CFM Flood Insurance & NFIP 2 — Questions and Answers
Question 1: What is the primary purpose of the Elevation Certificate (EC) in relation to flood insurance?
- To certify that a building meets energy efficiency standards
- To document a building's elevation for flood insurance rating and compliance purposes (Correct answer)
- To prove a property has been remediated from prior flood damage
- To establish the base flood elevation for a new community
Correct answer: To document a building's elevation for flood insurance rating and compliance purposes
The Elevation Certificate documents the elevation of a building relative to the Base Flood Elevation and is used by insurance agents to rate NFIP flood insurance policies and by communities to verify compliance with floodplain management ordinances.
Question 2: What is a Preferred Risk Policy (PRP) under the NFIP?
- A policy only available to government-owned properties
- A lower-cost flood insurance policy available to eligible properties in low-to-moderate risk areas (Correct answer)
- A policy that provides additional living expense coverage after a flood
- A policy for properties with previous flood claims that receive a discount
Correct answer: A lower-cost flood insurance policy available to eligible properties in low-to-moderate risk areas
A Preferred Risk Policy is a lower-cost NFIP flood insurance policy available to buildings located in moderate- or low-risk flood zones (B, C, and X zones) that meet eligibility requirements.
Question 3: Which of the following losses is typically NOT covered under a Standard NFIP flood insurance policy?
- Structural damage to the foundation
- Damage to electrical systems
- Additional living expenses while displaced (Correct answer)
- Damage to HVAC systems
Correct answer: Additional living expenses while displaced
NFIP policies do not cover additional living expenses (ALE) or loss of use; this coverage must be obtained through a separate homeowners or renter's policy.
Question 4: What is a 'Repetitive Loss' property as defined by FEMA?
- Any property that has flooded more than once
- A property that has had two or more NFIP claim payments of more than $1,000 each within any 10-year period (Correct answer)
- A property located in a floodway that floods annually
- A property with cumulative NFIP claims exceeding its current market value
Correct answer: A property that has had two or more NFIP claim payments of more than $1,000 each within any 10-year period
FEMA defines a Repetitive Loss property as one with two or more NFIP claim payments of more than $1,000 each within any rolling 10-year period, regardless of ownership changes.
Question 5: What is a 'Severe Repetitive Loss' (SRL) property under the NFIP?
- A property with any flood claim over $50,000
- A property with four or more separate NFIP flood claims, each exceeding $5,000
- A property with NFIP cumulative claims exceeding the property value or with four or more separate claim payments over $5,000 each (Correct answer)
- A property that has flooded in five consecutive years
Correct answer: A property with NFIP cumulative claims exceeding the property value or with four or more separate claim payments over $5,000 each
SRL properties are those with cumulative NFIP claim payments exceeding the current value of the structure, OR those with four or more separate NFIP claim payments each exceeding $5,000 within any 10-year period.
Question 6: Under NFIP rules, what type of damage is covered when water from a sewer backs up into a home due to flooding?
- It is always fully covered as flood damage
- It is covered only if the sewer backup is caused by flooding of the general area (Correct answer)
- It is never covered under NFIP; only private policies cover sewer backup
- It is covered only if the homeowner purchased a separate sewer backup rider
Correct answer: It is covered only if the sewer backup is caused by flooding of the general area
NFIP covers sewer or drain backup if the backup is a direct result of flooding in the area; damage from sewer backup not caused by flooding conditions is not covered.
Question 7: What is the Increased Cost of Compliance (ICC) coverage under NFIP?
- Coverage for upgrading a home's energy systems after a flood
- Coverage that helps pay for the cost to bring a substantially damaged or repetitive loss structure into compliance with local floodplain ordinance (Correct answer)
- Additional coverage purchased by communities to upgrade their flood maps
- Coverage for legal costs when disputing flood insurance claims
Correct answer: Coverage that helps pay for the cost to bring a substantially damaged or repetitive loss structure into compliance with local floodplain ordinance
ICC coverage provides up to $30,000 to help pay the costs of bringing a substantially damaged or repetitive loss building into compliance with the community's floodplain management ordinance, including elevation, floodproofing, relocation, or demolition.
CFM Flood Insurance & NFIP 2
What is the primary purpose of the Elevation Certificate (EC) in relation to flood insurance?