Flood

An insurance agent speaking at a countrywide convention of agents and brokers informs them about the common reasons why only a fraction of properties exposed to the risk of flood damage is actually insured against flood. First, he points out that those who own properties that are not subject to an obvious flood hazard tend to discount the possibility of flood damage. The other reason why not many properties are insured is that a. agents find it difficult to arrange NFIP policies for their customers. b. flood insurance is extremely expensive for home owners. c. flood insurance is not widely advertised. d. flood losses are too unpredictable and therefore hard to insure

a. agents find it difficult to arrange NFIP policies for their customers.

In addition to covering the described building and personal property, a standard NFIP policy dwelling form includes several additional coverages. Which one of the following is not one of these additional coverages? a. Additional living expenses b. Debris removal expenses c. Expenses of moving property to safety d. Sandbagging expenses

a. Additional living expenses

Tom is considering purchasing flood insurance but first want to obtain a FIRM. What does FIRM stand for? a. Flood insurance rate map b. Flood insurance regular map c. Flood insurance revision map d. Flood insurance risk map

a. Flood insurance rate map

Ann's personal property in her home is covered by an NFIP dwelling form. Of the following property, which would not be subject to a maximum limit of $2,500 per occurrence? a. Her expensive area carpets on the refinished hardwood floors b. Her mink coat c. Her diamond rings d. Her original Picasso painting

a. Her expensive area carpets on the refinished hardwood floors

Blake's new home has three bedrooms upstairs; a living room, a dining room, and a kitchen on the first floor, which is at ground level; and a finished family room and a storage area on the lower level. For flood insurance rating purposes, the lowest level of Blake's house is considered a(n) a. basement. b. crawl space. c. enclosure. d. flood zone.

a. basement.

Kendrick's one-story house is insured under an NFIP dwelling policy that provides building coverage but not personal property coverage. An enclosed breezeway connects the house with Kendrick's two-car garage. Because the garage is at a slightly lower elevation than the house, flood waters damage the garage but do not reach the house. Kendrick's standard NFIP flood insurance policy a. covers Kendrick's garage under Coverage A (building property) because it is an attached appurtenant structure. b. covers Kendrick's garage under Coverage B (appurtenant structures). c. does not cover Kendrick's garage because he did not purchase personal property coverage. d. does not cover Kendrick's garage unless it is separately described in the policy.

a. covers Kendrick's garage under Coverage A (building property) because it is an attached appurtenant structure.

When she applies for flood insurance, Noelle is pleased to hear that her home qualifies for a PRP, because a PRP a. has modest premiums. b. permanently guarantees premium rates will be discounted. c. permits the purchase of higher limits than they could get with a dwelling form. d. provides broader coverage than a dwelling form, a general form, or an RCBAP.

a. has modest premiums.

Rupert is building a house that is located in an SFHA. When Rupert asks his agent what base flood means, the agent tells him that a. it means the probability of a flood occurring in any given year is 1 percent or greater. b. it means the property will flood once every100 years. c. it means the probability of a flood within 100 years is 1percent. d. it means the elevation of the property is above sea level.

a. it means the probability of a flood occurring in any given year is 1 percent or greater.

The Indiana Condominium Association could purchase up to $500,000 in flood insurance from the NFIP. However, the association believes its building, which has an insurable value of $1 million, is not likely to sustain major damage if a flood occurs, so the association purchases an RCBAP with a $300,000 limit. If partial damage to the association building should occur, a. it will be paid in full up to $400,000. b. the insurer will pay 60 percent of the loss. c. the insurer will pay 75 percent of the loss. d. the insurer will pay 80 percent of the loss.

b. the insurer will pay 60 percent of the loss.

Technical information, forms, and other information about the NFIP for a broad audience that includes agents, claims representatives, lenders, state and local officials, and surveyors can be found at a. www.fdic.gov/nfip. b. www.fema.gov/nfip. c. www.fima.com/nfip. d. www.giggle.com.

b. www.fema.gov/nfip.

Which one of the following Which one of the following websites is a FEMA-sponsored source of information specifically directed at consumers and businesses that can benefit from flood insurance? a. www.smartflood.com b. www.floodsmart.gov c. www.floodmanual.com d. www.NIFP.gov

b. www.floodsmart.gov

The first FIRMs in Ben's community were completed in 2002. The apartment building he owns was originally built in 1969, but it was completely renovated in 2010. Into what category does Ben's building fall? a. Non-FIRM b. Noncomforming c. Post-FIRM d. Pre-FIRM

c. Post-FIRM

Which one of the following does an NFIP flood insurance policy cover? a. Loss that is already in progress as of 12:01 a.m. of the policy inception date b. Loss caused by the insured's modification to the insured property that materially increases the risk of flooding c. Loss from water, moisture, mildew, mold, or mudslide resulting primarily from a condition substantially confined to the dwelling or from a condition that is within the insured's control d. Loss caused by an inland body of water that exceeds its banks due to heavy snowmelt

d. Loss caused by an inland body of water that exceeds its banks due to heavy snowmelt

