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Author: rma1344 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 17953  
Subject: flood insurance Date: 11/29/2012 4:58 PM
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It's incredible how many folks had inadequate or no flood insurance along the mid Atlantic coast. Goes to show that it's easy to become relaxed after so many years of low or no hurricane damage along the mid atlantic coast. I don't understand how, if they were in a flood plain and had a mortgage, they were not required to have flood insurance. I suppose that many of the small beach homes which had been passed down thru generations had no mortgage. But I also read that some folks let their policies lapse after a few years of "no claims" and the banks didn't insist on proof of coverage. Strange!

If you live in a designated flood plain and you don't at least have FEMA flood insurance (which has been very cheap but will surely increase now) you're very silly!
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Author: NoIDAtAll Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17698 of 17953
Subject: Re: flood insurance Date: 11/29/2012 9:26 PM
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I don't understand how, if they were in a flood plain and had a mortgage, they were not required to have flood insurance. I suppose that many of the small beach homes which had been passed down thru generations had no mortgage. But I also read that some folks let their policies lapse after a few years of "no claims" and the banks didn't insist on proof of coverage. Strange!

I find that pretty surprising, too. Mortgagees here tend to be pretty strict in enforcing the requirement on properties located in a high risk FIRM Zone in my experience.

If you live in a designated flood plain and you don't at least have FEMA flood insurance (which has been very cheap but will surely increase now) you're very silly!

The vast majority of Flood Insurance policies are placed through the Federal Flood Insurance Program in my experience, with independent insurers merely doing the paperwork for the Program, as they're better at doing that - The premiums are the same (set by the Federal Program) and the Program ends up paying the cost of claims.

The rare exceptions that I've, personally, crossed have been properties located in a high risk FIRM Zone in which a community was banned from participating in the Federal Flood Insurance Program because it failed to comply with the Program's mandates, such as requiring that new construction in a high risk Zone be elevated. (I once insured a local church that found itself in that predicament for a few years, through an E&S market, until the community got their act together - pretty pricey premiums, compared to what the Federal Program charged.) The only other instance in which I've noticed independent insurers offering Flood Insurance was when I was once asked to try to find Excess coverage over the Federal Program's maximum. That property was located in a high risk FIRM Zone and wasn't elevated - I wasn't able to find a market for it, unfortunately. I'm hoping the owner doesn't experience a devastating loss - great guy.

Bob

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Author: rma1344 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17699 of 17953
Subject: Re: flood insurance Date: 11/30/2012 10:26 AM
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I was suprised to find out that the NFIP only covers ACV for commercial properties. Since I own a commercial building which is very old, the ACV (depreciated replacement cost) was a small fraction of replacement cost, yet my broker had me insured for full replacement cost. This meant that I was way overinsured in terms of the amount of coverage vs. the amount I could recover from the NFIP, and was paying a premium about 4 times the amount I should have been paying.

My understanding of how this works is that if you have a non residential building with replacement cost of, say, $1 million but an ACV of , say, $200,000,(using remaining useful life statistics or IRS depreciation rules) you should buy insurance and pay premiums on $200,000 of coverage since that's all the the NFIP will pay. Is this the correct way to interpret the NFIP rules? How does the NFIP compute ACV?

Thanks

Bob A

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Author: NoIDAtAll Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17700 of 17953
Subject: Re: flood insurance Date: 12/1/2012 12:20 AM
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How does the NFIP compute ACV?

Good question - I will ask them, when I have available time to do so. I strongly suspect that I will get a pretty subjective answer:

How old is the building? How current are updates to the building (notably roof, electrical system, plumbing, heating and A/C systems), what was damaged, what was the age and condition prior to the flood and what comparisons are available.

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