Summary: The General Property Form is available through the National Flood Insurance Program (NFIP). The NFIP falls under the Federal Emergency Management Agency (FEMA) Federal Insurance Administration. There are three standard policies used for writing flood insurance under the NFIP: Dwelling, General Property, and Residential Condominium Building Association policies.
The General Property form is the only one of the forms that may be used to insure commercial enterprises, such as a nonresidential condominium building or a mercantile or manufacturing concern. It may also be used to insure a residential condominium not qualifying for the regular program, or personal property in a unit in a nonresidential condominium building.
Coverage is on an actual cash value basis with no applicable coinsurance. Replacement cost is not available.
Topics covered:
Introduction
Insuring agreement
Definitions
Covered building property
Covered personal property
Other coverages
Property not covered
Exclusions
Deductibles
General conditions
Loss settlement provisions
Liberalization clause; what law governs
Introduction
The NFIP General Property Form may be used to insure residential buildings with five or more units and owners or lessees of nonresidential buildings or units. Cooperative buildings—where the entire building is in the name of the cooperative—time sharing buildings not in the condominium form of ownership, and condominiums that do not meet Residential Condominium Building Association Policy (RCBAP) requirements, may be written on the General Property Form. Eligible condominiums include those buildings in emergency program communities and those without at least 75 percent floor area used for residential purposes. The form may also be used for commercial condominiums and their commonly owned contents and for commercial condominium unit owners.
The Biggert-Waters Flood Insurance Reform Act of 2012 allowed for an increase in maximum building coverage for non-condominium residential buildings designed for use for five or more families (also known as other residential buildings) from $250,000 to $500,000, effective June 2014. The maximum content coverage for policies covering other residential buildings remained at $100,000 per policy. The limit of coverage available for a condo, timeshare, or other commercial building is $500,000 ($500,000 contents) in the regular program, and for buildings in the emergency program the limit is $100,000 ($100,000 contents). Nonresidential unit owners' contents may be insured for $500,000 in the regular program and $100,000 in the emergency program.
This form can also be used to insure such property as silos and grain storage buildings, cisterns, and buildings built entirely over water, if constructed prior to October 1, 1982. (These must be submitted for a rate.) Boathouses built partially over water—the portions of the building not used for boathouse purposes—may be insured, so long as the building is partially over land and also used for residential, commercial, or municipal purposes, and is eligible for flood coverage.
The form can also be used to insure stock, machinery, furniture and fixtures, and other property used in an insured's business. This is not to say all stock is covered. Autos and motorcycles, notably, cannot be insured on the general property form.
It is important to note that, while the general property form does not contain a coinsurance provision, neither does it provide replacement cost coverage for either building or contents. Loss settlement is strictly on an actual cash value (replacement less depreciation, not including any antique value) basis.
Before the insuring agreement, the form states the following:
This policy provides no coverage:
1.in a regular program community, for a residential condominium building, as defined in this policy; and
2.except for personal property coverage, for a unit in a condominium building.
Analysis
The form makes clear that the form is not designed for residential condos in a regular program community and for units in a condo building, except for personal property.
The Federal Emergency Management Agency (FEMA) provides flood insurance under the terms of the National Flood Insurance Act of 1968 and its Amendments, and Title 44 of the Code of Federal Regulations.
We will pay you for direct physical loss by or from flood to your insured property if you:
1.Have paid the correct premium;
2.Comply with all terms and conditions of this policy; and
3.Have furnished accurate information and statements.
We have the right to review the information you give us at any time and to revise your policy based on our review.
Analysis
The insurer is the Federal Emergency Management Agency (FEMA). The form covers all direct physical loss by or from flood to the insured property. Coverage is contingent upon the insured's having paid the correct premium and the accuracy of the information furnished to the insurer.
Definitions
As is common in property forms, the General Property Form sets out who the parties are and how they will be referred to throughout the policy. Since the General Property Form lends itself to a variety of properties to be insured, the entities insured are the named insured and legal representatives and any mortgagee and trustee named in the application and declarations page. In common with the RCBAP, the General Property Form makes no reference to “your spouse.” Any other entity with an interest in the insured property at the time of loss is also covered, but in order of precedence.
Most important for this form is the definition of “flood.”
Flood, as used in this flood insurance policy, means:
1.A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (one of which is your property) from:
a.Overflow of inland or tidal waters;
b.Unusual and rapid accumulation or runoff of surface waters from any source;
c.Mudflow.
2.Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels which result in a flood as defined in A.1.a. above.
Analysis
The definition of “flood” includes the overflow of inland or tidal waters. If a dam were to burst, releasing a torrent of water that flooded homes, this could fall within the scope of the “overflow of inland waters” since the inland waters can be either natural or manmade.
As well as providing coverage for commonly understood flooding, the definition of “flood” encompasses unusual and rapid runoff of surface waters, mudslides that may be triggered by such runoff, and collapse of land along the shore resulting from flooding. The surface water can come from any source—melting snow, ice, or rain. “Surface water” is not defined in the form; many courts hold it to be water usually created by rain or snow that is of a casual or vagrant nature, following no definite course. For example, in Smith v. Union Automobile Indemnity Co., 752 N.E.2d 1261 (Ill. App. 2001), the court viewed various jurisdictions relying on this definition and concluded that it was the most popular and applicable.
When contacted for an elaboration on the requirement that a flood cause complete inundation of two or more acres or two or more properties, FEMA stated, “The two or more properties and/or acres referenced in the definition of a 'flood' must be neighboring (contiguous) properties. The properties/acres may not be separated.”
The covered causes of loss are perils that are often included in the water exclusion on property forms.
The form lists twenty-nine other key definitions used in this policy.
1.Act. The National Flood Insurance Act of 1968 and any amendments to it.
2.Actual Cash Value. The cost to replace an insured item of property at the time of loss, less the value of its physical depreciation.
3.Application. The statement made and signed by you or your agent in applying for this policy. The application gives information we use to determine the eligibility of the risk, the kind of policy to be issued, and the correct premium payment. The application is part of this flood insurance policy. For us to issue you a policy, the correct premium payment must accompany the application.
Analysis
The application itself becomes a part of the flood policy, and the correct premium payment must accompany the application for a policy to be issued. If an application is sent without payment, it is returned and no coverage is in effect.
4.Base Flood. A flood having a one percent chance of being equaled or exceeded in any given year.
5.Basement. Any area of the building, including any sunken room or sunken portion of a room, having its floor below ground level (subgrade) on all sides.
Analysis
A base flood has often been called a one hundred-year flood, a term that led to a significant amount of confusion. Many people mistakenly thought that a one hundred year flood occurred once every one hundred years and did not realize that it meant that there was a 1 percent chance of a flood in any given year. Therefore the term “base flood” is being used to replace the term “one hundred-year flood.”
