disaster relief payment (including loans and grants) for the same loss are considered a single payment. Clarifying Crawl Space Rating Determining which rating table to use for a building constructed before the Flood Insurance Rate Map (FIRM) was published for the area in which the structure is located can become more complex if the building has a crawl space. As of October 1, 2006, Pre-FIRM buildings with subgrade crawl spaces may now--for the first time--use optional Post-FIRM elevation rating, provided that the lowest floor is below the Base Flood Elevation. The building must be reported statistically as a "submit-for-rate" policy using Risk Rating Method 2. To process these risks, agents must follow the submit-for-rate procedures on pages RATE 23-24. This is the only Pre-FIRM construction that can be rated using the submit-for-rate procedure. Cancellation Code 01 Clarification has been provided in the manual's October 1, 2006, changes for situations in which an insured wants to cancel his or her policy because the building has been foreclosed or because it has sustained flood damage equal to or greater than its replacement cost and is considered a total loss. In such cases, agents must use cancellation/nullification reason code "01" on the Cancellation/Nullification Request Form and submit this with proper documentation to the current NFIP insurer to process the cancellation of the flood insurance policy. CRS Changes A number of new communities have joined the Community Rating System or have improved their class rating as of October 1, 2006. See "Increasing Policyholder Discounts" for these changes and "First-Rate Community" for a description of the first community to receive the CRS Class 1 rating. Start of Waiting Period There is a standard 30-day waiting period for new applications and for endorsements to increase coverage. If the application or endorsement form and the premium payment are received at the NFIP within 10 days from the date of application or endorsement request, or if mailed by certified mail within 4 days from the date of application or endorsement request, then the waiting period will be calculated from the application or endorsement date. An October 1, 2006, clarification states that agents must count the application date (or the endorsement date) plus 9 days to determine if the application or endorsement and premium payment were received within 10 days. When these materials are sent by certified mail, agents count the application date (or endorsement date) plus 3 days to determine if the application or endorsement and premium payment were received within 4 days. Getting the Details You will find all recent enhancements to the Flood Insurance Manual by accessing the manual online or by ordering it from FEMA's Map Service Center (800-358-9616). Semiannual revisions are identified by a vertical bar in the page margin next to the text, table, or illustration that has been changed. |
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Last updated on December 1, 2006
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