Coverages A and B

Coverage C

Coverages D and E

Exclusions

Conditions

Introduction

The policy begins with a statement that it provides private flood insurance that is not underwritten by the Federal government. It states that policies may be available through NFIP and directs readers to the NFIP website www.floodsmart.gov. One of the issues with private flood insurance is that mortgagees have required policies through NFIP and would not accept coverage from other carriers; this is changing.

Eligible property is that which is used for residential purposes other than incidental occupancies of up to five roomers or boarders, and must not contain more than four apartments. Certain minimum limits must be met for coverage. Coverage A for a one- to four-family dwelling has a minimum limit of $15,000; coverage C for the same dwelling has no minimum limit, coverage C for a tenant is $6,000 and Coverage A dwelling for a condominium unit is $5,000 and Coverage C for a condominium unit is $10,000 unless the property is rented to others. If a condominium is rented to others, there is no minimum limit for contents.

Definitions

As always, definitions are important for the understanding of the policy. Definitions that are found in the homeowners policy will not be discussed since they are already familiar.

DEFINITIONS

A. In this Policy, "you" and "your" refer to the "named insured" shown in the Declarations and the spouse if a resident of the same household. "We", "us" and "our" refer to the company providing this insurance.

B. In addition, certain words and phrases are defined as follows:

1. "Below ground area" means that part of a building, including any room or portion of a room, with its floor below the surface of the ground on all sides. This Paragraph B.1. applies to any part of a building, including, but not limited to, a:

a. Basement;

b. Garage area;

c. Living area;

d. Storage area; or

e. Utility area.

2. "Business" means:

a. A trade, profession or occupation engaged in on a full-time, part-time or occasional basis; or

b. Any other activity engaged in for money or other compensation, except the following:

(1) One or more activities, not described in (2) through (4) below, for which no "insured" receives more than $2,000 in total compensation for the 12 months before the beginning of the policy period;

(2) Volunteer activities for which no money is received other than payment for expenses incurred to perform the activity;

(3) Providing home day care services for which no compensation is received, other than the mutual exchange of such services; or

(4) The rendering of home day care services to a relative of an "insured".

3. "Described location" means the location which is shown as the "described location" in the Declarations.

4. "Elevated building" means a building that has no "below ground area" and that has its lowest elevated floor raised above the surface of the ground, in whole or in part, by:

a. Foundation walls;

b. Shear walls;

c. Posts; or

d. Columns.

5. "Flood" means:

a. A general and temporary condition of partial or complete inundation of normally dry land areas due to any of the following:

(1) Overflow of inland or tidal waters from a natural or man-made body of water, including:

(a) Waves, such as tidal wave and tsunami;

(b) Storm surge; and

(c) Spray from any such overflow; all whether driven by wind or not;

(2) Unusual or rapid accumulation or runoff of surface waters from any source, including release of water from a:

(a) Dam;

(b) Levee;

(c) Seawall; or

(d) Other similar boundary or containment system; or

(3) "Mudslide or mudflow" caused by flooding as defined in 5.a.(1) and 5.a.(2) above.

b. Collapse or sinking of land along the shore of a body of water as a result of erosion or undermining caused by waves or currents of water which exceed cyclical levels and cause flooding as defined in 5.a.(1) above.

All flooding in a continuous or protracted event will constitute a single occurrence of "flood".

Analysis

"Below ground area" is the sections of a building that have the floor below the surface of the ground on all sides. If part of the floor is above ground and the rest is under ground, that is not a below ground area. The terrain may slope down in the back so part of the basement is below ground but another section is above ground, such as is often found with walk-out basements. Unless the floor is below the surface on all sides, that area is not below ground.

The definition of "business" is the same as that in the homeowners policy. "Described location" is just that, the premises described in the declarations.

An "elevated building" is the opposite of a "below ground area". An "elevated building" has no "below ground areas" and the lowest elevated floor is above the surface of the ground in whole or in part by posts, columns, and shear or foundation walls. A shear wall is designed to resist lateral forces often caused by floodwaters. Water can put tremendous lateral force on a building.

"Flood" is a key definition in the policy, and it varies from the NFIP form. Flood is a general and temporary partial inundation of normally dry land due to particular causes listed on the policy. The NFIP form requires two or more acres or two or more properties, one being the insured's, to be inundated. The ISO form is broader in that respect and does not require any particular amount of property to be inundated by water. The inundation must be due to the overflow of inland or tidal waters, from natural or man-made bodies of water, including waves, such as tidal waves and tsunamis, storm surge and spray from such an overflow whether or not driven by wind. Also included as a cause of flood is unusual or rapid accumulation of runoff of surface water from any source; sources include the release of water from a dam, levee, seawall, or similar boundary or containment system, or mudslide or mudflows. Likewise, collapse or sinking of land along a body of water due to erosion, or undermining caused by waves or currents exceeding normal cyclical levels that cause flooding is also a flood. The NFIP policy is not as explicit in the definition, although the coverage is the same. To an extent, the definition of flood in the ISO form matches the exclusion for water in the homeowners form; this allows the forms to work together to provide coverage for an insured.

