As a registered adjuster, you may be asked to handle residential, manufactured (mobile) home, and small commercial claims.

You may make recommendations to insurers on the disposition of claims and share them with policyholders, but you do not have the authority to approve or deny claims. Only the NFIP Direct Servicing Agent (DSA) and the Write Your Own (WYO) companies have this authority.

The NFIP expects every adjuster handling NFIP flood losses to understand and to communicate to the policyholders that the adjuster does not have the authority to deny a claim or to commit the NFIP or the WYO company to pay a claim and that all adjustments are recommendations.

The FCN card identifies you as an "active" registered adjuster and specifies the types of claims you are authorized to handle.

NFIP flood adjusters must contact the policyholder within 24-48 hours of the claim assignment, or as soon as reasonably possible depending on the size and scope of the storm. If you are unable to contact the policyholder by telephone, attempt contact through the agent. If that fails, use alternate methods such as email, text, or regular mail to the policyholder and agent. Include your contact information.

Find out your management's protocol for prompt contact. If you are unable to contact the policyholder, you should contact your management to seek guidance. It is imperative that you document your efforts to contact the policyholder in the Narrative Report.

The adjuster is required to inspect the property promptly upon loss assignment. This is also the time to complete the Adjuster Preliminary Damage Assessment, if applicable, and the Preliminary Report and to verify reserves. If it is not possible to inspect the insured building within the required time frame, this should be explained in a Status Report advising when the loss will be inspected.

The initial inspection includes preparation of the Preliminary Report and scope of damages. The adjuster scopes the loss during the initial visit by taking measurements and photographs. The adjuster notes direct flood damage as well as non-flood-related damage.

The adjuster must recommend reserves on the Preliminary Report based on the initial inspection and provide updated reserves as the claim progresses. It is the adjuster’s best approximation of the amount of damage to the covered building and personal property at the time of, and prior to, an estimate being prepared. The adjuster describes the risk, the usage of the risk, the flood zone, whether there is a basement, and whether the residence is principal or seasonal.

Once the adjuster determines there was a general and temporary condition of flooding, he or she should specify the cause of loss and flood characteristics.

• Tidal water overflow
• Stream, river, or lake overflow
• Accumulation of rainfall or snowmelt

• Velocity flow
• Low velocity flow or ponding
• Wave action
• Mudflow
• Erosion

The adjuster’s first report is the Preliminary Report Form. It is important to submit the Preliminary Report as soon as possible, preferably the same day as the inspection but no later than 15 calendar days after the assignment, along with perimeter photographs of the risk and photographs of the damage.

The adjuster must complete all sections in the Preliminary Report as accurately and with as much detail as possible. When a unique circumstance develops with the assignment which delays the initial inspection, the adjuster should immediately submit a narrative documenting the insurer’s claim file of the reason for the unavoidable delay. The form must be signed by the adjuster and include the active FCN.

Note: The company for which you are handling claims may request that they receive the preliminary report sooner than the 15-day deadline.

The adjuster should take as many photographs as necessary to depict the damage, including pre-existing damage. It is just as important to photograph undamaged property.

The photos must be of sufficient quality to see damage or lack of damage. Blurry, out-of-focus photographs and photos taken at night are not acceptable.

On residential and small mercantile losses, adequate salvage credit is taken when the policyholder retains possession of totally damaged items. The contents inventory must specifically denote those items that have been considered salvageable and left with the policyholder. A professional salvor must be used to handle items of significant value.

The adjuster may assist the policyholder in completing the Proof of Loss (POL). It is ultimately the responsibility of the policyholder to submit a Proof of Loss within 60 days of the date of loss.

The NFIP expects the adjuster to accurately estimate the cost of replacement as well as cost of replacement or repair of like kind and quality directly affected by flood. The insurer relies heavily on the judgment of the adjuster in preparing an accurate scope and estimate and interpreting the provisions, limitations, restrictions, and exclusions of the SFIP.

There will be instances when the adjuster's recommendation differs from the opinion of the NFIP reviewer as to whether a claim payment involved an excessive or inadequate loss payment. For example, reviews may differ on the amount of depreciation taken, whether a general condition of flooding existed, whether sufficient verification of damages was obtained, etc. These are examples of judgmental errors.

When the insurer determines that the adjuster has inadvertently made an error on a claim that resulted in claims or underwriting errors, such as payment on an ineligible risk, payment of loss for identical items, payment for non-existent items, or payment for unsubstantiated items, these are considered nonjudgmental errors, which are often serious.