Unlike other property forms, which do not define “basement,” this form does and includes a sunken room (or portion thereof, if the floor is below ground level on all sides) within the definition. This is important since much personal property is excluded from coverage if it is within a basement. So, for example, the insured with a basement storage would be well advised to move all personal property in event of an impending flood.
6.Building.
a.A structure with two or more outside rigid walls and a fully secured roof, that is affixed to a permanent site;
b.A manufactured home (“a manufactured 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
c.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.
Building does not mean a gas or liquid storage tank or a recreational vehicle, park trailer, or other similar vehicle, except as described in B.6.c., above.
Analysis
Many property policies that cover buildings provide a description of what is included under building coverage, but the General Property Form gives a specific definition of what the building itself must be.
7.Cancellation. The ending of the insurance coverage provided by this policy before the expiration date.
8.Condominium. That form of ownership of real property in which each unit owner has an undivided interest in common elements.
9.Condominium Association. The entity, formed by the unit owners, responsible for the maintenance and operation of:
a.Common elements owned in undivided shares by unit owners; and
b.Other real property in which the unit owners have use rights where membership in the entity is a required condition of unit ownership.
10.Declarations Page. A computer-generated summary of information you provided in the application for insurance. The Declarations Page also describes the term of the policy, limits of coverage, and displays the premium and our name. The Declarations Page is a part of this flood insurance policy.
11.Described Location. The location where the insured building or personal property is found. The described location is shown on the Declarations Page.
Analysis
It is interesting to note that the declarations page is defined as being computer-generated. If the computers were inoperable for some reason, would that make a typed declarations page invalid?
12.Direct Physical Loss By or From Flood. Loss or damage to insured property, directly caused by a flood. There must be evidence of physical changes to the property.
Analysis
This definition is straightforward. The damage must be directly caused by a flood, and there must be evidence of physical changes to the property. The physical changes can be interpreted as the damages caused by the flood.
13.Elevated Building. A building that has no basement and that has its lowest elevated floor raised above ground level by foundation walls, shear walls, posts, piers, pilings, or columns.
Analysis
Because a basement may include a room or any portion of a room having its floor below ground level on all sides, it is important to keep this in mind when determining whether a building can be considered elevated. For example, a building built on a slab is not elevated. A building with a floor elevated by foundation walls will still not be elevated if there is a sunken room within it.
A common method of building along the coast is on posts or piers, with hot water heater and central air unit contained in a central enclosed area. This is the type structure the definition refers to.
14.Emergency Program. The initial phase of a community's participation in the National Flood Insurance Program. During this phase, only limited amounts of insurance are available under the Act.
15.Expense Constant. A flat charge you must pay on each new or renewal policy to defray the expenses of the Federal Government related to flood insurance.
16.Federal Policy Fee. A flat charge you must pay on each new or renewal policy to defray certain administrative expenses incurred in carrying out the National Flood Insurance Program. This fee covers expenses not covered by the expense constant.
Analysis
An emergency program community may be viewed as an entry-level community. Limited coverage, at flat rates (no discounting) is all that is available.
While continuing to appear in the policy language, the expense constant was eliminated May 1, 2003. The federal policy fee still exists and is used to defray certain administrative expenses.
17.Improvements. Fixtures, alterations, installations, or additions comprising a part of the insured building.
18.Mudflow. A river of liquid and flowing mud on the surfaces of normally dry land areas, as when earth is carried by a current of water. Other earth movements, such as landslide, slope failure, or a saturated soil mass moving by liquidity down a slope, are not mudflows.
Analysis
The definition of “mudflow” may well prove troublesome. After the fact, it may be difficult to tell whether a loss was caused by liquid and flowing mud or by a saturated soil mass. To a casual observer, there may not be much difference between the two.
In McHugh v. United Service Automobile Association, 164 F.3d 451 (U.S. App. 1999), coverage under a flood policy turned on whether the insured dwelling was damaged by a landslide or a mudslide. A lower court had held for a landslide, but on appeal, the cause was held to be a mudslide. Two geo-technical engineers each held a different opinion as to which caused the damage. The court stated that “common sense and common meaning must prevail. Under the terms of the policy, 'liquid and flowing mud' surely means nothing more than a saturated soil mass moving by liquidity down a slope.” Now, however, the definition precludes the court's finding, but leaves unaddressed what a mudflow is.
19. National Flood Insurance Program (NFIP). The program of flood insurance coverageand floodplain management administered under the Act and applicable Federal regulations in Title 44 of the Code of Federal Regulations, Subchapter B.
20.Policy. The entire written contract between you and us. It includes:
a.This printed form;
b.The application and Declarations Page;
c.Any endorsement(s) that may be issued; and,
d.Any renewal certificate indicating that coverage has been instituted for a new policy and new policy term.
Only one building, which you specifically described in the application, may be insured under this policy.
Analysis
The definition of “policy” reiterates that the entire policy must include the application, declarations page, any endorsements, and renewal certificates. Most insurance policies do not define what the policy contains.
21.Pollutants. Substances that include, but that are not limited to, any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. “Waste” includes, but is not limited to, materials to be recycled, reconditioned, or reclaimed.
Analysis
This definition matches what is found in the standard ISO property forms. As will be discussed later in the article, an exclusion for testing or monitoring for pollutants exists.
22.Post-FIRM Building. A building for which construction or substantial improvement occurred after December 31, 1974, or on or after the effective date of an initial Flood Insurance Rate Map (FIRM), whichever is later.
23.Probation Premium. A flat charge you must pay on each new or renewal policy issued covering property in a community that has been placed on probation under the provisions of 44 CFR 59.24.
Analysis
The form no longer includes a definition of “pre-FIRM building.” This meant a building for which the start of construction or substantial improvement occurred on or before December 31, 1974, or before the effective date of the initial FIRM for the community in which the building was located, whichever was later. For application and rating purposes, however, a building may still be considered pre-FIRM and the rates will reflect this.
The probation premium is a flat charge of $50. If a community is put on probation (often for failure to comply with building requirements or building restrictions in flood-prone areas), then FEMA can assess each policy.
24.Regular Program. The final phase of a community's participation in the National Flood Insurance Program. In this phase, a Flood Insurance Rate Map is in effect and full limits of coverage are available under the Act.
Analysis
Under the regular program, an insured may purchase full limits of coverage.
25.Residential Condominium Building. A building, owned and administered as a condominium, containing one or more family units and in which at least 75% of the floor area is residential.
Analysis
This definition reflects the use of the form to insure residential condos not eligible for the Residential Condominium Form (RCBAP). A residential condo building in which at least 75 percent of the floor area is residential normally would qualify for the RCBAP; however, if the building is in the emergency program then the General Property Form must be used.