6. "Fungi" means any type or form of fungus, including mold or mildew, and any mycotoxins, spores, scents or by-products produced or released by fungi.

7. "Insured" means you and residents of your household who are:

a. Your relatives; or

b. Other persons under the age of 21 and in your care or the care of a resident of your household who is your relative.

When the word an immediately precedes the word "insured", the words an "insured" together mean one or more "insureds".

8. "Mudslide or mudflow" means a river of liquid and flowing mud on the surface of normally dry land areas, as when earth is:

a. Carried by a current of water; and

b. Deposited along the path of the current.

9. "Residence employee" means:

a. An employee of an "insured", or an employee leased to an "insured" by a labor leasing firm, under an agreement between an "insured" and the labor leasing firm, whose duties are related to the maintenance or use of the "described location", including household or domestic services; or

b. One who performs similar duties elsewhere not related to the "business" of an "insured".

A "residence employee" does not include a temporary employee who is furnished to an "insured" to substitute for a permanent "residence employee" on leave or to meet seasonal or short-term workload conditions.

Analysis

The next definition is "fungi" and it includes any type or form of fungus, including mold, mildew, and byproducts such as spores, scents, or mycotoxins given off by fungi. Any of these can cause damage to property and are common after flooding.

Unlike the homeowners form, the definition of insured does not include a student enrolled in school full-time, regardless of age, and does not address others who are caring for an insured's animal or watercraft at the time. This is because this policy is specific to flood losses that occur at the described location only. A student away at school is not at the described location, so there is no need to include students as insureds. Likewise, this is a property policy and does not include liability so there is no need to include others caring for insureds pets or boats on this policy.

"Mudslide or mudflow" is when a river of liquid and flowing mud is on the surface of normally dry land. This is when a current of water carries earth and deposits it along the path of the current. This is more than a big mud puddle. The mud has to be flowing, and has to contain earth. It is not just a swampy or muddy area in the backyard.

The definition of "residence employee" matches the definition found in the homeowners form. Those employees whose duties are related to the maintenance or use of the home are considered "residence employees".

Coverages A and B

A. Coverage A – Dwelling And Coverage B – Detached Garage

1. Coverage A – Dwelling

We insure for direct physical loss caused by "flood" to:

a. The dwelling on the "described location" shown in the Declarations, including structures attached to the dwelling;

b. Materials and supplies located in a fully enclosed building on the "described location" or on an adjacent property used to:

(1) Construct; (2) Alter; or (3) Repair; the dwelling or covered detached garage on the "described location"; and

c. If not otherwise covered in this Policy, building equipment used for the service of the dwelling or covered detached garage on the "described location".

2. Coverage B – Detached Garage We insure for direct physical loss caused by "flood" to one detached garage on the "described location". The limit of liability for this coverage:

a. Will not be more than 10% of the limit of liability that applies to Coverage A; and b. Is included within, and does not increase, the limit of liability that applies to Coverage A.

3. Property Not Covered We do not cover:

a. Any detached garage:

(1) Rented or held for rental to any person not a tenant of the dwelling, unless used solely as a private garage; (2) From which any "business" is conducted; or (3) Used or held for use for any farming purposes;

b. A building or structure located on or over a body of water; c. Land, land remediation or restoration, land values, lawns, trees, shrubs, plants or growing crops; d. Underground structures and equipment, including wells, septic tanks and septic systems; e. Those portions of walks, walkways, decks, driveways, patios and other similar surfaces, all whether protected by a roof or not, located outside the exterior walls of any building; f. Fences, retaining walls, seawalls, bulkheads, wharves, piers, bridges or docks; g. Hot tubs and spas that are not bathroom fixtures; or h. Swimming pools and their equipment.

Analysis

The coverages section is straightforward, and explains what is, and is not covered by flood. As flood is a defined term, the section does not need to identify perils, just what is covered. Direct physical loss by flood is the covered peril. The dwelling and structures attached to the dwelling, as listed on the declarations under described location are covered. In addition, materials and supplies used to construct, alter, or repair the dwelling or covered detached garage are covered as long as they are in a fully enclosed building on or adjacent property. Material left out in the open is particularly susceptible to being swept away, so in order for coverage to apply materials and supplies must be properly stored.

Detached garages are also covered, but coverage is restricted to ten percent of Coverage A. This is included within the Coverage A limit and does not increase coverage.

