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ADJUSTERSINTERNATIONAL .COM
1
A D J U S T I N G
T O D AY
Flood
Adjusters International Disaster Recovery Consulting
By Bill Koehler
Contributing: Hal Arnold
Understanding and Recovering from
One of Nature\u2019s Worst Disasters

It is the inevitable disaster. Each
year \ue000oodwaters will rise and
numerous properties will be
destroyed. Heavy rains, hurricanes
and winter runo\ue001\ue001 all cause
\ue000ooding. Flooding can occur just
about anywhere, and other than
fre, it is the most common and
widespread disaster. A\ue001ter the
water recedes, the adjusting o\ue001
\ue000ood insurance claims can be a
very di\ue001fcult and trying process.

The National Flood Insurance
Program is subject to a di\ue001\ue001erent
set o\ue001 rules than those \ue001ound in an
insurance policy. There are literally
thousands o\ue001 pages \ue001rom many
o\ue001fcial National Flood Insurance
Program Web sites that can a\ue001\ue001ect
the policyholder. Although this
article discusses some o\ue001 the key
coverages o\ue001 the National Flood
Insurance policy, it is not intended
to provide a detailed analysis o\ue001

2
ADJUSTINGTODAY.COM
A D J U S T I N G
T O D AY

coverage. For a detailed analysis, it is necessary to care\ue001ully review policy language.

Although \ue000ood insurance claims
may seem more complicated, they
work much like other claims under
property insurance policies. The
real challenge lies in the unique
nature o\ue001 \ue000ood damage, as well as
in how to deal with \ue000ood adjusters
and interpret the policy.

The National Flood Insurance
Program (NFIP), administered
by the Federal Emergency

Management Agency (FEMA),

makes \ue001ederally backed \ue000ood
insurance available in communities
that adopt and en\ue001orce \ue000oodplain
management ordinances to reduce
\ue001uture \ue000ood losses. Currently,
more than 4.2 million policies
representing $524 billion worth o\ue001
coverage are in \ue001orce in more than
19,000 participating communities.

The NFIP defnes \ue000ooding as a
general and temporary condition
o\ue001 partial or complete inundation
o\ue001 two or more acres o\ue001 normally
dry land or two or more properties

(at least one o\ue001 which is your
property) \ue001rom:
\u2022 Over\ue001ow of inland or tidal
waters;
\u2022 Unusual and rapid accumulation
or runo\ue001\ue001 o\ue001 sur\ue001ace waters \ue001rom
any source;
\u2022 Mud\ue001ow (de\ue000ned as a river of

liquid and \ue000owing mud on the
sur\ue001aces o\ue001 normally dry land
areas, as when earth is carried
by a current o\ue001 water);

\u2022 Collapse or subsidence of land
along the shore o\ue001 a lake or
similar body o\ue001 water as a
1http://bsa.nfpstat.com/reports/1011.htm
National Flood Insurance Program
Total Number of Policies in Force\u00b9
As o\ue001 November 30, 2009
Policies in Force
0 to 10,000
10,000 to 20,000
20,000 to 40,000
40,000 to 100,000
100,000 and Above
Policies in Force \u2014 Remaining States
District of
Columbia
1,475
Vermont

3,621 New Hampshire 8,855 Rhode Island

15,132
Alaska: 2,842
Hawaii: 58,345
Virgin Islands: 2,438
Puerto Rico: 62,628
CA
275,868
NV
16,131
OR
32,468
WA
55,820
MT
4,146
ID
7,015
UT
4,184
WY
2,660
ND
13,319
SD
4,223
CO
19,301
AZ
35,272
NM
16,403
TX
682,454
OK
16,470
KS
12,587
NE
12,004
MN
10,906
IA
15,406
MO
25,016
AR
18,626
LA
483,022
MS
76,460
AL
56,312
GA
94,825
SC
201,998
NC
135,640
TN 25,499KY
23,113
VA
107,837
WV
21,529
IL
47,757IN
32,353
OH
40,709
PA
66,777NY
160,728
WI
16,055
MI
25,657
ME
8,868
FL2,145,143
Delaware
24,693
Connecticut

37,297 Massachusetts 51,048 Maryland

67,790
New Jersey
226,732
\u201c
ADJUSTERSINTERNATIONAL .COM
3
A D J U S T I N G
T O D AY

result o\ue001 erosion or under-
mining caused by waves or
currents o\ue001 water exceeding
anticipated cyclical levels that
result in a \ue000ood as defned.

