Frequently Asked Questions About Flood Insurance

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Release date: 
October 21, 2004
Release Number: 
1554-036

ATLANTA, Ga. -- Flood insurance policyholders who suffered damages from recent hurricanes that impacted Georgia may have a number of questions about their policies. In an effort to provide the most up-to-date information and ease their concerns, National Flood Insurance Program (NFIP) officials have put together answers to the most frequently asked questions.

Who do I go to first for help with questions about my NFIP policy?
You should call your insurance agent or insurance company first.

Does my NFIP Policy cover all the buildings on my property?
The Standard Flood Insurance Policy provides coverage for one building per policy. The only exception is 10% coverage for a detached garage. However, the total payment for flood damage to the detached garage and the house together cannot exceed the building policy limit. For coverage to apply, the garage can only be used for parking and storage. Any other use would void this coverage, i.e. if the garage has a workshop, the coverage would not apply. All other buildings on the premises need separate coverage. Policy limits for residential properties are $250,000 and $500,000 for commercial properties.

Are the contents of my home covered under my NFIP Policy?
Contents are not automatically included. If contents coverage is desired a specific amount must be named and a separate premium charged, but it doesn't need to be a separate policy. Contents coverage limits are $100,000 for residential policies and $500,000 for commercial policies.

What is Actual Cash Value?
Actual Cash Value (ACV) is the cost to repair or replace an insured item of property at the time of the loss, less physical depreciation. The value of physical depreciation is based on the age and condition of the item. Personal property, i.e. contents, is always paid at ACV.

What is Replacement Cost Value?
Replacement Cost Value (RCV) is the cost to repair or replace an insured item of property at the time of the loss without a deduction for physical depreciation. RCV is available when the insured property is the primary residence and the amount of coverage is equal to 80% or more of the replacement cost of the building. RCV is also available for residential condominium buildings. There is no required amount of coverage, but residential condominium buildings not insured to 80% of replacement cost will experience a reduction in their claims payments.

Do I have to pay a deductible?
Yes, all policies have deductibles for both buildings and contents coverage (if contents coverage has been purchased).

I have a living area in my basement. Is that covered?
Strict exclusions of coverage apply in any basement. A basement is defined as any area that is below grade on all sides. In some cases, sunken living rooms can be defined as a basement. Building coverage in basements is limited to systems that service the building, such as electrical boxes, heat pumps and air conditioners. Contents in basements are covered with a few exceptions such as a washer, dryer, freezer and the food in it. Similar exclusions of coverage also apply in any enclosure below an elevated structure if the structure is post-FIRM.

What does Post-FIRM mean?
FIRM stands for Flood Insurance Rate Map. Post - FIRM means built after the effective date of the initial Flood Insurance Rate Map for the community or December 31, 1974, whichever is later.

Does my NFIP policy cover my additional living expenses when I cannot return home?
No. There is no coverage for Additional Living Expenses or Loss of Use or Business Interruption.

Last Updated: 
July 16, 2012 - 18:46
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