26.Special Flood Hazard Area. An area having special flood or mudflow, and/or flood-related erosion hazards, and shown on a Flood Hazard Boundary Map or Flood Insurance Rate Map as Zone A, AO, A1-A30, AE, A99, AH, AR, AR/A, AR/AE, AR/AH, AR/AO, AR/A1-A30, V1-V30, VE, V.
Analysis
When a building is located in a special flood hazard area, flood insurance must be purchased as a condition of receipt of federal or federally-related financial assistance for acquisition and/or construction of buildings. Flood Hazard Boundary Map is the term used when a community first enters the flood program. At this level, only limited coverage is available at flat rates.
27.Stock means merchandise held in storage or for sale, raw materials, and in-process or finished goods, including supplies used in their packing or shipping.
Stock does not include any property not covered under Section IV. Property Not Covered, except the following:
a.Parts and equipment for self-propelled vehicles;
b.Furnishings and equipment for watercraft;
c.Spas and hot-tubs, including their equipment; and
d.Swimming pool equipment.
28.Unit. A unit in a condominium building.
29.Valued Policy. A policy in which the insured and the insurer agree on the value of the property insured, that value being payable in the event of a total loss. The Standard Flood Insurance Policy is not a valued policy.
Analysis
Because the form is often used to insure coastal businesses such as boating stores, note that the definition of “stock” includes this type of property, even though coverage for other boating-related businesses such as a boat repair dock over water is not available.
Unit as used here refers either to a unit in a commercial condo or a unit in a residential condo.
A valued policy is one in which the full amount of insurance is the amount paid in event of a covered total loss, usually from certain events such as fire or windstorm. The flood policy is not one of these.
A.COVERAGE A—BUILDING PROPERTY
We insure against direct physical loss by or from flood to:
1.The building described on the Declarations Page at the described location. If the building is a condominium building and the named insured is the condominium association, Coverage A includes all units within the building and the improvements within the units, provided the units are owned in common by all unit owners.
2.We also insure building property for a period of 45 days at another location, as set forth in III.C.2.b., Property Removed to Safety.
Analysis
The form covers the entire building, including, if they are owned in common by a condominium association as named insured, all the units within the building and all improvements contained within the units. This does not mean that an individual cannot own a unit. The unit owner, however, owns (in old terminology) from the plaster out—air space, if you will.
3.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 your 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.
Analysis
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 are covered. These additions may be insured separately. There is no coverage, however, for decks, walkways, patios, or drives located outside the perimeter, exterior walls of the building (as per the property not covered section). So, for example, if a building is built partially over water—containing, say, shops and a restaurant—the building is covered but the deck built to take advantage of an ocean view is not.
4.The following fixtures, machinery, and equipment, which are covered under Coverage A only:
a.Awnings and canopies;
b.Blinds;
c.Carpet permanently installed over unfinished flooring;
d.Central air conditioners;
e.Elevator equipment;
f.Fire extinguishing apparatus;
g.Fire sprinkler systems;
h.Walk-in freezers;
i.Furnaces;
j.Light fixtures;
k.Outdoor antennas and aerials attached to buildings;
l.Permanently installed cupboards, bookcases, paneling, and wallpaper;
m.Pumps and machinery for operating pumps;
n.Ventilating equipment; and
o.Wall mirrors, permanently installed;
p.In the units within the building, installed:
(1)Built-in dishwashers;
(2)Built-in microwave ovens;
(3)Garbage disposal units;
(4)Hot water heaters, including solar water heaters;
(5)Kitchen cabinets;
(6)Plumbing fixtures;
(7)Radiators;
(8)Ranges;
(9)Refrigerators; and
(10) Stoves.
5.Materials and supplies to be used for construction, alteration, or repair of the insured building while the materials and supplies are stored in a fully enclosed building at the described location or on an adjacent property.
6.A building under construction, alteration, or repair at the described location.
a.If the structure is not yet walled or roofed as described in the definition for building (see II.6.a.), then coverage applies:
(1)Only while such work is in progress; or
(2) If such work is halted, only for a period of up to 90 continuous days thereafter.
b.However, coverage does not apply until the building is walled and roofed if the lowest floor, including the basement floor, of a non-elevated building or the lowest elevated floor of an elevated building is:
(1)Below the base flood elevation in Zones AH, AE, A1-A30, AR, AR/AE, AR/AH, AR/A1-A30, AR/A, AR/AO; or
(2)Below the base flood elevation adjusted to include the effect of wave action in Zones VE or V1-V30.
The lowest floor levels are based on the bottom of the lowest horizontal structural member of the floor in Zones VE or V1-V30 and the top of the floor in Zones AH, AE, A1-A30, AR, AR/AE, AR/AH, AR/A1-A30, AR/A, AR/AO.
Analysis
In common with the other two flood coverage forms, a building in the course of construction may be insured on the General Property Form; the deductible per occurrence before a building is walled and roofed is twice the deductible selected to apply after the building is walled and roofed. Construction must be in progress. If halted for longer than ninety days, there is no coverage until construction is resumed. Materials and supplies used in construction are covered while stored inside a fully enclosed building at either the property address or on an adjacent property at the time of loss.
7.A manufactured home or a travel trailer as described in the Definitions Section (see II.B.6.b. and II.B.6.c.).
If the manufactured home or travel trailer is in a special flood hazard area, it must be anchored in the following manner at the time of the loss:
a.By over-the-top or frame ties to ground anchors; or
b.In accordance with the manufacturer's specifications; or
c.In compliance with the community's floodplain management requirements unless it has been continuously insured by the NFIP at the same described location since September 30, 1982.
8.Items of property in a building enclosure below the lowest elevated floor of an elevated post-FIRM building located in zones A1-A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1-A30, V1-V30, or VE, or in a basement, regardless of the zone. Coverage is limited to the following:
a.Any of the following items, if installed in their functioning locations and, if necessary for operation, connected to a power source:
(1)Central air conditioners;
(2)Cisterns and the water in them;
(3)Drywall for walls and ceilings in a basement and the cost of labor to nail it, unfinished and unfloated and not taped, to the framing;
(4)Electrical junction and circuit breaker boxes;
(5)Electrical outlets and switches;
(6)Elevators, dumbwaiters, and related equipment, except for related equipment installed below the base flood elevation after September 30, 1987;
(7)Fuel tanks and the fuel in them;
(8)Furnaces and hot water heaters;
(9)Heat pumps;
(10) Nonflammable insulation in a basement;
(11) Pumps and tanks used in solar energy systems;
(12) Stairways and staircases attached to the building, not separated from it by elevated walkways;
(13) Sump pumps;
(14) Water softeners and the chemicals in them, water filters, and faucets installed as an integral part of the plumbing system;
(15) Well water tanks and pumps;
(16) Required utility connections for any item in this list; and
(17) Footings, foundations, posts, pilings, piers, or other foundation walls and anchorage systems required to support a building.
b.Clean-up.