The SFIP specifies the terms and conditions of the agreement of insurance between either the Federal Emergency Management Agency (FEMA) as insurer, for policies issued by the NFIP Direct Servicing Agent (NFIP DSA), or the Write Your Own (WYO) company as insurer for policies issued by the WYO Program, and the named insured.

The Dwelling Form and General Property Form contain the same nine (9) sections, presented in identical order. RCBAP has a tenth section, Coinsurance.

Note: As you review the policy forms, you might notice differences in the SFIP provisions, limitations, and restrictions.

The Dwelling Form of the policy covers only:

• A non-condominium residential building designed for principal use as a dwelling place for one to four families
• A single-family dwelling unit in a condominium building

• Coverage A - Building: $250,000
• Coverage B - Personal Property: $100,000

As an adjuster, knowing how the terms are defined by the policy is essential to proper claims handling.

Let's take some time to review some of the definitions you will come across frequently. In addition to those listed in Section II. Definitions, we will also review other terms used in the policy.

The SFIP refers to the policyholder and the policyholder's spouse, if a resident of the same household, as "you" or "your" on the Declarations Page.

Policyholder, referred to in the SFIP as "insured" include any mortgagee or loss payee named in the Application and Declarations Page, or any other mortgagee or loss payee determined to exist at the time of loss in the order of precedence.

"We", "us," and "our" refer to the insurer.

We will pay the expense to remove non-owned debris that is on or in insured property and debris of insured property anywhere.

If the policyholder or a member of the household performs the removal work, the value of the work will be based on the Federal minimum wage. This coverage does not increase the Coverage A or Coverage B limit of liability.

Sandbags, Supplies, and Labor

The policy pays up to $1,000 for costs incurred to protect the insured building from a flood or imminent danger of flood for the following:

• Reasonable expenses to buy sandbags, including the sand to fill them; fill for temporary levees; pumps; and plastic sheeting and lumber used in connection with these items
• The value of work, at the Federal minimum wage, that the policyholder or a member of his or her household performs

This coverage only applies if one of these conditions occurs:

• A general and temporary condition of flooding in the area near the described location must occur, even if the flood does not reach the insured building
• A legally authorized official must issue an evacuation order or other civil order for the community in which the insured building is located calling for measures to preserve life and property from the peril of flood

Property Removed to Safety

The policy pays up to $1,000 for the reasonable expenses the policyholder incurs to move insured property to a place other than the described location in order to protect it from flood or imminent danger of flood. Reasonable expenses include the value of the work, at Federal minimum wage, that the policyholder or a member of his or her household performs.

If the insured property is moved to a location other than the described location that contains the property in order to protect it from flood or the imminent danger of flood, the insured property is insured at that location for a period of 45 consecutive days from the date the policyholder begins to move it there. The personal property must be placed in a fully enclosed building or otherwise reasonably protected from the elements.

Any property removed, including a moveable home as described under the policy definition of a building, must be placed above ground level or outside of the SFHA.

ICC coverage pays the policyholder for the cost to comply with a state or community floodplain management law or ordinance after a direct physical loss by flood. When a building insured by an SFIP under the NFIP sustains a flood loss and the state or community declares the building to be substantially or repetitively damaged, ICC will help pay up to $30,000 for the cost to elevate, floodproof, demolish, or relocate the building.

ICC coverage is available on residential and non-residential buildings (this category includes public or government buildings, such as schools, libraries, and municipal buildings) insured under the NFIP.

When a structure insured under Coverage A - Building Property sustains a loss caused by a flood, the Coverage D payment for the loss will be for the increased cost to elevate, floodproof, relocate, or demolish (or any combination of these activities) caused by the enforcement of current state or local floodplain management law or ordinance. Payment for eligible demolition activities will be for the cost to demolish and clear the site of the building debris caused by the enforcement of current state or local floodplain management law or ordinance. Eligible activities for the cost of clearing the site will include those necessary to discontinue utility service to the site and ensure proper abandonment of on-site utilities.

Congratulations! You've completed Lesson 2: SFIP Overview & Dwelling Form Pt.1. You are halfway through the NFIP Claims Review!

The SFIP does not insure a loss directly or indirectly caused by a flood that is already in progress at the time and date:

• The policy term begins
• Coverage is added at the policyholder's request

 Whether a flood is in progress for a claim is evaluated on an individual basis. Evidence that a flood may be in progress on the date the policy’s first term begins or on the date increased policy coverage is effective may include a recent: 1. Flood in the community where the insured building is located caused by the same source of flooding as the flood on the insured property, or 2. Event initiating a flood that causes damage, such as: a. A spillway opening, b. A levee breaching, c. A dam releasing water, or d. Water escaping from the banks of a waterway (stream, river, creek, etc.).

