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GR 1 May 1, 2006

GENERAL RULES

I. COMMUNITY ELIGIBILITY

A. Participating (Eligible) Communities

Flood insurance may be written only in those

communities that have been designated as

participating in the National Flood Insurance

Program (NFIP) by the Federal Emergency

Management Agency (FEMA).

B. Emergency Program

The Emergency Program is the initial phase of a

community's participation in the NFIP. Limited

amounts of coverage are available.

C. Regular Program

The Regular Program is the final phase of a

community's participation in the NFIP. In this

phase, a Flood Insurance Rate Map is in effect

and full limits of coverage are available.

D. Maps

Maps of participating communities indicate the

degree of flood hazard so that actuarial premium

rates can be assigned for insurance coverage on

properties at risk.

1. Flood Hazard Boundary Map (FHBM) -

Usually the initial map of a community.

Some communities entering the Regular

Program will continue to use FHBMs

renamed a Flood Insurance Rate Map

(FIRM), if there is a minimum flood hazard.

2. Flood Insurance Rate Map (FIRM) - The

official map of the community containing

detailed actuarial risk premium zones.

3. Rescission - Participating communities in

the Emergency Program remain in the

Emergency Program if an FHBM is

rescinded.

E. Probation

Probation, imposed by the FEMA Regional

Director, occurs as a result of noncompliance with

NFIP floodplain management criteria. A

community is placed on probation for 1 year (may

be extended), during which time a $50 surcharge

is applied to all NFIP policies, including the

Preferred Risk Policy, issued on or after the

Probation Surcharge effective date. Probation is

terminated if deficiencies are corrected. However,

if a community does not take remedial or

corrective measures while on probation, it can be

suspended.

F. Suspension

Flood insurance may not be sold or renewed in

communities that are suspended from the NFIP.

When a community is suspended, coverage

remains in effect until expiration. These policies

cannot be renewed.

G. Non-Participating (Ineligible) Communities

When FEMA provides a non-participating

community with a Flood Hazard Boundary Map

(FHBM) or Flood Insurance Rate Map (FIRM)

delineating its flood-prone areas, the community

is allowed 1 year in which to join the NFIP. If the

community chooses not to participate in the NFIP,

flood insurance is not available.

H. Coastal Barrier Resources Act

Flood insurance may not be available for

buildings and/or contents located in coastal

barriers or otherwise protected areas. See the

Coastal Barrier Resources System section for

additional information.

I. Federal Land

Buildings and/or contents located on land owned

by the federal government are eligible for flood

insurance if the federal agency having control of

the land has met floodplain management

requirements. All federal land is recorded under

the local community number even if that local

community does not have jurisdiction.

II. POLICIES AND PRODUCTS AVAILABLE

A. Standard Flood Insurance Policy

The Standard Flood Insurance Policy (SFIP)

consists of the Dwelling Form, the General

Property Form, and the Residential Condominium

Building Association Policy (RCBAP) Form. The

three SFIP forms are reproduced in the Policy

section of this manual.

The table on the next page shows how agents

can use the three SFIP forms to insure a variety

of residential and non-residential building and

contents risks.

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GR 2 May 1, 2006

Matching Standard Flood Insurance Policy Forms

with Specific Risks

SFIP POLICY FORM ELIGIBILITY

Dwelling Form

Issued to homeowner,

residential renter, or owner

of residential building

containing two to four units.

In NFIP Regular Program community or Emergency Program community, provides

building and/or contents coverage for:

 Detached, single-family, non-condominium residence with incidental occupancy

limited to less than 50% of the total floor area;

 Two- to four-family, non-condominium building with incidental occupancy limited to

less than 25% of the total floor area;

 Dwelling unit in residential condominium building;

 Residential townhouse/rowhouse.

General Property Form

Issued to owner of

residential building with five

or more units.

Issued to owner or lessee of

non-residential building or

unit.

In NFIP Regular Program community or Emergency Program community, provides

building and/or contents coverage for these and similar “other residential” risks:

 Hotel or motel with normal guest occupancy of 6 months or more;

 Tourist home or rooming house with five or more lodgers;

 Apartment building;

 Residential cooperative building;

 Dormitory;

 Assisted-living facility.

In NFIP Regular Program community or Emergency Program community, provides

building coverage and/or contents coverage for these and similar non-residential

risks:

 Hotel or motel with normal guest occupancy of less than 6 months;

 Licensed bed-and-breakfast inn;

 Retail shop, restaurant, or other business;

 Mercantile building;

 Grain bin, silo, or other farm building;

 Agricultural or industrial processing facility;

 Factory;

 Warehouse;

 Poolhouse, clubhouse, or other recreational building;

 House of worship;

 School;

 Nursing home;

 Non-residential condominium;

 Condominium building with less than 75% of its total floor area in residential use;

 Detached garage;

 Tool shed;

 Stock, inventory, or other commercial contents.

