1. SRMC Fall Conference 2012 Jim Mahurin
You’re All Wet!
SRMC
Fall Conference 2012
Jim Mahurin

2. RULES Primary flood coverage source is federal
Property eligibility is fixed
“Building” is a defined term
Personal Property eligibility is limited

3. More Rules Definitions apply to eligibility
“Building” includes structures with permanent walls from the floor to ceiling that have no openings – but share a common ceiling
Apartments with common roof and solid walls in stairwell eligible for multiple policies on one structure

4. Private Flood Very limited number of private flood providers
Federal program drives coverage provided by private market
The majority will not entertain property within, OR IN PROXIMITY TO flood Zone A

5. Very Important Slide __________________________ Flood Zone A boundary
One percent (1%) probability measure
A MEASURE OF THE WATERSHED – NOT DEPTH

6. Very Important Slide ___________________________ Base Food Elevation
One percent (1%) probability measure

7. Very Important Slide _____________________________
BFE is 1% measure year flood zone
______________________________
One (1) foot below BFE is 25 to 40 year zone
Two (2) feet below BFE is 10 – 20 year zone

8. Average Flood Damage Water touches base of building 19%
Water one foot inside building %
Water two feet inside building %
Water six feet inside building %

9. Federal Flood Is Inadequate
Homes – Dwelling $250,000
Contents $100,000
Commercial – Building $500,000
Contents $500,000
Business Income - $ Zero

10. Private Flood
Expressly exclude all Zone A property Primary coverage with modest deductible applying to all other property Follow coverage terms of NFIP policies

11. Private Flood 2 Expressly exclude all Zone A and B property
Primary coverage with modest deductible applying to all other property

12. Private Flood 3
Excess Flood over Zone A NFIP maximum limits WITH MANDATE FOR PRIMARY COVERAGE
Primary flood with modest deductible applying to all other property

13. Private Flood 4
Excess Flood over Zone A NFIP maximum limits with no requirement to maintain underlying
Primary flood with modest deductible applying to all other property
Replacement Cost/Business Interruption, etc.

14. Primary Flood 5 Excess Flood over Zone A NFIP maximum limits
$1,000,000 (or other modest sublimit) over all property within 1,000 feet of Zone A (or all property in Zone B)
The sublimit applying to 1,000 feet (or Zone B) isn’t disclosed

15. Private Flood 6 Sublimit available is often modest
Business interruption is not freely available
Many Excess Flood policies exclude Debris Removal – a major cost item

16. Rules Revisited Remember the solid floor to ceiling rule
Many buildings have these walls – or you can make them
Allows purchase of multiple NFIP policies on structure

17. Private Flood Revisited
Inland Marine can be used to provide primary coverage:
Computers
Valuable Papers
Mobile Equipment
Antiques/Art/Wine/Guns/Sporting eqpt., etc

18. Flood Damage Reduction
Minimal elevation is a major reduction in exposure. Elevated entire floor in warehouse.
Elevate high valued property, i.e., computers, power distribution, nice offices, etc.
Establish plans to move vehicles and equipment

19. Private Excess Flood Market
Very few companies providing coverage by late 1990’s. Primary major market excess flood carrier underwriting requirements were very strict by 1997.
Market tightened again following five major hurricanes in 2003 and Hurricane Katrina occurred in 2005.

20. Private Excess Flood Market
Very small number of providers with Excess Flood in Zone A – as sublimit to property program.
Smaller number of Excess Flood providers of stand alone coverage
Significant percentage were marginal carriers.

21. Flood Determination Letters
Electronic Flood Determination Letters have a very high error rate.
High percentage of buildings located in boundary areas of Zone A are identified as Zone B or Zone C property.
Excess Flood policies voided if misclassification is found in application.

22. Substantial Damage
Buildings damaged by flood to 50% of their market value must be elevated