Reference Bulletin W-11030

The SFIP does not insure for loss to any building or personal property located on land leased from the Federal Government or arising from or incident to the flooding of the land by the Federal Government, where the lease expressly holds the Federal Government harmless under flood insurance issued under any Federal Government program.

When a loss is insured under this policy, the policy will pay only that part of the loss that exceeds the deductible amount, subject to the limit of liability that applies. Deductible amounts are found on the Declarations Page.

With respect to all insureds under the SFIP, the SFIP...

• Is void
• Has no legal force or effect
• Cannot be renewed
• Cannot be replaced by a new NFIP policy if, before or after a loss, you or any other insured or your agent have at any time
• Intentionally concealed or misrepresented any material fact or circumstance
• Engaged in fraudulent conduct, or
• Made false statements relating to the policy or any other NFIP insurance

1. If a loss covered by this policy is also covered by other insurance that includes flood coverage not issued under the Act, The SFIP will not pay more than the amount of insurance entitled to for lost, damaged or destroyed property insured under this policy subject to the following:

a. We will pay only the proportion of the loss that the amount of insurance that applies under this policy bears to the total amount of insurance covering the loss, unless C.1.b. or c. immediately below applies.

b. If the other policy has a provision stating that it is excess insurance, this policy will be primary.

2. This policy will be primary (but subject to its own deductible) up to the deductible in the other flood policy (except another policy as described in C.1.b. above). When the other deductible amount is reached, this policy will participate in the same proportion that the amount of insurance under this policy bears to the total amount of both policies, for the remainder of the loss.

If there is other insurance in the name of the policyholder's condominium association covering the same property, then this policy will be in excess over the other insurance.

The coverage amounts will be reduced if it is discovered that the premium was insufficient. The policyholder has 30 days to pay the additional premium. Only prospective premiums are to be charged. The time required to determine the additional premium must not delay the claim process.

The policyholder must cooperate with the adjuster or representative in the investigation of the claim.

The adjuster may furnish the policyholder with a Proof of Loss form and may help complete it. However, it is ultimately the policyholder’s responsibility to submit this form within the required 60 days.

The adjuster is not authorized to approve or disapprove claims or to tell the policyholder their claim will be approved.

No person or organization other than the policyholder having custody of insured property, will benefit from this insurance.

Note: Bailee goods are the result of a bailment, which is the delivery of personal property by one person (the bailor) to another (the bailee) who holds the property for a certain purpose under an express or implied-in-fact contract. Real property, by definition, can never be bailee goods. In addition, property that is sold (title changes) cannot be bailee goods. Therefore, real property that is sold cannot be bailee goods after the sale or before the sale.

Example: When the bailor takes a pair of shoes to the cobbler (the bailee) for repair, a bailment is established while the bailee has the shoes. The shoes while in the possession of the bailee are bailee goods. Note that a bailment involves a change in possession but not in title.

The appraisal clause applies if the insured and adjuster fail to agree on the ACV or replacement cost of the damaged property, whichever is appropriate. In the event that the two appraisers appointed by the insured and insurer cannot agree, they should submit only their differences to an umpire.

There is no appraisal for coverage issues.

The mortgage clause applies to any loss payable under Coverage A – Building.

Continuous Lake Flooding: The insured building must be inundated by lake water for 90 continuous days, and it must be reasonably certain that the continuation of this flooding will result in damage equal to or greater than policy limits, or the ACV or Replacement Cost Value (RCV), as applicable. If it is not reasonably certain that the flooding will cause a total loss, then the insurer will pay only for the actual damage up to the waterline. See Section VIII of the Claims Manual, Special Adjustment Issues, for more information about continuous lake flooding.

Special loss settlement conditions apply to a single-family dwelling that is:

• A manufactured or mobile home or travel trailer
• At least 16 feet wide when fully assembled and has an area of at least 600 square feet within its perimeter walls when fully assembled
• The policyholder’s principal residence

If the dwelling is totally destroyed or damaged the extent that it is not economically feasible to repair to at least pre-damage condition, the policy pays the least of the following:

• The lesser of the replacement cost of the dwelling or 1.5 times the Actual Cash Value
• The building limit of liability shown on the Declarations Page

The SFIP and all disputes arising from the handling of any claim under the policy are governed exclusively by the flood insurance regulations issued by FEMA, the National Flood Insurance Act of 1968, as amended (42 U.S.C. 4001, et seq.), and Federal common law.