Residential Condominium

Building Association

Policy (RCBAP)

Issued to residential

condominium association on

behalf of association and

unit owners.

In NFIP Regular Program community only, provides building coverage and, if

desired, coverage of commonly owned contents for residential condominium

building with 75% or more of its total floor area in residential use.

B. Insurance Products

1. Preferred Risk Policy

The Preferred Risk Policy (PRP) is available

in moderate-risk flood zones B, C, and X.

Formerly, only single-family and two- to four-

family dwellings were eligible for coverage.

Effective May 1, 2004, other residential and

non-residential buildings became eligible for

coverage. For information about specific

eligibility requirements and other changes in

the Preferred Risk Policy, see the PRP

section of this manual.

2. Mortgage Portfolio Protection Program

(MPPP)

The Mortgage Portfolio Protection Program

(MPPP) offers a force-placed policy available

only through a Write Your Own Company.

GR 3 May 1, 2006

3. Scheduled Building Policy

The Scheduled Building Policy is available

to cover 2 to 10 buildings. The policy

requires a specific amount of insurance to

be designated for each building. To qualify,

all buildings must have the same ownership

and the same location. The properties on

which the buildings are located must be

contiguous.

4. Group Flood Insurance

Group Flood Insurance is issued by the

NFIP Direct Program in response to a

Presidential disaster declaration. Disaster

assistance applicants, in exchange for a

modest premium, receive a minimum

amount of building and/or contents coverage

for a 3-year policy period. An applicant may

cancel the group policy at any time and

secure a regular Standard Flood Insurance

Policy through the NFIP.

III. BUILDING PROPERTY ELIGIBILITY

A. Eligible Buildings

Insurance may be written only on a structure with

two or more outside rigid walls and a fully

secured roof that is affixed to a permanent site.

Buildings must resist flotation, collapse, and

lateral movement. At least 51 percent of the

actual cash value of buildings, including

machinery and equipment, which are a part of the

buildings, must be above ground level, unless the

lowest level is at or above the Base Flood

Elevation (BFE) and is below ground by reason of

earth having been used as insulation material in

conjunction with energy-efficient building

techniques.

1. Appurtenant Structures

The only appurtenant structure covered by

the SFIP is a detached garage at the

described location, which is covered under

the Dwelling Form. Coverage is limited to

no more than 10 percent of the limit of

liability on the dwelling. Use of this

insurance is at the policyholder’s option but

reduces the building limit of liability. The

SFIP does not cover any detached garage

used or held for use for residential (i.e.,

dwelling), business, or farming purposes.

2. Manufactured (Mobile) Homes/Travel

Trailers

Eligible buildings also include:

• A manufactured home (a “manu-

factured home,” also known as a

mobile home, is a structure built on a

permanent chassis, transported to its

site in one or more sections, and

affixed to a permanent foundation); or

• A travel trailer without wheels, built on

a chassis and affixed to a permanent

foundation, that is regulated under the

community’s floodplain management

and building ordinances or laws.

NOTE: All references in this

manual to manufactured

(mobile) homes include tra-

vel trailers without wheels.

a. Manufactured (Mobile) Homes - New

Policies Effective on or After October 1,

1982

To be insurable under the NFIP, a

mobile home:

• Must be affixed to a permanent

foundation. A permanent foun-

dation for a manufactured (mobile)

home may be poured masonry slab

or foundation walls, or may be

piers or block supports, either of

which support the mobile home so

that no weight is supported by the

wheels and axles of the mobile

home.

• Must be anchored if located in a

Special Flood Hazard area. For

flood insurance coverage, all new

policies and subsequent renewals

of those policies must be based

upon the specific anchoring

requirements identified below:

A manufactured (mobile) home

located within a Special Flood

Hazard Area must be anchored to a

permanent foundation to resist

flotation, collapse, or lateral

movement by providing over-the-top

or frame ties to ground anchors; or

in accordance with manufacturer’s

specifications; or in compliance with

the community’s floodplain man-

agement requirements.

b. Manufactured (Mobile) Homes -

Continuously Insured Since September

30, 1982

All manufactured (mobile) homes on a

foundation continuously insured since

September 30, 1982, can be renewed

under the previously existing require-

GR 4 May 1, 2006

ments if affixed to a permanent

foundation.

Manufactured (mobile) homes in

compliance with the foundation and

anchoring requirements at the time of

placement may continue to be renewed

under these requirements even though

the requirements are more stringent at a

later date.

To be adequately anchored, the

manufactured (mobile) home is

attached to the foundation support

system, which in turn is established

(stabilized) into the ground, sufficiently

to resist flotation, collapse, and lateral

movement caused by flood forces,

including wind forces in coastal areas.

