NFIP Flood Adjuster cheat sheet

NFIP is a federal program administered by FEMA; the Write Your Own (WYO) carriers issue and service Standard Flood Insurance Policies (SFIP) under their own names but federal rules govern the policy wording.

Community participation is voluntary and conditioned on adopting and enforcing local floodplain management ordinances; the community must be in the Regular Program (or Emergency Program) for a policy to be written there.

Emergency Program limits are reduced: generally $35,000 building and $10,000 contents for a 1-4 family residence; the Regular Program uses the full Section 1306 statutory caps.

The SFIP is a single-peril policy: direct physical loss by or from flood. It is not a valued policy and does not respond to earth movement, even if water caused the movement.

Flood, per the SFIP definition, is a general and temporary condition of partial or complete inundation of normally dry land from overflow of inland or tidal waters, unusual rapid accumulation or runoff of surface waters, or mudflow.

Two or more properties must be affected for the general-condition element to be met; a single-property event can still qualify where at least two acres of normally dry land are inundated.

The 30-day waiting period applies to new policies and most increases in coverage; exceptions include lender-required flood insurance at loan closing, certain map-change and remapping situations, and reinstatement after a lapse for a lender requirement.

The NFIP is a debt-funded program: it borrows from the U.S. Treasury when claims exceed premium and reserve capacity; Congress authorizes program reauthorization, and lapses can stop new policy issuance.

Condo and cooperative unit owners may purchase building coverage for building elements within the unit (improvements and betterments) plus contents; the RCBAP covers the residential condominium building association's common elements.

Statutory maximums: $250,000 building and $100,000 contents for a 1-4 family residential building; $500,000 building and $500,000 contents for non-residential; $250,000 building per unit plus $100,000 contents per unit for residential condominium (RCBAP).

Basement coverage is limited to specified building elements and equipment (furnace, water heater, sump pumps, electrical outlets and switches, circuit breakers, foundation elements) plus the building's necessary utility connections; finished basement contents and furnishings are excluded.

Contents coverage is not automatic with building coverage; it must be purchased separately, and the deductible applies separately to building and to contents.

The SFIP deductible applies once per loss occurrence, not per item; the standard deductible is $1,000 for building and $1,000 for contents, with higher options available and a higher deductible mandatory for certain severe repetitive loss properties.

Covered building items include the building and its foundation, permanently installed carpet over unfinished flooring, awnings, and the building's systems; excluded are trees, plants, landscaping, sidewalks, decks, fences, and swimming pools.

Covered contents include personal property inside the building, certain property in the building's basement only if specifically listed, and leased items the insured is legally liable for; excluded are currency, precious metals, stock certificates, and motor vehicles.

Loss of use is not a coverage under the SFIP; there is no additional living expense (ALE) or fair rental value benefit.

Increased Cost of Compliance (ICC) provides up to $30,000 per building for compliance with a floodplain management ordinance after a covered loss, triggered by a substantially damaged or repetitively damaged determination.

Property removed to safety is covered for up to 45 days from the date of loss, subject to policy limits; the insured must keep records of expenses.

The SFIP excludes loss caused by water damage from sewer backup unless the backup results from a flood; it also excludes earth movement, mold, and moisture damage not caused by flood.

Proof of loss: the insured must submit a signed and sworn proof of loss within 60 days after the insurer's request; the adjuster may not waive SFIP proof-of-loss requirements, and the insured may not assign the claim.

The adjuster must inspect the loss site, photograph damage, document water lines and high-water marks, and record the date and time of loss and the duration of inundation.

Coverage investigation must establish that the loss is a direct physical loss by or from flood, that the property was insured at the time of loss, and that the location is in a participating community.

Concurrent causation: where both flood and a non-flood peril contribute, the SFIP pays only the portion attributable to flood; the adjuster must separate flood damage from wind, earth movement, or other excluded causes.

The adjuster must verify the policy declarations: building and contents limits, deductible, and whether the property is a primary residence, since the SFIP has separate limits for contents and building.

Flood claims require documentation of the pre-loss condition; the adjuster uses the insured's inventory, receipts, and photographs, and the insured must cooperate with the investigation.

The adjuster must report potential fraud (misrepresentation, inflated inventory, arson) to the insurer and may refer to the NFIP's fraud investigation unit; the adjuster should not accuse the insured.

The adjuster should identify the cause of loss and the flood zone, and must document any prior flood damage and prior claims to assess repetitive loss status.

The adjuster's report must include a narrative, photographs, measurements, and a damage estimate; the file must support the payment decision and be retained per NFIP recordkeeping requirements.

Notice of loss: the insured must give prompt notice; the adjuster should not deny solely for late notice without evaluating prejudice, and must document the notice timeline.

The SFIP pays actual cash value (ACV) for building and contents unless replacement cost (RC) coverage is purchased; RC is available for the building of a 1-4 family residence and for certain contents.

ACV = replacement cost new minus depreciation; the adjuster must apply depreciation based on age, condition, and useful life, and must document the depreciation method.

Replacement cost coverage for the building requires the insured to carry at least 80% of the building's replacement cost; if underinsured, the loss is settled on a proportional basis.

For RC building claims, the insured must repair or replace the damaged property within 180 days of the loss (extendable), and the adjuster may pay ACV first and the RC differential after proof of repair or replacement.

The adjuster must use the NFIP's General Property Form and damage estimate standards; unit prices should reflect local costs, and the estimate must separate building from contents.

Contents valuation: ACV unless RC contents coverage was purchased; the adjuster must verify ownership, age, and condition, and apply depreciation to each item.

The deductible is applied to the loss before payment; the adjuster must not apply the deductible to the ICC payment in a way that reduces the ICC benefit below the statutory maximum.

The adjuster must account for the policy limit and the 80% RC requirement when the building is underinsured; the payment cannot exceed the policy limit.

The adjuster must document salvage and any recovery; the SFIP does not pay for the cost of salvage unless it is a covered expense, and the adjuster should advise the insured of salvage rights.

The adjuster must prepare a detailed estimate that separates flood damage from pre-existing damage and from non-covered items, and must support every line item with photographs or measurements.

Adjusters must be licensed and appointed as required by state law and must comply with the NFIP's adjuster certification and continuing education requirements.

The adjuster owes a duty of good faith and fair dealing to the insured and must not misrepresent policy coverage, limits, or the claims process.

The adjuster must not accept or offer anything of value that could influence the claim decision; conflicts of interest must be disclosed.

Fraud indicators include inflated inventories, receipts that do not match the property, recent large purchases before the loss, and inconsistent statements; the adjuster must document and refer.

The adjuster must protect the insured's privacy and confidential information, sharing it only as needed for the claim and as required by law.

The adjuster must not alter, backdate, or destroy claim records; NFIP recordkeeping requires retention of claim files for the period specified by the program.

The adjuster must communicate clearly and promptly, explain the proof-of-loss requirement, and provide the insured with the claim decision and the basis for any denial.

The adjuster must avoid unauthorized practice of law or public adjusting; the adjuster represents the insurer, not the insured, and must not negotiate on the insured's behalf with third parties.

The adjuster must report suspected fraud to the insurer and cooperate with investigations; knowingly submitting a false claim is a federal crime under 18 U.S.C. § 1001 and related statutes.