Certain property is not covered. Detached garages that are rented or held for rental to anyone not a tenant of the residence, unless it is used solely as a private garage, are not covered. Nor are detached garages used or held for use for farming purposes or from which any "business" is conducted.

As in the homeowners policy land is not covered, nor is land remediation or restoration, land values, trees, shrubs, plants or growing crops, dwellings or structures over a body of water, underground structures and equipment including wells, septic tanks and septic systems. These are all readily damaged, some by even the mildest flood, and the policy is designed to provide coverage to the buildings themselves. Likewise, swimming pools and their equipment, as well as hot tubs and spas that are not bathroom fixtures are not covered. Fences, retaining walls, seawalls, bulkheads, wharves, piers, bridges or docks are not covered, as they too are readily susceptible to damage from floods.

Coverage C

C. Coverage C – Personal Property

1. Covered Property

a. We insure for direct physical loss caused by "flood" to personal property owned or used by an "insured" while inside a building at the "described location", subject to Paragraph C.1.b. below. After a loss and at your request, we will cover personal property owned by a guest or a "residence employee" while the property is inside a building at the "described location". b. We do not cover personal property located:

(1) In a "below ground area"; or
(2) Below the lowest elevated floor of an "elevated building". However this Paragraph C.1.b. does not apply to the following items, if installed in their functioning locations and, if necessary for operation, connected to a power source: (1) Air conditioning units, portable or window type; (2) Clothes washers and dryers; and (3) Refrigerators and freezers, other than walk-in, and food in any such refrigerator or freezer.

2. Special Limits Of Liability The special limit for each category shown below is the total limit for each loss for all property in that category. These special limits do not increase the Coverage C limit of liability.

a. $2,500 on artwork, photographs, collectibles, rare books or memorabilia, including, but not limited to, porcelain or other figures, and sports cards.
b. $2,500 on jewelry, watches, precious and semiprecious stones.
c. $2,500 on personal property used primarily for "business" purposes.
d. $2,500 on furs.
e. $2,500 for loss of silverware, silver-plated ware, goldware, gold-plated ware, platinumware, platinumplated ware and pewterware. This includes flatware, hollowware, tea sets, trays and trophies made of or including silver, gold or pewter.

3. Property Not Covered We do not cover:

a. Articles separately described and specifically insured, regardless of the limit for which they are insured, in this or other insurance;
b. Personal property located outside of a building;
c. Personal property in a building or structure located on or over a body of water;
d. Motor vehicles or all other motorized land conveyances, including trailers or semitrailers. This includes their equipment and parts. However, this Paragraph 3.d. does not apply to:

(1) Portable electronic equipment that:

(a) Reproduces, receives or transmits audio, visual or data signals; and (b) Is designed so that it may be operated from a power source other than the electrical system of motor vehicles and all other motorized land conveyances.

(2) Motor vehicles or other motorized land conveyances, including trailers and semitrailers, not required to be registered for use on public roads or property which are:

(a) Used solely to service a residence; or (b) Designed to assist the handicapped;

e. Animals, birds or fish;
f. Accounts, bank notes, bills, bullion, coins, currency, deeds, evidences of debt, gold other than goldware, letters of credit, manuscripts, medals, money, notes other than bank notes, passports, personal records, platinum other than platinumware, securities, silver other than silverware, tickets, stamps, scrip, stored value cards and smart cards;
g. Equipment located underground;
h. Tanks and their contents;
i. Aircraft, meaning any contrivance used or designed for flight, including any parts whether or not attached to the aircraft. We do cover model or hobby aircraft not used or designed to carry people or cargo;
j. Watercraft of all types, including their furnishings, equipment and outboard engines or motors;
k. Hovercraft and parts. Hovercraft means a self-propelled motorized ground effect vehicle and includes, but is not limited to, flarecraft and air cushion vehicles;
l. Hot tubs and spas that are not bathroom fixtures; or
m. Swimming pools and their equipment.

Analysis

Coverage C is for personal property, and since this policy only provides coverage for flood, it describes special limits that apply to certain types of property and lists what property is not covered. Direct physical loss must be caused by flood for there to be any coverage. Personal property inside a building on the "described location" is covered except for what is listed as not covered. Property in a "below ground area" or below the lowest elevation of an "elevated building" is not covered, unless it is air conditioning units, either portable or window type, washers and dryers, and refrigerators and freezers other than walk-in types, and any food in the refrigerators and freezers. This equipment must be installed in its functioning location and connected to a power source, if required for operation. A window air conditioner is covered if it is below ground if it is plugged in and being used. However, if it is sitting on the basement floor and is not plugged in and being used, it is not covered. The special limits are different from those found in the homeowners policy. Limits of $2,500 apply to all of the following, and do not increase the limit of coverage C.