Analysis
Like the RCBAP, the General Property Form covers equipment and machinery such as elevator equipment, sprinkler systems, pumps and machinery for operating pumps, and ventilating equipment. Property within the units—built-in dishwashers, ranges, and water heaters, for example—is covered. Like the other coverage forms, there is limited coverage for property below the lowest elevated floor or within a basement.
B.COVERAGE B—PERSONAL PROPERTY
1.If you have purchased personal property coverage, we insure, subject to B.2., 3., and 4. below, against direct physical loss by or from flood to personal property inside the fully enclosed insured building:
a.Owned solely by you, or in the case of a condominium, owned solely by the condominium association and used exclusively in the conduct of the business affairs of the condominium association; or
b.Owned in common by the unit owners of the condominium association.
We also insure such personal property for 45 days while stored at a temporary location, as set forth in III.C.2.b., Property Removed to Safety.
2.When this policy covers personal property, coverage will be either for household personal property or other than household personal property, while within the insured building, but not both.
a.If this policy covers household personal property, it will insure household personal property usual to a living quarters, that:
(1)Belongs to you, or a member of your household, or at your option:
(a)Your domestic worker;
(b)Your guest; or
(2)You may be legally liable for.
b.If this policy covers other than household personal property, it will insure your:
(1)Furniture and fixtures;
(2)Machinery and equipment;
(3)Stock; and
(4)Other personal property owned by you and used in your business, subject to IV. Property Not Covered.
Analysis
The coverage for personal property of necessity differs significantly under the General Property Form from the RCBAP or Dwelling Form. The General Property Form may be used for a residential or commercial condominium building or for a commercial building and/or contents exposure, and the coverage for personal property reflects this. The form covers personal property owned solely by the insured, which may be a condominium association or an individual, and personal property owned in common by the unit owners if a condominium is the named insured, so long as it is within the fully enclosed building or stored at a temporary location as authorized by the policy. Property in a temporary location is covered for forty-five days.
When coverage is provided for personal property, the coverage will apply to either household contents or to other than household contents, but not both. In other words, if a person both resides in and owns a business located in the insured building and uses the form to cover his own household contents, he cannot look for coverage for stock. Another policy must be purchased.
When the form is used for household contents, then there is coverage for personal property “usual to a living quarters” that belongs to the named insured, a household member, a domestic employee, a guest, or that the insured may be legally liable for. If the form is used to cover other than household personal property, then it insures furniture and fixtures, machinery and equipment, stock, and other business personal property. The form does not cover personal property owned by or in the control of a unit owner, other than the type of property described in the form's section B. for personal property. Coverage applies only while the property is within a fully enclosed building.
3.Coverage for personal property includes the following property, subject to B.1.a. and B.1.b. above, which is covered under Coverage B only:
a.Air conditioning units installed in the building;
b.Carpet, not permanently installed, over unfinished flooring;
c.Carpets over finished flooring;
d.Clothes washers and dryers;
e.”Cook-out” grills;
f.Food freezers, other than walk-in, and food in any freezer;
g.Outdoor equipment and furniture stored inside the insured building;
h.Ovens and the like; and
i.Portable microwave ovens and portable dishwashers.
4.Items of property in a building enclosure below the lowest elevated floor of an elevated post-FIRM building located in Zones A1-A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1-A30, V1-V30, or VE, or in a basement, regardless of the zone, is limited to the following items, if installed in their functioning locations and, if necessary for operation, connected to a power source:
a.Air conditioning units—portable or window type;
b.Clothes washers and dryers; and
c.Food freezers, other than walk-in, and food in any freezer.
5.Special Limits. We will pay no more than $2,500 for any loss to one or more of the following kinds of personal property:
a.Artwork, photographs, collectibles, or memorabilia, including but not limited to, porcelain or other figures, and sports cards;
b.Rare books or autographed items;
c.Jewelry, watches, precious and semi-precious stones, articles of gold, silver, or platinum;
d.Furs or any article containing fur which represents its principal value; or
6.We will pay only for the functional value of antiques.
7.If you are a tenant, you may apply up to 10% of the Coverage B limit to improvements:
a.Made a part of the building you occupy; and
b.You acquired, or made at your expense, even though you cannot legally remove.
This coverage does not increase the amount of insurance that applies to insured personal property.
8.If you are a condominium unit owner, you may apply up to 10% of the Coverage B limit to cover loss to interior:
a.Walls,
b.Floors, and
c.Ceilings,
that are not covered under a policy issued to the condominium association insuring the condominium building.
This coverage does not increase the amount of insurance that applies to insured personal property.
9.If you are a tenant, personal property must be inside the fully enclosed building.
Analysis
Personal property such as clothes washers and dryers, food freezers, air conditioning units installed in the building, carpet not permanently installed over unfinished flooring, and carpets over finished flooring are covered as long as they are owned by the insured, or in common by the unit owners of a condominium, or owned by the condominium association and used in the conduct of the association's business affairs. The list of property covered under coverage B—personal property is identical to that in the RCBAP. Both the RCBAP and General Property Form cover outdoor equipment and furniture stored inside the insured building, and ovens. The Dwelling form does not specifically mention this property.
There is a limitation of $2,500 for any loss to artwork, jewelry, furs, and rare books. Antiques are valued at their functional value. This is important for any antique dealer seeking coverage for stock. A $3,000 escritoire could be valued as a $25 desk.
If the insured is a tenant in the described building, then he can apply up to 10 percent of the limit of liability for contents coverage to improvements made or acquired at the insured's expense. This is not an additional amount of insurance. If the insured is a condominium unit owner, he can apply up to 10 percent of the limit of liability for contents coverage to cover loss to interior walls, floors, and ceilings not otherwise covered by a condominium association policy that insures the described building. Again, this is not an additional amount of insurance.
Other Coverages
C.COVERAGE C—OTHER COVERAGES
1.Debris Removal.
a.We will pay the expense to remove non-owned debris that is on or in insured property and debris of insured property anywhere.
b.If you or a member of your household perform the removal work, the value of your work will be based on the Federal minimum wage.
c.This coverage does not increase the Coverage A or Coverage B limit of liability.