3. Silos and Grain Storage Buildings

4. Cisterns

5. Buildings Entirely Over Water - Constructed

or Substantially Improved Before October 1,

1982

Follow "submit for rate" instructions in the

Rating section for insurance on Post-FIRM

buildings located entirely in, on, or over

water or seaward of mean high tide for these

buildings. Pre-FIRM buildings constructed

before October 1, 1982, are eligible for

normal Pre-FIRM rates.

If the building's start of construction occurred

on or after October 1, 1982, the building is

ineligible for coverage.

6. Buildings Partially Over Water

Follow “submit for rate” instructions in the

Rating section for buildings partially over

water. However, Pre-FIRM buildings are

eligible for normal Pre-FIRM rates.

7. Boathouses Located Partially Over Water

The non-boathouse parts of a building into

which boats are floated are eligible for

coverage if the building is partly over land

and also used for residential, commercial, or

municipal purposes and is eligible for flood

coverage. The area above the boathouse

used for purposes unrelated to the

boathouse use (e.g., residential occupancy)

is insurable from the floor joists to the roof

including walls. A common wall between the

boathouse area and the other part of the

building is insurable. The following items are

not covered:

a. The ceiling and roof over the

boathouse portions of the building into

which boats are floated.

b. Floors, walkways, decking, etc., within

the boathouse area, or outside the

area, but pertaining to boathouse use.

c. Exterior walls and doors of the

boathouse area not common to the rest

of the building.

d. Interior walls and coverings within the

boathouse area.

e. Contents located within the boathouse

area, including furnishings and

equipment, relating to the operation

and storage of boats and other

boathouse uses.

The Flood Insurance Application form with

photographs, but without premium, must be

submitted to the NFIP for premium

determination. No coverage becomes

effective until the NFIP approves the

insurance application, determines the rate,

and receives the premium. However,

buildings in existence prior to October 1,

1982, may continue to be rated using the

published rate.

8. Buildings in the Course of Construction

Buildings in the course of construction that

have yet to be walled and roofed are eligible

for coverage except when construction has

been halted for more than 90 days and/or if

the lowest floor used for rating purposes is

below the Base Flood Elevation (BFE).

Materials or supplies intended for use in

such construction, alteration, or repair are

not insurable unless they are contained

within an enclosed building on the premises

or adjacent to the premises.

To determine the eligibility of a residential

condominium building under construction,

see page CONDO 6 in this manual.

9. Repetitive Loss Target Group Properties

These must be processed by the NFIP

Special Direct Facility. See the Repetitive

Loss section of this manual for information.

GR 5 May 1, 2007

B. Single Building

To qualify as a single building structure and be

subject to the single building limits of coverage, a

building must be separated from other buildings

by intervening clear space or solid, vertical, load-

bearing division walls.

A building separated into divisions by solid,

vertical, load-bearing walls from its lowest level to

its highest ceiling may have each division insured

as a separate building. A solid load-bearing

interior wall cannot have any openings and must

not provide access from one building or room into

another (partial walls). However, if access is

available through a doorway or opening, then the

structure must be insured as one building unless

the building is self contained; it is a separately

titled building contiguous to the ground; it has a

separate legal description; and it is regarded as a

separate property for other real estate purposes,

meaning that it has most of its own utilities and

may be deeded, conveyed, and taxed separately.

Additions and Extensions

The NFIP insures additions and extensions

attached to and in contact with the building by

means of a rigid exterior wall, a solid load-bearing

interior wall, a stairway, an elevated walkway, or

a roof. At the insured’s option, additions and

extensions connected by any of these methods

may be separately insured. Additions and

extensions attached to and in contact with the

building by means of a common interior wall that

is not a solid load-bearing wall are always

considered part of the building and cannot be

separately insured.

C. Walls

1. Breakaway Walls

For an enclosure's wall to qualify as

breakaway, it must meet all of the following

criteria:

a. Above ground level; and

b. Below the elevated floor of an elevated

structure; and

c. Non-structurally supporting (non-load-

bearing walls); and

d. Designed to fail under certain wave

force conditions; and

e. Designed so that, as a result of failure, it

causes no damage to the elevated

portions of the elevated building and/or

its supporting foundation system.

2. Shear Walls

Shear walls are used for structural support,

but are not structurally joined or enclosed at

the ends (except by breakaway walls).

Shear walls are parallel (or nearly parallel)

to the flow of the water and can be used in

any zone.

3. Solid Perimeter Foundation Walls

Solid perimeter foundation walls are used as

a means of elevating the building in A Zones

and must contain proper openings to allow

for the unimpeded flow of floodwaters more

than 1 foot deep.

Solid perimeter foundation walls are not an

acceptable means of elevating buildings in

V/VE Zones.

D. Determination of Building Occupancy

The following terms should be used to determine

the appropriate occupancy classification:

1. Single Family Dwellings

These are non-condominium residential

buildings designed for principal use as a

dwelling place for one family, or a single-

family dwelling unit in a condominium

building. Residential single family dwellings

are permitted incidental occupancies,

including structures with office, professional,

private school, or studio occupancies,

including a small service operation, if such

occupancies are limited to less than 50

percent of the building's total floor area.