• Artwork, photographs, collectibles, rare books, memorabilia, including but not limited to porcelain or other figures and sports cards.

• Jewelry, watches, precious and semiprecious stones, furs, personal property used primarily for "business" use.

• Silverware, v, platinumware, and silver, gold and platinum-plated ware and pewterware. This includes flatware, hollowware, tea sets, trays and trophies made of or including silver, gold or pewter.

Property not covered is of course property specifically insured, regardless of limit, on this or any other insurance policy. The insured is not supposed to profit from his loss, and paying when another policy exists is providing duplicate coverage. Personal property located outside of a building, or in a building or structure over a body of water, equipment underground, tanks and their contents, swimming pools and their equipment, hot tubs and spas not part of bathroom fixtures are all not covered. Motor vehicles or other motorized land conveyances, trailers or semitrailers are not covered, including equipment and parts with some exceptions. The exceptions parallel the homeowners exceptions for portable electronic equipment that receives or transmits audio, video or data signals and can be operated from a power source other than that in the vehicles. In addition, vehicles not required to be registered for use on public roads or property that are used solely to service a residence or are designed to assist the handicapped are also an exception to the exclusion. Any aircraft, watercraft or hovercraft is not covered except for hobby or model aircraft not used to carry people or cargo.

Animals, birds or fish are not covered, nor are accounts, bank notes, bills, bullion, coins, currency, deeds, evidences of debt, gold other than goldware, letters of credit, manuscripts, medals, money, notes other than bank notes, passports, personal records, platinum other than platinumware, securities, silver other than silverware, tickets, stamps, scrip, stored value cards and smart cards. Coins, currency and any records are too easily damaged by flood.

Coverages D and E

D. Coverage D – Loss Of Use
The limit of liability for Coverage D is the total limit for the coverages in 1. Additional Living Expense, 2. Fair Rental Value and 3. Civil Authority Prohibits Use below.

1. Additional Living Expense If a loss caused by "flood" to:

a. Covered property; or
b. A building containing covered property; makes that part of the "described location" where you reside not fit to live in, we cover any necessary increase in living expenses incurred by you so that your household can maintain its normal standard of living. However, Paragraph 1.b. only applies if you are a tenant of the "described location". Payment will be for the shortest time required to repair or replace the damage or, if you permanently relocate, the shortest time required for your household to settle elsewhere.

2. Fair Rental Value If a loss caused by "flood" to:

a. Covered property; or
b. A building containing covered property; makes that part of the "described location" rented to others or held for rental by you not fit to live in, we cover the fair rental value of such premises less any expenses that do not continue while it is not fit to live in. However, Paragraph 2.b. only applies if you are a tenant of the "described location". Payment will be for the shortest time required to repair or replace such premises.

3. Civil Authority Prohibits Use
If a civil authority prohibits you from use of the "described location" as a result of direct damage to neighboring premises by "flood", we cover the loss as provided in 1. Additional Living Expense and 2. Fair Rental Value above for no more than two weeks.
4. Loss Or Expense Not Covered
We do not cover loss or expense due to cancellation of a lease or agreement. The periods of time under 1. Additional Living Expense, 2. Fair Rental Value and 3. Civil Authority Prohibits Use above are not limited by expiration of this Policy.

E. Additional Coverages

1. Debris Removal
We will pay your reasonable expense for the removal of debris of covered property if "flood" causes the loss. This expense is included in the limit of liability that applies to the damaged property. If the amount to be paid for the actual damage to the property plus the debris removal expense is more than the limit of liability for the damaged property, an additional 5% of that limit is available for such expense.
2. Reasonable Repairs

a. We will pay the reasonable cost incurred by you for the necessary measures taken solely to protect covered property that is damaged by "flood" from further damage. b. If the measures taken involve repair to other damaged property, we will only pay if that property is covered under this Policy and the damage is caused by "flood". This coverage does not:

(1) Increase the limit of liability that applies to the covered property; or
(2) Relieve you of your duties, in case of a loss to covered property, described in C. under Conditions.

3. Property Removed

a. We will pay the reasonable cost incurred by you, up to $1,000, to move covered property to a place other than the "described location" in order to protect it from "flood" or the imminent danger of "flood".
b. We insure covered property against direct loss from any cause while being removed from a premises endangered by "flood" and for no more than 45 days while removed. The personal property that is moved must be placed in a fully enclosed building or otherwise reasonably protected from the elements. Any property removed must be placed above ground level. This coverage does not increase the limit of liability that applies to the property being removed. No deductible applies to this coverage.

