-Flood insurance can be purchased through private commercial insurance companies.-A condominium association can purchase flood insurance.-All flood insurance policies are settled on an AVC basis.-Flood insurance is always backed by the National Flood Insurance Program. WHY: There are three methods to settle a loss under the Standard Flood Insurance Polices: Replacement Cost, Special Loss Settlement, and Actual Cash Value. Antonia lives in a 560 square foot mobile home that is only 20 feet wide. She also has detached garage. When Antonia’s house is damaged by a flood, she hopes that she might beable to receive a Special Loss Settlement. Why isn’t Antonia eligible for a Special Loss Settlement? Her home must have fewer than 600 square feet.
WHY: In order to qualify for Special Loss Settlement, a mobile home must be the insured’s principle residence, be at least 16 feet wide, and have at least 600 square feet inside. Lacey owns vacation home on the beach in North Carolina. It is 2,600 square feet and includes a finished basement. She’d like to buy flood insurance through the NFIP with replacement cost coverage. Why won’t Lacey be able to purchase a replacement cost policy?Lacey’s beach house is not her principle residence. WHY: A property will only get replacement cost coverage if it meets several criteria. It must be asingle-family dwelling, it must be the owner’s principle residence, and it must be insured for at least 80% of its replacement value. Mark’s house sustained $226,000 of damage in a flood. When Mark applies for the permits needed to repair the damage, he discovers that there are new building codes, and he will have to raise his house nine inches to bring it into compliance, which adds $20,000 to his repair costs. Mark’s flood policy has a Coverage A limit of $240,000. Ignoring the deductible, how much will Mark’s SFIP pa him for this claim? $246,000WHY: The Standard Flood Policy includes up to $30,000 of coverage for Increased Cost of Compliance, which applies in addition to the policy limit. However, the cost of covered damagesand ICC together cannot exceed $250,000. Mark’s repair costs (226,000) plus his increased Cost of Compliance ($20,000) come to $246,000. Lori’s property was damaged in a recent flood. The damages to her home and detached garage came to $80,000 and $15,000, respectively. Lori has a Dwelling Form flood policy with $100,000 limit. How much indemnification can Lori expect to receive for the damage to her garage?$10,000WHY: Coverage A can pay up to 10% of the coverage limit for detached garages. 10% of Lori’s $100,000 policy is limit is $10,000. XYZ Insurance is a private insurer that sells flood insurance policies. Which of the following statements is FALSE?-XYZ Insurance is responsible for adjusting all flood claims made by its policyholders. Xx-XYZ Insurance is responsible for paying claims. xx-XYZ Insurance receives expense allowances from the federal government.