2. 2-4 Family Dwellings

These are non-condominium residential

buildings designed for principal use as a

dwelling place of two to four families.

Residential buildings, excluding hotels and

motels with normal room rentals for less than

6 months' duration and containing no more

than 4 dwelling units, are permitted incidental

occupancies (see D.1 above). The total area

of incidental occupancy is limited to less than

GR 6 May 1, 2006

25 percent of the total floor area within the

building.

3. Other Residential Buildings

These include hotels or motels where the

normal occupancy of a guest is 6 months or

more, or a tourist home or rooming house

which has more than four roomers. This also

includes residential buildings, excluding

hotels and motels with normal room rentals

for less than 6 months' duration and

containing more than four dwelling units.

These buildings are permitted incidental

occupancies (see D.1 above). The total area

of incidental occupancy is limited to less than

25 percent of the total floor area within the

building. Examples of other residential

buildings include dormitories and assisted

living facilities.

4. Non-Residential Buildings

This category includes all other eligible

occupancies (e.g., garages, poolhouses,

recreational buildings, agricultural buildings,

licensed bed and breakfasts, nursing

homes, etc.).

IV. CONTENTS ELIGIBILITY

A. Eligible Contents

Contents must be located in a fully enclosed

building or secured to prevent flotation out of the

building.

B. Vehicles and Equipment

The NFIP covers self-propelled vehicles or

machines, provided they are not licensed for use

on public roads and are:

1. Used mainly to service the described

location; or

2. Designed and used to assist handicapped

persons;

while the vehicles or machines are inside a

building at the described location.

C. Silos, Grain Storage Buildings, and

Cisterns

Contents located in silos, grain storage buildings,

and cisterns are insurable.

D. Commercial Contents Coverage

Commercial contents in a residential property

must be insured on the General Property Form.

V. EXAMPLES OF ELIGIBLE RISKS

Since the question of coverage eligibility has

frequently been raised, examples of eligible risks

are provided below.

A. Building Coverage

1. Cooperative Building--Entire Building in

Name of Cooperative (General Property

Form)

Cooperative buildings where at least 75

percent of the area of the building is used for

residential purposes are considered as

residential occupancies, and can be insured

for a maximum building coverage of

$250,000 in a Regular Program community

under the General Property Form. Since they

are not in the condominium form of

ownership, they cannot be insured under the

RCBAP.

2. Time Sharing Building--Entire Building in

Name of Corporation (General Property

Form)

Timeshare buildings not in the condominium

form of ownership where at least 75 percent

of the area of the building is used for

residential purposes are considered as

residential occupancies under the NFIP, and

can be insured for a maximum building

coverage of $250,000 under the General

Property Form.

Timeshare buildings in the condominium form

of ownership are eligible for coverage and

must be insured under the RCBAP. These

buildings are subject to the same eligibility,

rating, and coverage requirements as other

condominiums, including the requirement that

75 percent of the area of the building be used

for residential purposes.

B. Contents Coverage

Parts and equipment as open stock—not part of

specific vehicle or motorized equipment—are

eligible for coverage.

C. Condominiums

Refer to pages CONDO 3-5.

VI. INELIGIBLE PROPERTY

A. Buildings

Coverage may not be available for buildings that

are constructed or altered in such a way as to

place them in violation of state or local floodplain

management laws, regulations, or ordinances.

GR 7 May 1, 2006

Contents and personal property contained in

these buildings are ineligible for coverage.

For example, section 1316 of the National Flood

Insurance Act of 1968 allows the states to declare

a structure to be in violation of a law, regulation,

or ordinance. Flood insurance is not available

for properties that are placed on the 1316

Property List. Insurance availability is restored

once the violation is corrected and the 1316

Declaration has been rescinded.

B. Container-Type Buildings

Gas and liquid tanks, chemical or reactor

container tanks or enclosures, brick kilns, and

similar units, and their contents are ineligible for

coverage.

C. Buildings Entirely Over Water

Buildings newly constructed or substantially

improved on or after October 1, 1982, and

located entirely in, on, or over water or seaward

of mean high tide are ineligible for coverage.

D. Buildings Partially Underground

If 50 percent or more of the building's actual cash

value, including the machinery and equipment,

which are part of the building, is below

ground level, the building or units and their

contents are ineligible for coverage unless the

lowest level is at or above the BFE and is below

ground by reason of earth having been used as

insulation material in conjunction with energy

efficient building techniques.

E. Basement/Elevated Building Enclosures

Certain specific property in basements and under

elevated floors of buildings is excluded from

coverage. See the policy contract for specific

information.

VII. EXAMPLES OF INELIGIBLE RISKS

Some specific examples of ineligible risks are

provided below. See the policy for a definitive

listing of property not covered.