4. Sandbags, Supplies And Labor
We will pay the reasonable cost incurred by you, up to $1,000, to protect the covered building from a "flood" or imminent danger of "flood". This coverage is limited to:

a. Sandbags, including sand to fill them;
b. Fill for temporary levees;
c. Pumps; and d. Plastic sheeting and lumber used in connection with these items.
This coverage does not increase the limit of liability that applies to the covered property. No deductible applies to this coverage.

5. Improvements, Alterations And Additions
If you are a tenant of the "described location", you may use up to 10% of the Coverage C limit of liability for loss by "flood" to improvements, alterations and additions, made or acquired at your expense, to that part of the "described location" used only by you. This coverage is additional insurance. 6. Loss Assessment

a. We will pay up to $1,000 for your share of loss assessment charged during the policy period against you, as owner or tenant of the "described location", by a corporation or association of property owners. The assessment must be made as a result of direct loss to property, owned by all members collectively, of the type that would be covered by this Policy if owned by you, caused by "flood". The limit of $1,000 is the most we will pay with respect to any one loss, regardless of the number of assessments. We will only apply one deductible, per unit, to the total amount of any one loss to the property described above, regardless of the number of assessments.
b. We do not cover assessments charged against you or a corporation or association of property owners by any governmental body. c. Paragraph P. Policy Period under Conditions does not apply to this coverage. This coverage is additional insurance.

Analysis

Coverage D is almost identical to the homeowners policy except it specifies that the damage must be due to flood. Otherwise, the additional living expenses, fair rental expenses, civil authority prohibits use and loss or expenses due to cancellation of a lease or agreement are the same.

Coverage E debris removal applies only to property damaged by flood and does not include trees, shrubs, or other plants. The reasonable repairs, property removed, and loss assessment coverages are identical to the homeowners form other than for references that the damage must be caused by flood. Property removed must be stored above ground level. The remaining coverage E sections of the homeowners policy do not appear in the flood policy. Instead, there is coverage for sandbags, supplies and labor and improvements, additions and alterations for tenants of the "described location".

Up to $1,000 is provided for the cost of sandbags, sand to fill them, fill for temporary levees, pumps, and plastic sheeting and lumber used to construct levees and barriers with the aforementioned materials. Up to ten percent of coverage C can be used for loss to improvements and betterments installed by the tenant to the location used only by the tenant.

Exclusions

EXCLUSIONS A. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.

1. Ordinance Or Law Ordinance Or Law means any ordinance or law:

a. Requiring or regulating the construction, demolition, remodeling, renovation or repair of property, including removal of any resulting debris;
b. The requirements of which result in a loss in value to property; or
c. Requiring you 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.
Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed. This Exclusion A.1. applies whether or not the property has been physically damaged.

2. Earth Movement Earth Movement means:

a. Earthquake, including land shock waves or tremors before, during or after a volcanic eruption;
b. Landslide;
c. Subsidence or sinkhole;
d. Destabilization;
e. Gradual erosion; or
f. Any other earth movement including earth sinking, rising or shifting.
This Exclusion A.2. applies regardless of whether any of the above, in A.2.a. through A.2.f., is caused by an act of nature or is otherwise caused. However, direct physical loss by "flood" resulting from any of the above, in A.2.a. through A.2.f., is covered.

3. Rain, Snow, Ice, Sleet Or Their Spray
4. Freezing, Thawing, Pressure Or Weight Of Water Or Ice
However, this Exclusion A.4. does not apply to the extent that loss is caused by "flood".
5. "Fungi", Wet Or Dry Rot Or Bacteria
This means "fungi", wet or dry rot or bacteria that results primarily from failure to inspect and maintain the property after a "flood" recedes.
6. Water
This means:

a. Water or waterborne material which backs up, overflows or is otherwise discharged from:

(1) Sewers or drains; or
(2) A sump, sump pump or related equipment; that does not result from "flood"; or

b. Water below the surface of the ground which:

(1) Exerts pressure on, or seeps, leaks or flows through a building, foundation or other structure; and
(2) Does not result from flooding as described in Paragraph a.(1) or a.(2) in the definition of "flood".
This Exclusion A.6. applies regardless of whether any of the above, in A.6.a. through A.6.b., is caused by an act of nature or is otherwise caused.

7. Theft, Fire, Explosion, Wind Or Hail
8. Intentional Loss
Intentional Loss means any loss arising out of any act an "insured" commits or conspires to commit with the intent to cause a loss. In the event of such loss, no "insured" is entitled to coverage, even "insureds" who did not commit or conspire to commit the act causing the loss.
9. Power Failure
Power Failure means the failure of power or other utility service if the failure takes place off the "described location". But if the failure of power or other utility service results in a loss, from a "flood" on the "described location", we will pay for the loss caused by "flood".
10. Neglect
Neglect means neglect of an "insured" to use all reasonable means to save and preserve property at and after the time of a loss.
11. War
War includes the following and any consequence of any of the following:

a. Undeclared war, civil war, insurrection, rebellion or revolution;
b. Warlike act by a military force or military personnel; or
c. Destruction or seizure or use for a military purpose. Discharge of a nuclear weapon will be deemed a warlike act even if accidental.