All property owners should be
keenly aware o\ue001 any risk o\ue001 \ue000ood
that may exist \ue001or them. According
to FEMA, one-third o\ue001 the NFIP\u2019s
claims come \ue001rom outside the
designated high-risk \ue000ood areas.

Of the approximately 10 million

properties in so-called Special
Flood Hazard Areas \u2014 the most
vulnerable to \ue000ood \u2014 no more
than a quarter are covered by \ue000ood
insurance. Yet, in these special
hazard areas, a building has a
26 percent chance o\ue001 su\ue001\ue001ering
\ue000ood damage during a 30-year
period, compared to a 9 percent
chance o\ue001 fre.

The NFIP contracts with many
insurance companies to sell \ue000ood
insurance. The insurance company
receives only a small portion o\ue001 the
premium and generally contracts
out the adjusting o\ue001 \ue000ood claims
to independent adjusters. These
adjusters, sometimes called \u201cstorm
troopers,\u201d \ue001ollow storms and
\ue000oods spending a great deal o\ue001
time on the road traveling \ue001rom
disaster to disaster.

Purchasing Flood Insurance

All NFIP policies have the same
language and will have the same
rates, regardless o\ue001 the insurance
company \ue001rom which they are
purchased. With this standard
pricing, it is wise to buy \ue001rom

an insurance company that has
a history o\ue001 \ue001airness and good
service with their regular policy
settlements. Companies will tend
to be as liberal or as conservative
with their NFIP policies as they are

with their own policies. A company

that generally provides the poorest
payouts with its regular work will
most likely adjust its \ue000ood losses
the same way, even though the
premium rate is the same no matter
which company provides coverage.

There are three NFIP policies
available: commercial property,
condominium property and
dwellings and their contents. In
addition, the Insurance Services

Of\ue000ce (ISO) introduced an

endorsement, CP 10 65, which can
be used with general lines policies
either on an excess basis over
NFIP policies or, \ue001or businesses
not subject to NFIP coverage, on a
primary basis.

Among the key coverages o\ue001\ue001ered
with the \ue000ood policy are: building,
personal property, debris removal
and increased cost o\ue001 compliance.

Building Coverages

Building coverage applies to the
building structure itsel\ue001, with
some exceptions and extensions.
This coverage extends to fxtures,
machinery and equipment within

the building, and includes a long
list o\ue001 specifc property items,

including \ue001or example: awnings and
canopies, fre sprinkler systems,
venetian blinds, ventilating
equipment and permanently
installed wall mirrors.

Since no defnitions are o\ue001\ue001ered \ue001or
most o\ue001 these items, controversy
o\ue001ten can occur between
policyholders and the companies\u2019
adjusters over the existence and
extent o\ue001 coverage. Also included
under building coverage are
materials and supplies \ue001or use in
constructing, altering or repairing
the building while stored in a \ue001ully
enclosed building, on the premises
or on an adjacent property;
and buildings in the course o\ue001
construction be\ue001ore being walled
and roo\ue001ed. Certain conditions
apply to each, which should be
checked be\ue001ore relying on coverage
\ue001or any item.

Personal Property Coverage

NFIP coverage \ue001or personal
property applies to property inside
a \ue001ully enclosed insured building.

Unlike most property insurance

policies, there is no coverage \ue001or
property in the open or in vehicles
on or near the premises. The policy
provides \ue001or either household

Expense incurred to remove debris o\ue000\ue000, on, or \ue000rom the insured
property caused by food is covered by NFIP policies. This
includes debris \ue000rom the insured\u2019s property on or away \ue000rom
the premises, and other debris brought onto the property
by food.

\u201d

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