A. Building Coverage

1. Boat Repair Dock

2. Boat Storage Over Water

3. Boathouses (exceptions on page GR 4)

4. Camper

5. Cooperative Unit Within Cooperative

Building

6. Decks (except for steps and landing;

maximum landing area of 16 sq. ft.)

7. Drive-In Bank Teller Unit (located outside

walls of building)

8. Fuel Pump

9. Gazebo (unless it qualifies as a building)

10. Greenhouse (unless it has at least two rigid

walls and a roof)

11. Hot tub or spa (unless it is installed as a

bathroom fixture)

12. Open Stadium

13. Pavilion (unless it qualifies as a building)

14. Pole Barn (unless it qualifies as a building)

15. Pumping Station (unless it qualifies as a

building)

16. Storage Tank--Gasoline, Water, Chemicals,

Sugar, etc.

17. Swimming Pool Bubble

18. Swimming Pool (indoor or outdoor)

19. Tennis Bubble

20. Tent

21. Time Sharing Unit Within Multi-Unit Building

22. Travel Trailer (unless converted to a

permanent onsite building meeting the

community's floodplain management permit

requirements)

23. Water Treatment Plant (unless 51 percent of

its actual cash value is above ground)

B. Contents Coverage

1. Automobiles--Including Dealer's Stock

(assembled or not)

2. Bailee's Customer Goods--Including

garment contractors, cleaners, shoe repair

shops, processors of goods belonging to

others, and similar risks

3. Contents Located in a Structure Not

Eligible for Building Coverage

4. Contents Located in a Building Not Fully

Walled and/or Contents Not Secured

Against Flotation

GR 8 May 1, 2007

5. Motorcycles--Including Dealer's Stock

(assembled or not)

6. Motorized Equipment--Including Dealer's

Stock (assembled or not)

C. Non-Residential Condominium Unit

The owner of a non-residential condominium unit

cannot purchase a unit owner's policy. The

association can purchase a condominium

association policy to cover the entire building.

Contents-only coverage may be purchased by

the unit owner.

VIII. POLICY EFFECTIVE DATE

A. Evidence of Insurance

A copy of the Flood Insurance Application and

premium payment, or a copy of the declarations

page, is sufficient evidence of proof of purchase.

The NFIP does not recognize an oral binder or

contract of insurance.

B. Start of Waiting Period

There is a standard 30-day waiting period for new

applications and for endorsements to increase

coverage.

1. 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. Use the application date

or endorsement date plus 9 days to

determine if the application or endorsement

and premium payment were received within

10 days. When sent by certified mail, use

the application date or endorsement date

plus 3 days to determine if the application

or endorsement and premium payment

were mailed within 4 days.

2. If the application or endorsement form and

the premium payment are received at the

NFIP after 10 days from the date of

application or endorsement request, or are

not mailed by certified mail within 4 days

from the date of application or endorsement

request, then the waiting period will be

calculated from the date the NFIP receives

the application or endorsement.

As used in VIIl.B.1. and 2. above, the term

“certified mail” extends to not only the U.S.

Postal Service but also certain third-party

delivery services. Acceptable third-party delivery

services include Federal Express (FedEx),

United Parcel Service (UPS), and courier

services and the like that provide proof of

mailing. Third-party delivery is acceptable if the

delivery service provides documentation of the

actual mailing date and delivery date to the NFIP

insurer. Bear in mind that third-party delivery

services deliver to street addresses but cannot

deliver to U.S. Postal Service post office boxes.

C. Effective Date

1. New Policy (other than 2, 3, or 4 below)--

The effective date of a new policy will be

12:01 a.m., local time, on the 30th calendar

day after the application date and the

presentment of premium. (Example: a

policy applied for on May 3 will become

effective 12:01 a.m., local time, on June 2.)

The effective date of coverage is subject to

the waiting period rule listed under B.1 or

B.2 above.

2. New Policy (in connection with making,

increasing, extending, or renewing a loan,

whether conventional or otherwise)--Flood

insurance, which is initially purchased in

connection with the making, increasing,

extending, or renewal of a loan, shall be

effective at the time of loan closing,

provided that the policy is applied for and

the presentment of premium is made at or

prior to the loan closing. (Example:

presentment of premium and application

date--April 3, refinancing--April 3 at 3:00

p.m., policy effective date--April 3 at 3:00

p.m.) This rule applies to all buildings

regardless of flood zone. The waiting

period rule listed under B.1 or B.2 above

does not apply.

3. New Policy (in connection with lender

requirement)--The 30-day waiting period

does not apply when flood insurance is

required as a result of a lender determining

that a loan on a building in a Special Flood

Hazard Area (SFHA) that does not have

flood insurance coverage should be

protected by flood insurance. The coverage

is effective upon the completion of an

application and the presentment of payment

of premium. (Example: presentment of

premium and application date--April 3, policy

effective date--April 3.) The waiting period

rule listed under B.1 or B.2 must be used.