12. Nuclear Hazard
This Exclusion A.12. pertains to Nuclear Hazard to the extent set forth in the Nuclear Hazard Clause of the Conditions.
13. Governmental Action
Governmental Action means the destruction, confiscation or seizure of property described in Coverage A, B or C by order of any governmental or public authority.

B. We do not insure for loss caused directly or indirectly by a "flood" that begins before:

1. The inception date of this Policy; or

2. The effective date of a coverage change, but only with respect to any newly added or increased coverage.

Analysis

The exclusions are very similar to the homeowners exclusions with a few changes. The earth movement exclusion includes gradual erosion and destabilization as excluded forms of earth movement but does not include mudflow. An exception is made for earth movement that causes direct physical loss by flood. For example, an earthquake ruptures a dam that floods the insured's property. Rain, ice, snow, sleet or their spray are excluded as is freezing, thawing pressure or weight of water or ice, although freezing, thawing, pressure or weight of water or ice is not excluded if that loss is caused by flood.

Fungi, wet or dry rot or bacteria are excluded when they result from the insured's failure to maintain and inspect the property after a flood recedes. The insured needs to pay attention to his property once the water has subsided, as this is particularly when mold begins to grow. Water is excluded when it backs up from sewers, drains, sumps or sump pumps, or water below the surface of the ground as long as it is not a result of flooding. The policy is designed to cover flooding only; water backup coverage can and should be endorsed onto the homeowners policy.

As this is a flood policy, losses from theft, fire, explosion, wind or hail are not covered. Nor is loss from intentional acts of the insured; and innocent coinsureds who knew nothing of the action that caused intentional damage receive no coverage.

Power failure is excluded unless the loss of power results from a flood on the "described location". Neglect is also excluded, as is war, nuclear hazard, and governmental action.

Conditions

CONDITIONS
A. Insurable Interest And Limit Of Liability Even if more than one person has an insurable interest in the property covered, we will not be liable in any one loss:

1. To an "insured" for more than the amount of such "insured's" interest at the time of loss; or 2. For more than the applicable limit of liability.

B. Deductible Unless otherwise noted in this Policy, the following deductible provision applies: With respect to any one loss:

1. Subject to the applicable limit of liability, we will pay only that part of the total of all loss payable that exceeds the deductible amount shown in the Declarations. 2. If two or more deductibles under this Policy apply to the loss, only the highest deductible amount will apply.

C. Duties After Loss In case of a loss to covered property, we have no duty to provide coverage under this Policy if the failure to comply with the following duties is prejudicial to us. These duties must be performed either by you, an "insured" seeking coverage, or a representative of either:

1. Give prompt notice to us or our agent; 2. Protect the property from further damage. If repairs to the property are required, you must:

a. Make reasonable and necessary repairs to protect the property; and b. Keep an accurate record of repair expenses;

3. Cooperate with us in the investigation of a claim;
4. Prepare an inventory of damaged personal property showing the quantity, description, actual cash value and amount of loss. Attach all bills, receipts and related documents that justify the figures in the inventory;
5. As often as we reasonably require:

a. Show the damaged property;
b. Provide us with records and documents we request and permit us to make copies; and
c. Submit to examination under oath, while not in the presence of another "insured", and sign the same;

6. Send to us, within 60 days after our request, your signed, sworn proof of loss which sets forth, to the best of your knowledge and belief:

a. The time and cause of loss;
b. The interests of all "insureds" and all others in the property involved and all liens on the property;
c. Other insurance which may cover the loss;
d. Changes in title or occupancy of the property during the term of the Policy;
e. Specifications of damaged buildings and detailed repair estimates;
f. The inventory of damaged personal property described in 4. above; and
g. Receipts for additional living expenses incurred and records that support the fair rental value loss.

D. Loss Settlement In this Condition D., the terms "cost to repair or replace" and "replacement cost" do not include the increased costs incurred to comply with the enforcement of any ordinance or law. Covered property losses are settled as follows:

1. Property of the following types:

a. Personal property; and
b. Awnings, carpeting, household appliances, outdoor antennas and outdoor equipment attached to buildings; at actual cash value at the time of loss but not more than the amount required to repair or replace.