2.Loss Avoidance Measures.
a.Sandbags, Supplies, and Labor
(1)We will pay up to $1,000 for the costs you incur to protect the insured building from a flood or imminent danger of flood, for the following:
(a)Your reasonable expenses to buy:
(i)Sandbags, including sand to fill them;
(ii)Fill for temporary levees;
(iii)Pumps; and
(iv)Plastic sheeting and lumber used in connection with these items; and
(b)The value of work, at the Federal minimum wage, that you perform.
(2)This coverage for Sandbags, Supplies, and Labor only applies if damage to insured property by or from flood is imminent and the threat of flood damage is apparent enough to lead a person of common prudence to anticipate flood damage. One of the following must also occur:
(a)A general and temporary condition of flooding in the area near the described location must occur, even if the flood does not reach the insured building; or
(b)A legally authorized official must issue an evacuation order or other civil order for the community in which the insured building is located calling for measures to preserve life and property from the peril of flood.
This coverage does not increase the Coverage A or Coverage B limit of liability.
b.Property Removed to Safety
(1)We will pay up to $1,000 for the reasonable expenses you incur to move insured property to a place other than the described location that contains the property in order to protect it from flood or the imminent danger of flood. Reasonable expenses include the value of work, at the Federal minimum wage, that you perform.
(2) If you move insured property to a place other than the described location that contains the property, in order to protect it from flood or the imminent danger of flood, we will cover such property while at that location for a period of 45 consecutive days from the date you begin to move it there.
The personal property that is moved must be placed in a fully enclosed building, or otherwise reasonably protected from the elements.
Any property removed, including a moveable home described in II.6.b. and c., must be placed above ground level or outside of the special flood hazard area.
This coverage does not increase the Coverage A or Coverage B limit of liability.
3.Pollution Damage.
We will pay for damage caused by pollutants to covered property if the discharge, seepage, migration, release, or escape of the pollutants is caused by or results from flood. The most we will pay under this coverage is $10,000. This coverage does not increase the Coverage A or Coverage B limits of liability. Any payment under this provision when combined with all other payments for the same loss cannot exceed the replacement cost or actual cash value, as appropriate, of the covered property. This coverage does not include the testing for or monitoring of pollutants unless required by law or ordinance.
Analysis
The debris removal provision is identical to that found in the Dwelling and the RCBAP forms. Expense incurred in the removal of debris—nonowned or insured but found anywhere—of, on, or from the building or personal property covered under the General Property Form is reimbursed. This expense is included in the limit of liability applying to the covered property. If the insured or a member of the household does the work, the value of the work is based on the federal minimum wage.
Coverage for loss avoidance measures, such as sandbags, pumps, and labor, is limited to $1,000. This expense is included in the limit of liability. In order for this coverage to apply, damage to insured property by flood must be imminent and the threat of flood damage must be apparent enough so that a reasonable person would anticipate flood damage. The mere prediction of a flood would probably not meet this criteria. One of two conditions must apply: a general and temporary condition of flooding near the described location even if the flood does not reach the building, or a legally authorized person must issue an evacuation order for the community in which the building is located calling for measures to preserve life and protect property.
Reasonable expense to move insured property to protect it from flood is limited to $1,000. Again, this is not an additional amount of insurance. The property is covered for up to forty-five days at the new location, where it must be placed above ground level or outside the special flood hazard area.
The form limits coverage to $10,000 for damage caused by pollutants if the escape, release, or migration of the pollutants was caused by a flood. The coverage falls within the limits applying to coverages A or B. Any payment made under this provision, when combined with other payments for the same loss, cannot exceed the replacement cost or actual cash value, as appropriate, of covered property. The coverage does not include testing for or monitoring pollutants unless required by law. However, the cost of compliance with any ordinance or law requiring the testing, monitoring, removal, containment, treatment, detoxification or neutralization of pollutants is not covered.
D.COVERAGE D—INCREASED COST OF COMPLIANCE
1.General.
This policy pays you to comply 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 your structure. Eligible floodproofing activities are limited to:
a.Non-residential structures.
b.Residential structures with basements that satisfy FEMA's standards published in the Code of Federal Regulations [44 CFR 60.6 (b) or (c)].
2.Limit of Liability.
We will pay you up to $30,000 under this Coverage D—Increased Cost of Compliance, which only applies to policies with building coverage (Coverage A).Our payment of claims under Coverage D is in addition to the amount of coverage which you selected on the application and which appears on the Declarations Page. But the maximum you can collect under this policy for both Coverage A (Building Property) and Coverage D (Increased Cost of Compliance) cannot exceed the maximum permitted under the Act. We do NOT charge a separate deductible for a claim under Coverage D.
3. Eligibility.
a.A structure covered under Coverage A—Building Property sustaining a loss caused by a flood as defined by this policy must:
(1)Be a “repetitive loss structure.” A “repetitive loss structure” is one that meets the following conditions:
(a)The structure is covered by a contract of flood insurance issued under the NFIP.
(b)The structure has suffered flood damage on 2 occasions during a 10-year period which ends on the date of the second loss.
(c)The cost to repair the flood damage, on average, equaled or exceeded 25% of the market value of the structure at the time of each flood loss.
(d)In addition to the current claim, the NFIP must have paid the previous qualifying claim, and 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
(2) Be a structure that has had flood damage in which the cost to repair equals or exceeds 50% of the market value of the structure at the time of the flood. The State or community must have a substantial damage provision in its floodplain management law or ordinance being enforced against the structure.
b. This Coverage D pays you to comply with State or local floodplain management laws or ordinances that meet the minimum standards of the National Flood Insurance Program found in the Code of Federal Regulations at 44 CFR 60.3. We pay for compliance activities that exceed those standards under these conditions:
(1) 3.a.(1) above.
(2) Elevation or floodproofing in any risk zone to preliminary or advisory base flood elevations provided by FEMA which the State or local government has adopted and is enforcing for flood-damaged structures in such areas. (This includes compliance activities in B, C, X, or D zones which are being changed to zones with base flood elevations. This also includes compliance activities in zones where base flood elevations are being increased, and a flood-damaged structure must comply with the higher advisory base flood elevation.) Increased Cost of Compliance coverage does not apply to situations in B, C, X, or D zones where the community has derived its own elevations and is enforcing elevation or floodproofing requirements for flood-damaged structures to elevations derived solely by the community.
(3) Elevation or floodproofing above the base flood elevation to meet State or local “freeboard” requirements, i.e., that a structure must be elevated above the base flood elevation.
c.Under the minimum NFIP criteria at 44 CFR 60.3 (b)(4), States and communities must require the elevation or floodproofing of structures in unnumbered A zones to the base flood elevation where elevation data is obtained from a Federal, State, or other source. Such compliance activities are also eligible for Coverage D.
d.This coverage will also pay for the incremental cost, after demolition or relocation, of elevating or floodproofing a structure during its rebuilding at the same or another site to meet State or local floodplain management laws or ordinances, subject to Exclusion D.5.g. below.
e.This coverage will also pay to bring a flood-damaged structure into compliance with State or local floodplain management laws or ordinances even if the structure had received a variance before the present loss from the applicable floodplain management requirements.