Spencer just received his NFIP Spencer just received his NFIP dwelling form flood insurance policy on the home he occupies. The policy's declarations page describes his house and lists the amount of building coverage that applies. Spencer's policy is accompanied by an acknowledgement form. By signing and returning this form, Spencer will acknowledge all of the following to be true EXCEPT: a. Spencer has received a declarations page and a summary of his flood policy's coverage. b. Spencer has received a Flood Insurance Claims Handbook. c. Spencer realizes his policy does not cover personal property but that he can, if he wants to, purchase that coverage separately. d. Spencer's home does not qualify as severe repetitive loss property.

d. Spencer's home does not qualify as severe repetitive loss property.

The NFIP Flood Insurance Manual is not a. a useful resource for insurance agents writing flood insurance. b. available online. c. kept up to date. d. more than 20 pages long.

d. more than 20 pages long.

Rating Erin's flood insurance policy is relatively simple, because Erin's community currently qualifies for flood insurance under the emergency program. Which one of the following factors will not have a bearing on the premium she must pay? a. The date on her community's initial FIRM b. The deductible she selects c. The federal policy fee d. Whether the property is a residence

a. The date on her community's initial FIRM

The ICC coverage in an NFIP policy would apply to a. a flood-damaged structure that can be repaired but the cost of repairs equals or exceeds 50 percent of its market value. b. garages or carports. c. property located in communities participating in the emergency flood program. d. structures insured under a group flood insurance policy.

a. a flood-damaged structure that can be repaired but the cost of repairs equals or exceeds 50 percent of its market value.

Some insurance policies cover loss to covered property from virtually any cause while others are more limited in scope. A standard NFIP flood insurance policy is a. A multi-peril policy that covers floods, mudflow, and earth movement b. A single-peril policy that covers only the flood peril c. An all risks policy that includes flood and other perils d. An endorsement that converts a standard homeowners policy to a multi-peril policy

b. A single-peril policy that covers only the flood peril

Before signing a purchase agreement on the home she is considering, Toni checks to determine what flood zone the property is in. When she finds out that it is in Zone B, Toni realizes that a. she should not buy flood insurance on this house. b. the house is in a moderate risk area. c. the house is within the 100-year floodplain. d. the house is outside the 500-year floodplain.

b. the house is in a moderate risk area.

Kelli owns the building that houses her retail store. The building currently has an ACV of $500,000. Kelli's community participates in the regular NFIP program. How much flood insurance can Kelli purchase on this building? a. She must purchase limits of at least $250,000. b. She may purchase limits of up to $500,000. c. She may purchase limits of up to $800,000. d. She may purchase limits of up to $1 million.

b. She may purchase limits of up to $500,000.

Mary purchased a flood insurance policy many years ago and recently suffered a flood loss. Which of the following is not a duty she has to perform in conjunction with this claim? a. Exhibit all the remains from her damaged property b. Show the policy provision granting coverage to the claims adjuster c. Submit to an examination under oath if the adjuster requires this d. File a proof of loss within 60 days of the loss, unless FEMA waives this stipulation

b. Show the policy provision granting coverage to the claims adjuster

As a member of the Seaside Condominium Association, Christa approves the association board of directors' proposal to purchase flood insurance. At a later meeting, Christa is shocked to discover that the flood policy, known as an RCBAP, does not cover flood damage to a. personal property in common areas that the association owns. b. personal property in her condominium unit. c. structural elements such as supporting beams within the walls of her condominium unit. d. the condominium building itself.

b. personal property in her condominium unit.

Marigold disagrees with how Arthur Adjuster has determined the amount of her flood loss. He advises her that she can follow the appeals process to dispute his determination. The four steps in the appeals process include all of the following EXCEPT: a. Contact Arthur's supervisor b. Contact the insurance agent who sold the policy c. Contact the state insurance department d. Write a letter to FEMA

c. Contact the state insurance department

The Coastal Barrier Resources Act was passed in 1982. This act was not designed to a. conserve natural resources associated with coastal barriers. b. discourage development in high-risk areas, thereby furthering economic growth. c. increase the availability of flood insurance for property in the Coastal Barrier Resource System. d. restrict federal financial assistance for areas subject to the Act.

c. increase the availability of flood insurance for property in the Coastal Barrier Resource System.