4. New Policy (when the initial purchase of

flood insurance is in connection with the

revision or updating of a Flood Hazard

Boundary Map or Flood Insurance Rate

GR 9 October 1, 2006

Map)--During the 13-month period

beginning on the effective date of the map

revision, the effective date of a new policy

shall be 12:01 a.m., local time, following the

day after the application date and the

presentment of premium. This rule only

applies where the Flood Hazard Boundary

Map (FHBM) or Flood Insurance Rate Map

(FIRM) is revised to show the building to be

in a Special Flood Hazard Area (SFHA)

when it had not been in an SFHA.

(Example: FIRM revised--January 1, 2005,

policy applied for and presentment of

premium--August 3, 2005, policy effective

date--August 4, 2005.) The waiting period

rule listed under B.1 or B.2 above must be

used. This rule applies to all property

owners including condominium associ-

ations.

5. New Policy (in connection with the

purchase of an RCBAP)--When a

condominium association is purchasing a

Residential Condominium Building

Association Policy (RCBAP), the 30-day

waiting period does not apply if the

condominium association is required to

obtain flood insurance as part of the

security for a loan under the name of the

condominium association. The coverage is

effective upon completion of an application

and presentment of premium. The waiting

period rule listed under B.1 or B.2 above

does not apply.

Otherwise, the 30-day waiting period

applies, and the waiting period rule listed

under B.1 or B.2 above must be used.

6. New Policy (submit-for-rate application)--

With three exceptions (described below),

the effective date of a new policy will be

12:01 a.m., local time, on the 30th calendar

day after the presentment of premium.

The three exceptions are as follows.

First, there is no waiting period if the initial

purchase of flood insurance on a submit-

for-rate application is in connection with

making, increasing, extending, or renewing

a loan, provided that the policy is applied

for and the presentment of premium is

made at or prior to the loan closing. The

waiting period rule listed under B.1 or B.2

above does not apply.

Second, the 30-day waiting period does not

apply when flood insurance is required as a

result of a lender determining that a loan

which does not have flood insurance

coverage should be protected by flood

insurance, because the building securing a

loan is located in an SFHA. The coverage

is effective upon the completion of an

application and the presentment of

payment of premium. This exemption from

the 30-day waiting period applies only to

loans in SFHAs, i.e., those loans for which

the statute requires flood insurance. The

waiting period rule listed under B.1 or B.2

above must be applied.

Third, during the 13-month period

beginning on the effective date of a map

revision, the effective date of a new policy

shall be 12:01 a.m., local time, following the

day after the date the increased amount of

coverage is applied for and the

presentment of additional premium is

made. This rule applies only on an initial

purchase of flood insurance where the

Flood Hazard Boundary Map (FHBM) or

Flood Insurance Rate Map (FIRM) is

revised to show the building to be in an

SFHA when it had not been in an SFHA.

The waiting period rule listed under B.1 or

B.2 must be applied.

7. New Policy (rewrite Standard to PRP)--The

30-day waiting period does not apply when

an insured decides to rewrite the existing

policy at the time of renewal from Standard

to a Preferred Risk Policy (PRP), provided

that the selected PRP coverage limit

amount is no higher than the next highest

PRP amount above that which was carried

on the Standard policy using the highest of

building and contents coverage. In those

cases where the Standard policy has only

one kind of coverage, either building or

contents only, the 30-day waiting period

applies.

In addition, if the structure is no longer

eligible under the PRP or the insured

decides to rewrite the existing PRP at

renewal time to a Standard policy, the

30-day waiting period does not apply

provided the coverage limit amount is no

more than the previous PRP coverage

amount or the next higher PRP amount

above that.

8. New Policy (contents only)--Unless the

contents are part of the security for a loan,

the 30-day waiting period applies to the

purchase of contents-only coverage.

9. New Policy (documentation required)--The

insurer may rely on an agent’s

GR 10 May 1, 2007

representation on the application that the

loan exception applies unless there is a

loss during the first 30 days of the policy

period. In that case, the insurer must

obtain documentation of the loan

transaction, such as settlement papers,

before adjusting the loss.

10. Community's Initial Entry or Conversion

from Emergency to Regular Program--

Process according to rules 1 through 9

above and 11 below.

11. Endorsements--With two exceptions

(described below), the effective date for a

new coverage or an increase in limits on a

policy in force shall be 12:01 a.m., local

time, on the 30th calendar day following the

date of endorsement and the presentment

of additional premium, or on such later date

set by the insured to conform with the

reason for the change. The waiting period

rule listed under B.1 or B.2 above must be

used.

The two exceptions are as follows.

First, during the 13-month period beginning

on the effective date of a map revision, the

effective date of an endorsement of an

existing policy shall be 12:01 a.m., local

time, following the day after the application

date and the presentment of premium. This

rule applies only where the FHBM or FIRM

is revised to show the building to be in an

SFHA when it had not been in an SFHA.