2. Buildings covered under Coverage A or B at replacement cost without deduction for depreciation, subject to the following:

a. If, at the time of loss, the amount of insurance in this Policy on the damaged building is 80% or more of the full replacement cost of the building immediately before the loss, we will pay the cost to repair or replace, without deduction for depreciation, but not more than the least of the following amounts:

(1) The limit of liability under this Policy that applies to the building;
(2) The replacement cost of that part of the building damaged with material of like kind and quality and for like use; or
(3) The necessary amount actually spent to repair or replace the damaged building. If the building is rebuilt at a new premises, the cost described in (2) above is limited to the cost which would have been incurred if the building had been built at the original premises.

b. If, at the time of loss, the amount of insurance in this Policy on the damaged building is less than 80% of the full replacement cost of the building immediately before the loss, we will pay the greater of the following amounts, but not more than the limit of liability under this Policy that applies to the building:

(1) The actual cash value of that part of the building damaged; or (2) That proportion of the cost to repair or replace, without deduction for depreciation, that part of the building damaged, which the total amount of insurance in this Policy on the damaged building bears to 80% of the replacement cost of the building.

c. To determine the amount of insurance required to equal 80% of the full replacement cost of the building immediately before the loss, do not include the value of:

(1) Excavations, footings, foundations, piers or any other structures or devices that support all or part of the building, which are below the undersurface of the lowest "below ground area" floor;
(2) Those supports described in (1) above which are below the surface of the ground inside the foundation walls, if there is no "below ground area"; and
(3) Underground flues, pipes, wiring and drains.

d. We will pay no more than the actual cash value of the damage until actual repair or replacement is complete. Once actual repair or replacement is complete, we will settle the loss as noted in 2.a. and b. above. However, if the cost to repair or replace the damage is both:

(1) Less than 5% of the amount of insurance in this Policy on the building; and
(2) Less than $2,500; we will settle the loss as noted in 2.a. and b. above whether or not actual repair or replacement is complete.

e. You may disregard the replacement cost loss settlement provisions and make claim under this Policy for loss to buildings on an actual cash value basis. You may then make claim for any additional liability according to the provisions of this Condition D. Loss Settlement, provided you notify us, within 180 days after the date of loss, of your intent to repair or replace the damaged building.

E. Loss To A Pair Or Set
In case of loss to a pair or set we may elect to:

1. Repair or replace any part to restore the pair or set to its value before the loss; or
2. Pay the difference between actual cash value of the property before and after the loss.

F. Appraisal
If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent and impartial appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the "described location" is located. The appraisers will separately set the amount of loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will:

1. Pay its own appraiser; and
2. Bear the other expenses of the appraisal and umpire equally.

G. Other Insurance And Service Agreement
If a loss covered by this Policy is also covered by:

1. Other insurance, we will pay only the proportion of the loss that the limit of liability that applies under this Policy bears to the total amount of insurance covering the loss; or
2. A service agreement, this insurance is excess over any amounts payable under any such agreement. Service agreement means a service plan, property restoration plan, home warranty or other similar service warranty agreement, even if it is characterized as insurance.

H. Suit Against Us
No action can be brought against us unless there has been full compliance with all of the terms of this Policy and the action is started within two years after the date of loss.
I. Our Option
If we give you written notice within 30 days after we receive your signed, sworn proof of loss, we may repair or replace any part of the damaged property with material or property of like kind and quality.
J. Loss Payment
We will adjust all losses with you. We will pay you unless some other person is named in the Policy or is legally entitled to receive payment. Loss will be payable 60 days after we receive your proof of loss and:

1. Reach an agreement with you;
2. There is an entry of a final judgment; or
3. There is a filing of an appraisal award with us.

K. Abandonment Of Property
We need not accept any property abandoned by an "insured".
L. Mortgage Clause

1. If a mortgagee is named in this Policy, any loss payable under Coverage A or B will be paid to the mortgagee and you, as interests appear. If more than one mortgagee is named, the order of payment will be the same as the order of precedence of the mortgages.
2. If we deny your claim, that denial will not apply to a valid claim of the mortgagee, if the mortgagee:

a. Notifies us of any change in ownership, occupancy or substantial change in risk of which the mortgagee is aware;
b. Pays any premium due under this Policy on demand if you have neglected to pay the premium; and
c. Submits a signed, sworn statement of loss within 60 days after receiving notice from us of your failure to do so. Paragraphs F. Appraisal, H. Suit Against Us and J. Loss Payment under Conditions also apply to the mortgagee.

3. If we decide to cancel this Policy, the mortgagee will be notified at least:

a. 10 days before the date cancellation takes effect if:

(1) Cancellation is for nonpayment of premium; or
(2) Notice is mailed during the first 60 days this Policy is in effect and this is not a renewal or continuation policy; or

b. 45 days before the date cancellation takes effect in all other cases.