FEMA created the Flood Insurance Claims Handbook to a. provide claims adjusters with information on handling flood claims. b. provide Congress with information concerning the status of claims closed and pending under the NFIP. c. provide policyholders with information on pursuing a flood claim. d. satisfy the requirements of the Biggert-Waters Flood Insurance Reform and Modernization Act of 2012.

c. provide policyholders with information on pursuing a flood claim.

When the snow melts, a creek overflows and covers six low-lying acres of property that also contain some buildings. This is an example of a. coastal flooding. b. erosion. c. river flooding. d. water damage that does not meet the definition of a flood.

c. river flooding.

Catherine and her fellow Catherine and her fellow condominium unit owners hold a condominium association meeting. Their building is located on the coast in a community that has just joined the NFIP. A FEMA representative tells them that their association can procure flood insurance written on the RCBAP and that this policy will cover all of the following except a. the common elements of the condominiums. b. the contents of the building owned in common. c. the individual personal property of each owner. d. the structural items of the condominium units within a building.

c. the individual personal property of each owner.

The restriction on payment of return premiums should the insured cancel the flood policy is necessary because of a. the catastrophic nature of flooding. b. the high probability of flooding. c. the seasonal nature of flooding. d. the unpredictable nature of flooding.

c. the seasonal nature of flooding.

A small area in Watershed, USA, has flooded due to heavy rains. Watershed is a participant in the regular program with the NFIP. A resident wants to know if he is going to have coverage under his flood policy for the water damage to his home and contents. He will, so long as one of two criteria is met. They are: a. A legally authorized FEMA official issues an evacuation order, or the flood causes damage to the insured's home. b. A legally authorized FEMA official issues an evacuation order, or the flood covers two or more acres of normally dry land area. c. The flood covers three or more acres of normally dry land area, or a legally authorized FEMA official issues an evacuation order. d. The flood covers two or more acres of normally dry land area or two or more properties, one of which must be the insured's property.

d. The flood covers two or more acres of normally dry land area or two or more properties, one of which must be the insured's property.

NFIP representative Bob tells client Richard, who has applied for a flood policy, that he is eligible because his community is a participant in the regular flood program. Richard has given Bob all the required information, including the flood hazard zone where his property is located. Bob tells Richard that on the first page of the form is a statement specifying that the insurance is based on the insurer's reliance on the accuracy of the information that Richard has provided. What will happen if it is later determined that Richard knowingly gave Bob the wrong flood hazard zone? a. Nothing; the policy is still in effect. b. Richard will be given a refund on the difference in premium based on the different flood hazard zone. c. The policy will automatically be amended with the correct information. d. The policy will be void.

d. The policy will be void.

Bobby is in the process of applying Bobby is in the process of applying for flood insurance. On June 1, he submits the application. He suffered some flood damage on May 25, just 1 week before submitting the application. What coverage for the May 25 damage will be available under their flood policy? a. They will have coverage minus a proportion of the payable limit. b. They will have coverage once they meet their deductible. c. They will have full coverage for this damage. d. They will not have coverage for this damage.

d. They will not have coverage for this damage.

The personal property in Beverly's seaside home is covered by an NFIP dwelling form. Beverly moves her covered personal property into her brother's hilltop home 100 miles away from the shore before a hurricane hits her seaside home. Her NFIP dwelling form policy will a. cover any expenses Beverly incurs in moving her property but not cover the property itself. b. cover Beverly's property at her brother's home for up to $1,000. c. exclude coverage on the removed property because it should be covered by her homeowners policy. d. provide full coverage for her covered personal property since she is storing it indoors and outside an SFHA.

d. provide full coverage for her covered personal property since she is storing it indoors and outside an SFHA.

The Biggert-Waters Flood Insurance Reform and Modernization Act of 2012 does not a. establish a Technical Mapping Advisory Council. b. phase in premium increases that move to actuarially sound rates. c. require FEMA to repay its debts and capitalize a reserve fund in anticipation of future losses. d. revise the definition of "flood" to eliminate "smaller-waters" claims that affect only a small area.

d. revise the definition of "flood" to eliminate "smaller-waters" claims that affect only a small area.

After hearing that many people qualify for federal disaster assistance following flood damage to their homes, Mari decides not to buy flood insurance. Mari apparently does not realize that a. federal disaster assistance is available in the same amounts as flood insurance. b. federal disaster assistance is mandatory for property in an SFHA. c. federal disaster relief is available only to people who buy flood insurance. d. the assistance will be a loan that she has to repay.

d. the assistance will be a loan that she has to repay.

The Flood Insurance Reform Act of The Flood Insurance Reform Act of 2004 required insurers to provide flood insurance policyholders with information concerning a. FEMA's power of imminent domain. b. the distinction between mudflows and mudslides. c. the distinction between the emergency program and the regular program. d. the number and amount of previous claims on the property and the effect of filing further claims.

d. the number and amount of previous claims on the property and the effect of filing further claims.