The waiting period rule listed under B.1 or

B.2 above does not apply.

Second, the 30-day waiting period does not

apply when the additional amount of flood

insurance is required in connection with the

making, increasing, extending, or renewing

of a loan, such as a second mortgage,

home equity loan, or refinancing. The

increased amount of flood coverage shall

be effective at the time of loan closing,

provided that the increased amount of

coverage is applied for and the

presentment of additional premium is made

at or prior to the loan closing. The waiting

period rule listed under B.1 or B.2 above

does not apply.

The insurer may rely on an agent’s

representation on the endorsement that the

loan exception applies unless there is a loss

during the first 30 days after the

endorsement effective date. In that case, the

insurer must obtain documentation of the

loan transaction, such as settlement papers,

before adjusting the loss.

12. Renewals (inflation increase option)--The

30-day waiting period does not apply when

an additional amount of insurance is

requested at renewal time that is no more

than the amount of increase recommended

by the insurer on the renewal bill to keep

pace with inflation. If a revised renewal

offer is generated at least 30 days before

renewal with coverage more than the

inflation increase option, the new limits will

apply at policy renewal.

In either situation, the increased amount of

coverage will be effective at 12:01 a.m. on

the date of policy renewal provided the

premium for the increased coverage is

received before the expiration of the grace

period.

13. Renewals (higher PRP limits)--The waiting

period does not apply to a renewal offer to

the insured for the next higher limits

available under the PRP.

14. Renewals (deductible reduction)--The

30-day waiting period does not apply to a

reduction of the deductible effective as of

the renewal date.

IX. COVERAGE

A. Limits of Coverage

Coverage may be purchased subject to the

maximum limits of coverage available under the

Program phase in which the community is

participating. Duplicate policies are not allowed.

B. Deductibles

Deductibles apply separately to building

coverage and to contents coverage.

C. Coverage D - Increased Cost of

Compliance (ICC) Coverage

For all new and renewal policies effective on or

after May 1, 2003, the ICC limit of liability is

$30,000.

The Standard Flood Insurance Policy (SFIP) pays

for complying with a State or local floodplain

management law or ordinance affecting repair or

reconstruction of a structure suffering flood

damage. Compliance activities eligible for

payment are: elevation, floodproofing, relocation,

or demolition (or any combination of these

activities) of the insured structure. Eligible

floodproofing activities are limited to non-

GR 11 May 1, 2007

residential structures and residential structures

with basements that satisfy FEMA's standards

published in the Code of Federal Regulations [44

CFR 60.6 (b) or (c)].

ICC coverage is mandatory for all SFIPs, except

that coverage is not available for:

1. Policies issued or renewed in the

Emergency Program.

2. Condominium units, including townhouse/

rowhouse condominium units. (The

condominium association is responsible for

complying with mitigation requirements.)

3. Group Flood Insurance Policies.

4. Appurtenant structures, unless covered by

a separate policy.

ICC coverage contains exclusions in addition to

those highlighted here. See the policy for a list of

exclusions.

To be eligible for claim payment under ICC, a

structure must:

a. Be a repetitive loss structure as defined, for

which NFIP paid a previous qualifying claim,

in addition to the current claim. The state or

community must have a cumulative,

substantial damage provision or repetitive

loss provision in its floodplain management

law or ordinance being enforced against the

structure; OR

b. Be a structure that has sustained substantial

flood damage. The state or community

must have a substantial damage provision in

its floodplain management law or ordinance

being enforced against the structure.

The ICC premium is not eligible for the deductible

discount. First calculate the deductible discount,

then add in the ICC premium for each policy year.

D. Reduction of Coverage Limits or

Reformation

In the event that the premium payment received

is not sufficient to purchase the amounts of

insurance requested, the policy shall be deemed

to provide only such insurance as can be

purchased for the entire term of the policy for the

amount of premium received.

Complete provisions for reduction of coverage

limits or reformation are described in:

1. Dwelling Form, section VII, paragraph G.

2. General Property Form, section VII,

paragraph G.

3. Residential Condominium Building Asso-

ciation Policy (RCBAP), section VIII,

paragraph G.

E. Loss Assessments

The SFIP provides limited coverage for loss

assessments against condominium unit owners for

flood damage to common areas of any building

owned by the condominium association. The

RCBAP does not provide assessment coverage.

The Dwelling Form provides assessment coverage

only under the circumstances, and to the extents,

described below.

1. No RCBAP

• If the unit owner purchases building

coverage under the Dwelling Form and

there is no RCBAP, the Dwelling Form

responds to a loss assessment against

the unit owner for damages to common

areas, up to the building coverage limit

under the Dwelling Form.

• If there is damage to building elements of

the unit as well, the building coverage limit

under the Dwelling Form may not be

exceeded by the combined settlement of

unit building damages, which would apply

first, and the loss assessment.