4.Conditions.
a.When a structure covered under Coverage A—Building Property sustains a loss caused by a flood, our payment for the loss under this Coverage D will be for the increased cost to elevate, floodproof, relocate, or demolish (or any combination of these activities) caused by the enforcement of current State or local floodplain management ordinances or laws. Our payment for eligible demolition activities will be for the cost to demolish and clear the site of the building debris or a portion thereof caused by the enforcement of current State or local floodplain management ordinances or laws. Eligible activities for the cost of clearing the site will include those necessary to discontinue utility service to the site and ensure proper abandonment of onsite utilities.
b.When the building is repaired or rebuilt, it must be intended for the same occupancy as the present building unless otherwise required by current floodplain management ordinances or laws.
5.Exclusions.
Under this Coverage D—Increased Cost of Compliance, we will not pay for:
a.The cost to comply with any floodplain management law or ordinance in communities participating in the Emergency Program.
b.The cost associated with enforcement of any ordinance or law that requires any insured or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants.
c.The loss in value to any insured building or other structure due to the requirements of any ordinance or law.
d.The loss in residual value of the undamaged portion of a building demolished as a consequence of enforcement of any State or local floodplain management law or ordinance.
e.Any Increased Cost of Compliance under this Coverage D:
(1)Until the building is elevated, floodproofed, demolished, or relocated on the same or to another premises; and
(2)Unless the building is elevated, floodproofed, demolished, or relocated as soon as reasonably possible after the loss, not to exceed two years.
f.Any code upgrade requirements, e.g., plumbing or electrical wiring, not specifically related to the State or local floodplain management law or ordinance.
g.Any compliance activities needed to bring additions or improvements made after the loss occurred into compliance with State or local floodplain management laws or ordinances.
h.Loss due to any ordinance or law that you were required to comply with before the current loss.
i.Any rebuilding activity to standards that do not meet the NFIP's minimum requirements. This includes any situation where the insured has received from the State or community a variance in connection with the current flood loss to rebuild the property to an elevation below the base flood elevation.
j.Increased Cost of Compliance for a garage or carport.
k.Any structure insured under an NFIP Group Flood Insurance Policy.
l.Assessments made by a condominium association on individual condominium unit owners to pay increased costs of repairing commonly owned buildings after a flood in compliance with State or local floodplain management ordinances or laws.
6.Other Provisions.
All other conditions and provisions of this policy apply.
Analysis
The form includes coverage for up to $30,000 for increased costs of compliance. As with the other forms, eligibility requirements must be met and conditions fulfilled. Because the General Property Form settles loss strictly on an actual cash value basis, there is no clause stating that the coverage will not be included in calculations to see if the coinsurance or insurance to value provisions have been met.
A.We do not cover any of the following property:
1.Personal property not inside the fully enclosed building;
2.A building, and personal property in it, located entirely in, on, or over water or seaward of mean high tide, if it was constructed or substantially improved after September 30, 1982;
3.Open structures, including a building used as a boathouse or any structure or building into which boats are floated, and personal property located in, on, or over water;
4.Recreational vehicles other than travel trailers described in II.B.6.c., whether affixed to a permanent foundation or on wheels;
5.Self-propelled vehicles or machines, including their parts and equipment. However, we do cover self-propelled vehicles or machines, provided they are not licensed for use on public roads and are:
a.Used mainly to service the described location; or
b. Designed and used to assist handicapped persons, while the vehicles or machines are inside a building at the described location;
6.Land, land values, lawns, trees, shrubs, plants, growing crops, or animals;
7.Accounts, bills, coins, currency, deeds, evidences of debt, medals, money, scrip, stored value cards, postage stamps, securities, bullion, manuscripts, or other valuable papers;
8.Underground structures and equipment, including wells, septic tanks, and septic systems;
9.Those portions of walks, walkways, decks, driveways, patios, and other surfaces, all whether protected by a roof or not, located outside the perimeter, exterior walls of the insured building;
10.Containers including related equipment, such as, but not limited to, tanks containing gases or liquids;
11.Buildings or units and all their contents if more than 49% of the actual cash value of the building or unit is below ground, unless the lowest level is at or above the base flood elevation and is below ground by reason of earth having been used as insulation material in conjunction with energy efficient building techniques;
12.Fences, retaining walls, seawalls, bulkheads, wharves, piers, bridges, and docks;
13.Aircraft or watercraft, or their furnishings and equipment;
14.Hot tubs and spas that are not bathroom fixtures, and swimming pools, and their equipment such as, but not limited to, heaters, filters, pumps, and pipes, wherever located;
15.Property not eligible for flood insurance pursuant to the provisions of the Coastal Barrier Resources Act and the Coastal Barrier Improvement Act of 1990 and amendments to these Acts;
16.Personal property owned by or in the care, custody or control of a unit owner, except for property of the type and under the circumstances set forth under III. Coverage B—Personal Property of this policy;
17.A residential condominium building located in a Regular Program community.
Analysis
The list of property not covered by the flood policy is extensive. Self-propelled vehicles used to service the described location or that are designed to assist the handicapped are covered, as long as they are inside a building at the insured location.
The form does not cover any personal property not within a fully enclosed building. Accounts, currency, postage stamps, securities, land, trees, shrubs, growing crops, animals, aircraft or watercraft, and containers (tanks containing gas, for example) are not covered.
With one exception, the property not covered section essentially is the same as the RCBAP. A residential condominium building located in a regular program community is not covered. This is properly insured under the RCBAP.
Hot tubs and spas that are not bathroom fixtures are not covered. Swimming pools and their equipment—such as heaters and pumps—are excluded.
Item 10. excludes coverage for “tanks containing gases or liquids.” Remember that fuel tanks within a building enclosure or basement are covered.
Remember that the Coastal Barrier Resources Act and the Coastal Barrier Improvement Acts intend to protect coastal areas that serve as barriers against wind and tides caused by coastal storms, and serve as habitat for aquatic species.
Exclusions
A.We only pay for direct physical loss by or from flood, which means that we do not pay you for:
1.Loss of revenue or profits;
2.Loss of access to the insured property or described location;
3.Loss of use of the insured property or described location;
4.Loss from interruption of business or production;
5.Any additional expenses incurred while the insured building is being repaired or is unable to be occupied for any reason;
6.The cost of complying with any ordinance or law requiring or regulating the construction, demolition, remodeling, renovation, or repair of property, including removal of any resulting debris. This exclusion does not apply to any eligible activities we describe in Coverage D—Increased Cost of Compliance; or
7. Any other economic loss you suffer.
B.We do not insure a loss directly or indirectly caused by a flood that is already in progress at the time and date:
1.The policy term begins; or
2.Coverage is added at your request.
