National Flood Insurance Program (NFIP) Write Your Own (WYO) Program
participating insurers write the coverage on their own "paper," but the coverage is 100 percent reinsured by the NFIP.
The WYO program is a cooperative enterprise between the Federal Emergency Management Agency (FEMA) and the private insurance industry. Participating property and casualty insurers write and service federal flood insurance in their own names. The insurers receive an expense allowance for policies written and claims processed, while the federal government retains responsibility for paying for any underwriting losses. Ninety-five percent of all NFIP policies are now written by WYO programs.
Coverages and premium rates are set by FEMA, and they are the same regardless of what agent or insurer issues the policy.
Standard Flood Insurance Policy Coverage Forms
The three standard flood insurance policy coverage forms available are the:
general property form
residential condominium building association policy (RCBAP) form
Special Flood Hazard Area (SFHA)
(floodplain) properties that have a 1% chance of being flooded in any given year.
Flood Insurance Rate Map (FIRM)
a map of a community on which FEMA has indicated both the special flood hazard areas and the risk premium zones.
NFIP Standard Flood Insurance Policy-Dwelling Flood Definition
The term flood is defined as follows in the NFIP Standard Flood Insurance Policy—Dwelling Form policy:
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 (at least one of which is your property) from- Overflow of inland or tidal waters; Unusual and rapid accumulation or runoff of surface waters from any source; Mudflow.
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 that result in a flood as we’ve defined it.
For coverage to apply, the flood must be a general condition that covers two or more acres of normally dry land area or two or more properties (at least one of which is the insured's property). In other words, if the flood is confined to the insured's property, there may be no coverage.
Other Coverages (Coverage C)
In addition to the coverage provided on buildings and personal property, the NFIP policy provides coverage for:
debris removal expenses
expenses of removing property to safety
condominium loss assessments (dwelling form only)
pollution damage (general property form only)
Increased Cost of Compliance (Coverage D)
Provides up to $30,000 of coverage.
Increased cost of compliance coverage applies only under the following circumstances:
When the cost to repair a flood-damaged structure equals or exceeds 50 percent of itsmarket value, and the state or community is enforcing a substantial damage provision in its floodplain management law.
When the structure has suffered two flood losses (including the current loss) paid by the NFIP program during a ten-year period, the cost of each repair equaled or exceeded 25 percent of the market value of the structure, and the state or community is enforcing a cumulative substantial damage provision or repetitive loss provision in its floodplain management law.
Deductibles apply separately to building coverage and contents coverage.
Under the emergency program a $2,000 deductible applies.
Under the standard program, the deductibles available on residential buildings and contents range from $1,000 to $5,000.
Deductibles up to $50,000 are available on nonresidential buildings and contents.
Flood Replacement Cost
single family dwelling and RCBAP
Flood Special Loss Settlement
manufactured or mobile homes
Pays the least of- replacement cost; 1.5 times actual cash value; policy limit.
Flood Actual Cash Value
This loss settlement applies to a single-family dwelling not subject to replacement cost or the special loss settlement valuations as well as to-
two-, three-, or four-family dwellings
units that are not used exclusively for single-family dwelling purposes
appliances and carpets
outdoor equipment, such as awnings and aerials of any type
abandoned property on the described location
dwellings that are not the insured's principal residence
Actual cash value is deemed the cost to replace the covered property at the time of the loss, less any applicable depreciation.