2. RCBAP Insured to at Least 80 Percent of the

Building Replacement Cost

• If the unit owner purchases building

coverage under the Dwelling Form and

there is an RCBAP insured to at least 80

percent of the building replacement cost

at the time of loss, the loss assessment

coverage under the Dwelling Form will

pay that part of a loss that exceeds 80

percent of the association’s building

replacement cost.

• The loss assessment coverage under the

Dwelling Form will not cover the

association’s policy deductible purchased

by the condominium association.

• If there is damage to building elements of

the unit as well, the Dwelling Form pays to

repair unit building elements after the

RCBAP limits that apply to the unit have

been exhausted. The coverage combi-

nation cannot exceed the building

coverage limit under the Dwelling Form.

3. RCBAP Insured to Less than 80 Percent of

the Building Replacement Cost

• If the unit owner purchases building

coverage under the Dwelling Form and

GR 12 May 1, 2007

there is an RCBAP insured to less than 80

percent of the building replacement cost

at the time of loss, the loss assessment

coverage cannot be used to reimburse the

association for its coinsurance penalty.

• The covered damages to the condo-

minium association building must be

greater than 80 percent of the building

replacement cost at the time of loss

before the loss assessment coverage

becomes available under the Dwelling

Form. Covered repairs to the unit, if

applicable, would have priority over loss

assessments.

For more information on this topic, see “D. Assess-

ment Coverage” on page CONDO 7 and Section

III. C. 3. of the Dwelling Form, “Condominium Loss

Assessments,” on page POL 8.

X. SPECIAL RATING SITUATIONS

A. Tentative Rates

Tentative rates are applied when producers are

unable to provide all required underwriting

information necessary to rate the policy.

Tentatively rated policies cannot be endorsed to

increase coverage limits or renewed for another

policy term until required actuarial rating

information and full premium payment are

received by the NFIP. If a loss occurs on a

tentatively rated policy, the loss payment will be

limited by the amount of coverage that the

premium initially submitted will purchase (using

the correct actuarial rating information), and not

the amount requested by application.

B. Submit-For-Rate

Some risks, because of their unique underwriting

characteristics, cannot be rated using this

manual. Certain risks must be submitted to the

NFIP Underwriting Unit to determine the

appropriate rate. Refer to page GR 9 for the

applicable waiting period.

Submit-for-rate policies must be rerated annually

using the newest rates. If the NFIP Direct or

WYO company does not have all the underwriting

information, it must request the missing

information from the insured in order to properly

rate the risk.

Pre-FIRM risks may not be rated using the

submit-for-rate process.

C. Provisional Rates

Rules applicable to provisionally rated policies

are provided in the Provisional Rating section of

this manual.

D. Buildings in More Than One Flood Zone

Buildings, not the land, located in more than one

flood zone must be rated using the more

hazardous zone.

This condition applies even though the portion of

the building located in the more hazardous zone

may not be covered under the SFIP, such as a

deck.

XI. MISCELLANEOUS RULES

A. Policy Term

The policy term available is 1 year for both NFIP

Direct business policies and policies written

through WYO Companies.

B. Application Submission

Flood insurance applications and presentment of

premium must be mailed promptly to the NFIP.

The date of receipt of premium for the NFIP

insurer is determined by either the date received

at its offices or the date of certified mail.

In the context of submission of applications,

endorsements, and premiums to the NFIP, the

term “certified mail” has been broadened to

include not only the U.S. Postal Service but also

certain third-party delivery services. For details,

see the paragraph following VIII.B.2. on page

GR 8.

Producers are encouraged to submit flood

insurance applications by certified mail. Certified

mail ensures the earliest possible effective date if

the application and premium are received by the

NFIP insurer more than 10 days from the

application date. The date of certification

becomes the date of receipt at the NFIP.

C. Delivery of the Policy

The producer is responsible for delivering the

declarations page and the policy contract of a

new policy to the insured and, if appropriate, to

the lender. Renewal policy documentation is sent

directly to the insured.

D. Assignment

A property owner's flood insurance building policy

may be assigned in writing to a purchaser of the

GR 13 May 1, 2007

insured property upon transfer of title without the

written consent of the NFIP.

Policies on buildings in the course of construction

and policies insuring contents only may not be

assigned.

E. Producers' Commissions (Direct

Business Only)

The earned commission may be paid only to

property or casualty insurance producers duly

licensed by a state insurance regulatory authority.

It shall not be less than $10 and is computed for

both new and renewal policies as follows: Based

on the Total Prepaid Amount (less the Federal

Policy Fee) for the policy term, the commission

will be 15 percent of the first $2,000 of annualized

premium and 5 percent on the excess of $2,000.

Calculated commissions for mid-term endorse-

ments and cancellation transactions will be based

upon the same commission percentage that was

paid at the policy term's inception.

Commissions for all Scheduled Building Policies

are computed as though each building and

contents policy was separately written.

For calculation of commission on an RCBAP, see

the CONDO section.

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