Policy Interpretation 1997-2
Subject: Clarification of Other Insurance Clauses in the Standard Flood Insurance Policy. This rescinds all earlier Policy Issuances on this issue.
Background: This Policy Interpretation addresses the Other Insurance Clause in the Standard Flood Insurance Policy (SFIP): Dwelling Form, Article 9.C.; General Property Form, Article 8.C.; and the Residential Condominium Building Association Policy, Article 10.C.
In the development of the Residential Condominium Building Association Policy (RCBAP) and revisions to the SFIP, General Property and Dwelling Forms, effective October 1, 1994, changes were made to the language of the Other Insurance Clause in the Dwelling Form and the General Property Form. As explained in Policy Issuance 1-95, the changes to the General Property Form and the Dwelling Form were inadvertent. The intent was to maintain the requirement that the maximum amount of National Flood Insurance Program (NFIP) insurance available be purchased for the Dwelling Form and General Property Form to be primary.
In the course of reviewing claim files, the Mitigation Division reconsidered its position on the Other Insurance Clause and is issuing this Policy Interpretation. FlA's position was developed according to its understanding of the majority of court decisions and the prevailing practices in the private insurance industry regarding Other Insurance Clauses.
Policy Interpretation: Where there is another insurance policy in addition to the SFIP (Dwelling Form, General Property Form, or RCBAP) and the other policy has a provision stating it is excess insurance, the SFIP will be primary. For any other flood insurance policy, the SFIP will be primary (subject to its own deductible) up to the deductible in the other flood policy. When the other deductible amount is reached, the SFIP will be pro rata for the remainder of the loss. Nothing in this Policy Interpretation should be construed as waiving the policy limits of the SFIP concerned.
In addition, in all cases involving the RCBAP the co-insurance provisions will reduce the claim payment if the RCBAP limits are not 80% or more of the replacement cost of the building at time of the loss, as required by Article 9 of the RCBAP.
Last Modified: Tuesday, 23-May-2006 10:53:59 EDT