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FEMA Issues More Flood Manual Clarifications

The Federal Emergency Management Agency is continuing to provide clarifications to questions raised by changes to the June 1, 2014, National Flood Insurance Program Flood Insurance Manual...
June 12, 2014

The Federal Emergency Management Agency (FEMA) is continuing to provide clarifications to questions raised by changes to the June 1, 2014, National Flood Insurance Program (NFIP) Flood Insurance Manual. Topics include primary residences, tenant improvements and betterments, photograph requirement on insurer transfer and minimum deductibles.

UPDATE - w-14027 – FEMA/NFIP issues 30-day delay on Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) requirement for large fonts.

The font change imposes far reaching systems changes and substantial costs for all connected to the processing and storing of NFIP-related materials (NFIP, WYOs, producers & all related vendors and systems). PIA is working with other industry representatives in developing a sound cost-to-benefit ratio outline to share, discuss with and ask Members of Congress to continue to delay this particular change. There are many more changes yet to come that are far more important and of benefit to consumers than this.

UPDATEw-14028 – Clarifications just issued for important questions raised by changes to the June 1, 2014 NFIP Flood Insurance Manual include:

  1. “Grantor TRUSTs”: There is an increase (and we expect it to continue and grow) in the number of individuals and couples that are forming a Grantor-trust to hold their assets and avoid probate. This bulletin begins to align NFIP underwriting, rating and claims meanings and practice with that of the private property insurance.
  2. C/L Tenants I&B: NFIP has made clear that only one NFIP insurance policy can be written on a building, and that the named-insured must be the owner of the building. In this clarification, NFIP formally acknowledges (as an insured-interest and value) tenants’ potential interests and financial rights in the Improvements & Betterments (I&B) that many make in their rental spaces, especially in C/L. Many of these I&Bs are not contents by NFIP policy definition and often exceed the 10% of building value coverage automatically included in NFIP contents policies for I&B.

These specific clarifications are unrelated to the implementation of the Homeowners Flood Insurance Affordability Act of 2014 (H.R. 3370) rate changes, as detailed in the following link:

FEMA Issues New Flood Premium Rate Changes Effective 10/1/14

PIA will continue its efforts to pursue refinement of these clarifications, and it will be on the July 2014 FIPNC-IBHS-FEMA/NFIP meetings’ agendas.

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