The statutory limits for coverage available under the General Property Form are:

Coverage A – Building Coverage

• Other Residential: $500,000
• Non-Residential (including Business and Other Non-Residential): $500,000

Coverage B – Personal Property Coverage

• Other Residential: $100,000
• Non-Residential Business, Other Non-residential: $500,000

Merchandise held in storage or for sale, raw materials, and in-process or finished goods, including supplies used in their packing or shipping. Stock does not include any property not covered under Section IV. Property Not Covered, except the following:

• Parts and equipment for self-propelled vehicles
• Furnishings and equipment for watercraft
• Spas and hot tubs, including their equipment
• Swimming pool equipment

Under Coverage B of the SFIP General Property Form, there is a $2,500 limit on artwork, collectibles, jewelry, watches, furs, etc. This section differs from the Dwelling Form in that personal property used in any business is not subject to special limits.

Note: Special limits apply even to the insured policyholder’s stock.

The limit is not per type of item; coverage is collectively limited to $2,500.

The General Property Form of the SFIP is primary over all other policies that clearly state they are excess. If the other policy does not state it is excess, the SFIP is primary up to the other policy’s deductible, subject to the SFIP’s deductible. Once the SFIP payment reaches the other deductible amount, the coverage becomes pro rata.

As mentioned in the review of the Dwelling Form, the SFIP and all disputes arising from the handling of any claim under the policy are governed exclusively by the flood insurance regulations issued by FEMA, the National Flood Insurance Act of 1968, as amended (42 U.S.C. 4001, et seq.), and Federal common law.

The RCBAP covers only a residential condominium building in a Regular Program community. If the community reverts to Emergency Program status during the policy term and remains an Emergency Program community at time of renewal, this policy cannot be renewed.

The RCBAP insures a building owned and administered as a condominium, containing one or more family units, and in which at least 75 percent of the floor area is residential.

We mentioned in Lesson 2 that in addition to the same nine sections as the Dwelling and General Property Forms, RCBAP has a tenth section: Coinsurance.

Coinsurance is a penalty imposed on the loss payment unless the amount of insurance carried on the damaged building is at least 80 percent of its replacement cost or the maximum amount of insurance available for that building under the NFIP, whichever is less. Coinsurance applies only to building coverage under the RCBAP. See Section VII. Coinsurance.​

Click this link to see the other nine sections.

As with the General Property Form, the Dwelling Form definitions also generally apply to RCBAP, but the RCBAP contains some additional definitions either defined differently than, or not found in, the other forms:

Improvements: Fixtures, alterations, installations, or additions comprising a part of the residential condominium building, including improvements in the units.

This section of the RCBAP differs from the Dwelling Form in that personal property used in any business is not subject to special limits. Under Coverage B of the SFIP RCBAP, there is a $2,500 limit on artwork, collectibles, jewelry, watches, furs, etc. not used in a business.

The RCBAP does not cover buildings and all their contents if more than 49 percent of the ACV of the building is below ground, unless the lowest level is at or above the BFE and is below ground by reason of earth having been used as insulation in conjunction with energy-efficient building techniques.'

This policy is primary over all other policies that clearly state they are excess. If the other policy does not state it is excess, this policy is primary up to the other policy’s deductible, subject to this policy’s deductible. Once the payment reaches the other deductible amount, the coverage becomes pro rata.

As mentioned in the review of the Dwelling and General Property Forms, the SFIP and all disputes arising from the handling of any claim under the policy are governed exclusively by the flood insurance regulations issued by FEMA, the National Flood Insurance Act of 1968, as amended (42 U.S.C. 4001, et seq.), and Federal common law.

Congratulations! You’ve completed Lesson 3: Dwelling Form Pt. 2, General Property, RCBAP. You have almost completed the NFIP Claims Review!

Refrigerators are building items as reflected in the SFIP Dwelling Form, Section III, A. Coverage A – Building Property, Item 7. However, a refrigerator may be afforded coverage under the SFIP Dwelling Form, Section III, B. Coverage B – Personal Property if the policyholder is a tenant of the building and owns the refrigerator.

Qualifications for replacement cost loss settlement should be clearly documented, including noting the building’s status as a single-family principal residence, which is insured 80 percent to value or at the maximum coverage amount available.

You can avoid payment processing errors by making all payment recommendations clear. Include other claim documents to support your recommendations, such as the estimate, proper photos, Preliminary Report, Final Report, and Proof of Loss.

Case loss reserve is the insurer’s estimate of the value of future payments for an individual claim. It is imperative—and the adjuster’s responsibility—to inform the insurer regarding changes in reserves. The reserving system mandates that reports be timely and reflect true reserves.