C.We do not insure for loss to property caused directly by earth movement even if the earth movement is caused by flood. Some examples of earth movement that we do not cover are:
1.Earthquake;
2.Landslide;
3.Land subsidence;
4.Sinkholes;
5.Destabilization or movement of land that results from accumulation of water in subsurface land areas; or
6.Gradual erosion.
We do, however, pay for losses from mudflow and land subsidence as a result of erosion that are specifically covered under our definition of flood (see A.1.c. and II.A.2.).
D.We do not insure for direct physical loss caused directly or indirectly by:
1.The pressure or weight of ice;
2.Freezing or thawing;
3.Rain, snow, sleet, hail, or water spray;
4.Water, moisture, mildew, or mold damage that results primarily from any condition:
a.Substantially confined to the insured building; or
b.That is within your control including, but not limited to:
(1)Design, structural, or mechanical defects;
(2)Failures, stoppages, or breakage of water or sewer lines, drains, pumps, fixtures, or equipment; or
(3)Failure to inspect and maintain the property after a flood recedes;
5.Water or water-borne material that:
a.Backs up through sewers or drains;
b.Discharges or overflows from a sump, sump pump, or related equipment; or
c.Seeps or leaks on or through the covered property; unless there is a flood in the area and the flood is the proximate cause of the sewer or drain backup, sump pump discharge or overflow, or the seepage of water;
6.The pressure or weight of water unless there is a flood in the area and the flood is the proximate cause of the damage from the pressure or weight of water;
7.Power, heating, or cooling failure unless the failure results from direct physical loss by or from flood to power, heating, or cooling equipment situated on the described location;
8.Theft, fire, explosion, wind, or windstorm;
9.Anything that you or your agents do or conspire to do to cause loss by flood deliberately; or
10.Alteration of the insured property that significantly increases the risk of flooding.
E.We do not insure for loss to any building or personal property located on land leased from the Federal Government, arising from or incident to the flooding of the land by the Federal Government, where the lease expressly holds the Federal Government harmless under flood insurance issued under any Federal Government program.
Analysis
The form covers only direct physical loss by or from flood. There is no coverage for loss of use or for loss of profits when the damaged building cannot be used. Nor is there compensation if a flood renders the building inaccessible, whether or not the building sustains damage. There is no coverage for any additional expenses while the insured building is being repaired or is uninhabitable for any reason.
Water, moisture, mildew, or mold damage resulting from any condition substantially confined to the insured building, or that is within the insured's control, including failure to maintain and inspect the property after a flood recedes, is not covered. This is not to say mold remediation is not covered. The exclusion addresses occurrences such as a plumbing leak that results in mold, not mold resulting from a flood.
The form excludes coverage for any theft, fire, wind, earthquake, rain, snow, sleet, hail, water spray, freezing, thawing, and the pressure or weight of ice. Note, however, that the commercial property forms, while excluding damage caused by flood, cover any resulting damage by fire, explosion, or sprinkler leakage. Other perils (such as hail and wind) are covered under the commercial forms depending upon which form is chosen. Like the other flood forms, the General Property Form covers loss from the pressure or weight of water if there is a flood in the area and the flood is the proximate cause of the damage from the pressure or weight.
Sewer or drain back up or sump discharge is covered if a flood is the proximate cause of the sewer or drain backup or the sump discharge.
A.When a loss is covered under this policy, we will pay only that part of the loss that exceeds the applicable deductible amount, subject to the limit of liability that applies. The deductible amount is shown on the Declarations Page.
However, when a building under construction, alteration, or repair does not have at least two rigid exterior walls and a fully secured roof at the time of loss, your deductible amount will be two times the deductible that would otherwise apply to a completed building.
B.In each loss from flood, separate deductibles apply to the building and personal property insured by this policy.
C.No deductible applies to:
1.III.C.2. Loss Avoidance Measures; or
2.III.D. Increased Cost of Compliance.
Analysis
In common with the other flood forms, the deductible applies separately to building and contents, so that different deductibles may be written for building and personal property. The minimum deductible is $1,500 for coverage of $100,000 or less located in an emergency program community or in certain flood hazard zones; higher deductibles may be selected for the appropriate reduction in premium. Otherwise, the standard deductible is $1,000 for coverage of $100,000 or less. In some pre-FIRM zones, the minimum deductible of over coverage over $100,000 is $2,000, while the standard deductible is otherwise $1,200 for coverage over $100,000. Deductibles may not be reduced midterm unless it is required by the mortgagee and the mortgagee provides written authorization. Deductible changes may be made at renewal, and the request must be received thirty days before the renewal date.
The General Property Form contains common conditions found on most property policies. The conditions that are more flood-specific are discussed here.
F.Non-Renewal of the Policy by Us
Your policy will not be renewed:
1.If the community where your covered property is located stops participating in the NFIP; or
2.If your building has been declared ineligible under section 1316 of the Act.
Analysis
The policy offers some unique reasons for nonrenewal specific to the flood program: essentially, if the community where the insured property exists stops participating in the NFIP of the building is ineligible, then naturally the policy would not be renewed.
T.Continuous Lake Flooding
1.If an insured building has been flooded by rising lake waters continuously for 90 days or more and it appears reasonably certain that a continuation of this flooding will result in a covered loss to the insured building equal to or greater than the building policy limits plus the deductible or the maximum payable under the policy for any one building loss, we will pay you the lesser of these two amounts without waiting for the further damage to occur if you sign a release agreeing:
a.To make no further claim under this policy;
b.Not to seek renewal of this policy;
c.Not to apply for any flood insurance under the Act for property at the described location; and
d.Not to seek a premium refund for current or prior terms.
If the policy term ends before the insured building has been flooded continuously for 90 days, the provisions of this paragraph T.1. will apply when as the insured building suffers a covered loss before the policy term ends.
