Although there are many factors that can affect flood claim coverage under the Standard Flood Insurance Policy ("SFIP"), coverage issues usually fall into two categories: 1) the property for which a claim is treated is "covered property" according to policy; and 2) there has been "direct physical loss of or from flooding.
Determining whether property is considered "covered property" under SFIP is a matter of verifying the list of covered property in Section III of SFIP. Although Section III contains a list of covered properties, policyholders should be aware that there are certain specific provisions that work to exclude or limit coverage based on the location, age and even design of the property.
The second category, determining whether there has been "direct physical loss of or from flood", has the greatest potential for political interpretation disputes. SFIP defines "direct physical loss of or from a flood" as "[l] us or damage to insured property, directly caused by a flood." 1
The NFIP Claims Manual is designed to "improve the clarity of claims guidance" for the benefit of policyholders. 4 In fact, FEMA wants the NFIP Damage Guide to "assist NFIP insurers, adjusters, suppliers and policyholders to apply applicable laws and regulations requirements, as well as the terms of standard flood insurance." 5 This is how the latest publication of the NFIP Claims Manual clarifies what is considered “evidence of physical change?” The answer is … not entirely.
Two factors are particularly useful in helping adjuster and policyholders to apply SFIP's "direct physical loss of or from flood" language. First, the NFIP Claims Manual acknowledges that certain materials cannot be salvaged once they have come into contact with floods. For example, the NFIP Claims Manual classifies certain types of perimeter wall layers based on the amount of damage assumed when the sheath has come into contact with floods. 6 Specifically, the NFIP Requirements Manual states that Class 1 or 2 The mantle "is directly damaged by contact with floods" and is therefore not "salvageable". which was damaged – gives policyholders and adjusters the clarity that the NFIP Claims Manual is designed to achieve.
Second, the NFIP Claim Handbook is aware of the effect that flood contact has on the useful life of certain objects. The NFIP Claims Manual provides adjusters with guidance for calculating depreciation and instructs them to remember that "[b] building materials and personal property have a certain useful life or useful life." 8 This instruction falls specifically under Section 5 of the Claims Manual, entitled "Damage Adjustment". Section 5 states that an adjuster “must understand the factors that may be involved in the claim that may affect the extent of the loss and the amount of dollars to repair or replace an item. . . . 9 A correct adjustment of a flood claim requires an adjuster to assess a "useful life" or "life" of an item not only to calculate the "dollar amount to repair or replace an item," but also as a factor affecting the "extent of the loss. "lawyer at Merlin Law Group to have a look.
1 Section II.B.12., Standard Flood Insurance Housing Form; Section II.B.12., Standard Flood Insurance General Property Form; Section II. B.12., Standard Flood Insurance Policy Residential Condominium Building Association Form.
3 National Flood Insurance Program Claims Manual, May 2020.
4 National Flood Insurance Program Claims Manual, May 2020, page 1 Purpose .
6 Id. At 252
] 7 Id.
8 Id. at 223.
9 Id. at 220.
10 Id.