Section III, Property Insured, C. Coverage C of the SFIP addresses debris removal insured by the policy as it relates to non-owned debris on or in the insured property and owned debris anywhere. The policy pays to move debris that is on the insured building far enough away to effect repairs, but does not pay to remove debris from the described location. Let's look at two examples:

• Select this link to see the first example
• Select this link to see the second example

Click here to access all information from the link(s) above.

When working a claim, it is very important to pay special attention to whether building or personal property damage requires repair or replacement. Not everything touched by floodwater necessarily needs replacement; repair or cleaning might be warranted.

It is imperative that the adjuster be alert to any claims for which there might have been prior losses. The policyholder must prove that prior repairs were made before any current flood claims for the same or similar items can be considered.

Adjusters should always request a copy of the prior losses and should investigate to determine whether prior repairs were completed. This can be accomplished with photographs (such as prior claim photos), serial numbers, the prior estimate with different materials included (for example, drywall versus paneling), receipts showing paid repairs, or a combination of all of these.

As an adjuster you are responsible for documenting interior and exterior water depths. Water depths are recorded in inches on the Preliminary Report.

When measuring water depth in a basement below ground level, the water depth is recorded as a negative number. Water depth on the main level is recorded as a positive number.

Elevators, dumbwaiters, and related equipment are insured items in basements and below the lowest elevated floor of a Post-FIRM elevated building in specified flood zones, except for related equipment installed below the Base Flood Elevation (BFE) after September 30, 1987.

A slab under an elevated building is insured if the building is pre-FIRM. If the building is post-FIRM in a Special Flood Hazard Area as specified in Section III. Property Insured A. 8, a slab is only insured if it is a part of the foundation. In order to be a part of the foundation, it must be at least six inches thick, reinforced with rebar, and tied into the foundation posts, pilings, piers, or other foundation walls required to support the building.

Think back to what you learned in the Dwelling Policy, Section V, Exclusions D.4 and read each of the following examples. What do you think the policy covers in each?

Example 1

A policyholder's home floods with three feet of water the day before she leaves for a two-week vacation. She chooses to lock up the house and deal with the damage when she returns. Consequently, mold grows up to and including the ceiling.

Example 2

On the other side of town another policyholder's home floods with three feet of water. Officials did not allow residents back into the area due to dangerous conditions. When the policyholder is able to get back into the area, the mold has grown up to and including the ceiling. ​

Select this link to see the answers.

Adjusters must keep up with current materials when working flood claims. Be sure you have the most up-to-date SFIP, Claims Manual, Flood Insurance Claims Handbook, and NFIP claim forms, if applicable, and keep abreast of the latest WYO Bulletins.

As you might recall from Lesson 2, the SFIP defines an elevated building as a building that has no basement and has its lowest elevated floor raised above ground level by any of the following:

• Foundation walls
• Posts
• Piers
• Pilings
• Columns

When adjusting an elevated building claim it is important to know whether the building is in a Special Flood Hazard Area (SFHA), as specified in Section III. Property Insured, A.8, and whether the building is Pre-FIRM or Post-FIRM. Remember:

A Pre-FIRM building is a building which was built prior to the initial FIRM date and, regardless of the zone it is in, does not have Post-FIRM limitations below the lowest elevated floor

A Post-FIRM building is a building which was built or substantially improved after December 31, 1974 or on or after the effective date of the initial FIRM, whichever is later. Limitations of the SFIP will then apply

Note: To review a list of the building and personal property insured, see Section III, Property Insured.

When handling a personal property loss under the Dwelling Form, and the policyholder has some of those personal property items located in a shed at the described location, the contents items within the shed are insured if the shed meets the definition of a building.

It is the adjuster’s responsibility to assist the policyholder with preparing the contents claim and verifying that contents being claimed are insured under the SFIP, and to verify accurate local replacement costs and apply appropriate depreciation. The adjuster must show photos of the damaged contents items. It is also a good practice to photograph undamaged items. The two bulletins below discuss personal property:

• Bulletin W-10035 discusses Flood Insurance Guidance Concerning Contents Manipulation
• Bulletin W-12090 discusses Debris Removal

Congratulations! You’ve completed Lesson 4: SFIP Quality Assurance & Adjustment Issues.

In this lesson, we explored some common adjustment issues that might arise while handling National Flood Insurance Program (NFIP) claims. We also introduced the adjuster to some of the oversight methods that are part of FEMA's responsibility to ensure the integrity of the NFIP.