2.If your insured building is subject to continuous lake flooding from a closed basin lake, you may elect to file a claim under either paragraph T.1. above or this paragraph T.2. (A “closed basin lake” is a natural lake from which water leaves primarily through evaporation and whose surface are now exceeds or has exceeded one square mile at any time in the recorded past. Most of the nation's closed basin lakes are in the western half of the United States, where annual evaporation exceeds annual precipitation and where lake levels and surface areas are subject to considerable fluctuation due to wide variations in the climate. These lakes may overtop their basins on rare occasions.) Under this paragraph T.2 we will pay your claim as if the building is a total loss even though it has not been continuously inundated for 90 days, subject to the following conditions:
a.Lake flood waters must damage or imminently threaten to damage your building.
b.Before approval of your claim, you must:
(1)Agree to a claim payment that reflects your buying back the salvage on a negotiated basis; and
(2)Grant the conservation easement described in FEMA's “Policy Guidance for Closed Basin Lakes,” to be recorded in the office of the local recorder of deeds. FEMA, in consultation with the community in which the property is located, will identify on a map an area or areas of special consideration (ASC) in which there is a potential for flood damage from continuous lake flooding. FEMA will give the community the agreed-upon map showing the ASC. This easement will only apply to that portion of the property in the ASC. It will allow certain agricultural and recreational uses of the land. The only structures that it will allow on any portion of the property within the ASC are certain, simple agricultural and recreational structures. If any of these allowable structures are insurable buildings under the NFIP and are insured under the NFIP, they will not be eligible for the benefits of this paragraph T.2. If a U.S. Army Corps of Engineers certified flood control project or otherwise certified flood control project later protects the property, FEMA will, upon request, amend the ASC to remove areas protected by those projects. The restrictions of the easement will then no longer apply to any portion of the property removed from the ASC; and
(3)Comply with paragraphs T.1.a. through T.1.d. above.
c.Within 90 days of approval of your claim, you must move your building to a new location outside the ASC. FEMA will give you an additional 30 days to move if you show that there is sufficient reason to extend the time.
d.Before the final payment of your claim, you must acquire an elevation certificate and a floodplain development permit from the local floodplain administrator for the new location of your building.
e.Before the approval of your claim, the community having jurisdiction over your building must:
(1)Adopt a permanent land use ordinance, or a temporary moratorium for a period not to exceed 6 months to be followed immediately by a permanent land use ordinance, that is consistent with the provisions specified in the easement required in paragraph T.2.b. above;
(2)Agree to declare and report any violations of this ordinance to FEMA so that under Sec. 1316 of the National Flood Insurance Act of 1968, as amended, flood insurance to the building can be denied; and
(3)Agree to maintain as deed-restricted, for purposes compatible with open space or agricultural or recreational use only, any affected property the community acquires an interest in. These deed restrictions must be consistent with the provisions of paragraph T.2.b. above except that even if a certified project protects the property, the land use restrictions continue to apply if the property was acquired under the Hazard Mitigation Grant Program or the Flood Mitigation Assistance Program. If a non-profit land trust organization receives the property as a donation, that organization must maintain the property as deed-restricted, consistent with the provisions of paragraph T.2.b. above.
f.Before the approval of your claim, the affected State must take all action set forth in FEMA's “Policy Guidance for Closed Basin Lakes.”
g.You must have NFIP flood insurance coverage continuously in effect from a date established by FEMA until you file a claim under this paragraph T.2. If a subsequent owner buys NFIP insurance that goes into effect within 60 days of the date of transfer of title, any gap in coverage during that 60-day period will not be a violation of this continuous coverage requirement.
For the purpose of honoring a claim under this paragraph T.2, we will not consider to be in effect any increased coverage that became effective after the date established by FEMA. The exception to this is any increased coverage in the amount suggested by your insurer as an inflation adjustment.
h. This paragraph T.2. will be in effect for a community when the FEMA Regional Administrator for the affected region provides to the community, in writing, the following:
(1)Confirmation that the community and the State are in compliance with the conditions in paragraphs T.2.e. and T.2.f. above, and
(2)The date by which you must have flood insurance in effect.
Analysis
An insured whose building is subjected to continuous lake flooding for ninety days or more may choose to accept an amount equal to the building policy limits plus the deductible or the maximum payable under the policy for any one building loss, whichever is less, without waiting for the further damage to occur. It must be clear that the continuous flooding will result in covered flood loss. The insured must sign a release stating agreeing not to make further claims under the policy, not to seek renewal of the policy, not to apply for flood insurance for property at the described location, and not seek premium refund.
If the continuous lake flooding is caused by a closed basin lake (described in the provision), the insured may file a claim as described in the previous paragraph or accept payment as if the building is a total loss, even if not continuously inundated for ninety days, with certain conditions. The purpose of this provision is to allow insureds to relocate their buildings out of the continuous flooding area, and the insureds do not need to wait until the buildings are inundated for ninety days.
U.Duplicate Policies Not Allowed
1.Property may not be insured under more than one NFIP policy. If we find that the duplication was not knowingly created, we will give you written notice. The notice will advise you that you may choose one of several options under the following procedures:
a.If you choose to keep in effect the policy with the earlier effective date, you may also choose to add the coverage limits of the later policy to the limits of the earlier policy. The change will become effective as of the effective date of the later policy.
b.If you choose to keep in effect the policy with the later effective date, you may also choose to add the coverage limits of the earlier policy to the limits of the later policy. The change will be effective as of the effective date of the later policy.
In either case, you must pay the pro rata premium for the increased coverage limits within 30 days of the written notice. In no event will the resulting coverage limits exceed the permissible limits of coverage under the Act or your insurable interest, whichever is less. We will make a refund to you, according to applicable NFIP rules, of the premium for the policy not being kept in effect.
2.Your option under this Condition U. Duplicate Policies Not Allowed to elect which NFIP policy to keep in effect does not apply when duplicates have been knowingly created. Losses occurring under such circumstances will be adjusted according to the terms and conditions of the earlier policy. The policy with the later effective date must be canceled.
Analysis
An insured with a building having a replacement value of $700,000 cannot purchase one policy for $500,000 (the maximum amount available for building property) and another for $200,000 and hope to thus have full coverage. The provision clearly states that an insured may have only one flood policy in force. If an insured knowingly purchases two policies hoping to collect on both in event of a flood, the policy with the earlier effective date governs loss settlement, and the policy with the later date will be cancelled.
If an insured unknowingly has a duplicate, the insured has the option of choosing which policy is to remain in force.
V.Loss Settlement
We will pay the least of the following amounts after application of the deductible:
1.The applicable amount of insurance under this policy;
2.The actual cash value; or
3.The amount it would cost to repair or replace the property with material of like kind and quality within a reasonable time after the loss.
Unlike the Dwelling Form's or the RCBAP's replacement cost, the general property form pays on an actual cash value basis.
Liberalization Clause; What Law Governs
Like the other flood forms, the General Property Form states that a change made under this edition of the policy that does not require any additional premium will automatically apply if the implementation falls within sixty days before, or during the policy term.
The policy is governed by the flood insurance regulations issued by FEMA (the Federal Emergency Management Agency), the National Flood Insurance Act of 1968, as amended (42 U.S.C. 4001, et seq.) and federal common law.