4. If we decide not to renew this Policy, the mortgagee will be notified at least 45 days before the date nonrenewal takes effect.
5. If we pay the mortgagee for any loss and deny payment to you:

a. We are subrogated to all the rights of the mortgagee granted under the mortgage on the property; or
b. At our option, we may pay to the mortgagee the whole principal on the mortgage plus any accrued interest. In this event, we will receive a full assignment and transfer of the mortgage and all securities held as collateral to the mortgage debt.

6. Subrogation will not impair the right of the mortgagee to recover the full amount of the mortgagee's claim.

M. No Benefit To Bailee
We will not recognize any assignment or grant any coverage that benefits a person or organization holding, storing or moving property for a fee regardless of any other provision of this Policy.
N. Nuclear Hazard Clause

1. "Nuclear Hazard" means any nuclear reaction, radiation, or radioactive contamination, all whether controlled or uncontrolled or however caused, or any consequence of any of these.
2. This Policy does not apply to loss caused directly or indirectly by nuclear hazard.

O. Recovered Property
If you or we recover any property for which we have made payment under this Policy, you or we will notify the other of the recovery. At your option, the property will be returned to or retained by you or it will become our property. If the recovered property is returned to or retained by you, the loss payment will be adjusted based on the amount you received for the recovered property.
P. Policy Period
This Policy applies only to loss which occurs during the policy period.
Q. Concealment Or Fraud
We do not provide coverage under this Policy if, whether before or after a loss, an "insured" has:

1. Intentionally concealed or misrepresented any material fact or circumstance;
2. Engaged in fraudulent conduct; or
3. Made false statements; relating to this insurance.

R. Loss Payable Clause
If the Declarations shows a loss payee for certain listed insured personal property, the definition of "insured" is changed to include that loss payee with respect to that property. If we decide to cancel or not renew this Policy, that loss payee will be notified in writing.
S. Liberalization Clause
If we make a change which broadens coverage under this edition of our policy without additional premium charge, that change will automatically apply to your insurance as of the date we implement the change in your state, provided that this implementation date falls within 60 days prior to or during the policy period stated in the Declarations. This Liberalization Clause does not apply to changes implemented with a general program revision that includes both broadenings and restrictions in coverage, whether that general program revision is implemented through introduction of:

1. A subsequent edition of this Policy; or
2. An amendatory endorsement.

T. Waiver Or Change Of Policy Provisions
A waiver or change of a provision of this Policy must be in writing by us to be valid. Our request for an appraisal or examination will not waive any of our rights.
U. Cancellation

1. You may cancel this Policy at any time by returning it to us or by letting us know in writing of the date cancellation is to take effect.
2. We may cancel by delivering to you, or mailing to you at your mailing address shown in the Declarations, written notice as follows:

a. At least 10 days' notice:

(1) If cancellation is for nonpayment of premium; or
(2) If notice is mailed during the first 60 days this Policy is in effect and this is not a renewal or continuation policy; or

b. At least 45 days' notice for any other reason permissible under applicable law in all other cases. Proof of mailing will be sufficient proof of notice.

3. When this Policy is canceled, the premium for the period from the date of cancellation to the expiration date will be refunded pro rata.
4. If the return premium is not refunded with the notice of cancellation or when this Policy is returned to us, we will refund it within a reasonable time after the date cancellation takes effect.

V. Nonrenewal
We may elect not to renew this Policy for any reason permissible under applicable law. We may do so by delivering to you, or mailing to you at your mailing address shown in the Declarations, written notice at least 45 days before the expiration date of this Policy. Proof of mailing will be sufficient proof of notice.
W. Assignment
Assignment of this Policy will not be valid unless we give our written consent.
X. Subrogation
An "insured" may waive in writing before a loss all rights of recovery against any person. If not waived, we may require an assignment of rights of recovery for a loss to the extent that payment is made by us. If an assignment is sought, an "insured" must sign and deliver all related papers and cooperate with us. Y. Death If any person named in the Declarations or the spouse, if a resident of the same household, dies, the following apply:

1. We insure the legal representative of the deceased but only with respect to the premises and property of the deceased covered under the Policy at the time of death; and
2. "Insured" includes:

a. An "insured" who is a member of your household at the time of your death, but only while a resident of the "described location"; and
b. With respect to your property, the person having proper temporary custody of the property until appointment and qualification of a legal representative.

Analysis

The Conditions section is almost identical to the conditions found in the homeowners policy with just a few changes. Since the policy only covers flood there is no require to report theft to the police, or to provide supporting evidence for credit card fraud or other counterfeit fraud. The mortgagee receives forty-five day notice of nonrenewal or cancellation instead of ten days as appears in the homeowners policy. Otherwise, the conditions are standard.

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