NCSI
Flood
Insurance Claim Adjusting
Requirements and Procedures
The following are guidelines that describe, in a general sense, requirements and procedures that should act as a road map for experienced flood adjusters handling claims assigned to them by NCSI. All policy provisions and conditions are not included. Please always refer to the Standard Flood Insurance Policies (SFIP).
Please note that newly rewritten editions of all three SFIPs are currently in the approval process. These polices may be effective as soon as December 31, 2000. These requirements and procedures will comply with all coverage changes both reductions and expansions that apply to the new policies.
A. Qualifications
1. The adjuster’s NFIP certification letter must be in our file. The adjuster’s flood certification number must be printed on the Closing Report.
2. The Errors and Omissions (E&O) insurance certificate must be in our file. The renewal declarations page is required annually.
3. A résumé and/or sample of the adjuster’s work product may be required.
B. Loss Assignments
1. Policyholders must be contacted within 24 hours from the adjusting firm’s receipt of claim. If contact is not made within 24 hours it must be explained.
2. Loss must be inspected within five (5) days from receipt of the claim. An explanation is required if the property is not inspected within the five-day (5) requirement.
3. Determine if an advance payment is needed. Complete the Advance Payment Proof of Loss at the time of inspection and fax it immediately with the Preliminary Report.
4. Verify mortgagee information at the time of inspection. Supporting documentation should be sent for any suggested change.
C. File Maintenance & Reporting Requirements
1. Reporting/Diary System
1. A fully completed Preliminary Report should be received in our offices within fifteen days of assignment. When feasible, all reports may be faxed. If a report includes photographs, please do not fax it.
2. Status reports should be received in our offices every thirty days after the initial fifteen days.
3. Closing Reports should be received in our offices within forty-five days of the assignment. The adjuster bill should be the first document we see. If applicable, include a statement sheet just below the bill that the proof of loss was sent to the policyholder and is not included with the report.
4. The Proof of Loss, signed by the named policyholder(s), should be sent by US First Class Mail to our offices within sixty days of the date of loss. If the adjuster has the signed Proof of Loss and is going to overnight or send it with the Closing Report or by itself, use of the more expedient mailing method is approved.
2. During times of catastrophe, do not fax and mail preliminary and status reports. Please do one or the other.
3. A copy of the Preliminary Report should always be provided with the Closing Report.
4. Return policyholders’ phone calls within 24 hours.
5. Return NCSI’s phone calls within 24 hours.
6.
Identify all
documents with the policy number, date of loss, and the named policyholder(s).
7. Always establish and state whether or not there was a general and temporary condition of flooding on the date of loss that caused the claimed damage. In these cases, the adjuster may have to canvas the area, and interview neighbors and local authorities.
8. Closing Reports must be reviewed by the supervisor in your office before forwarding them to our offices.
9. If substantial damage or improvement is a possibility, the Property Damage Assessment (PDA) form must be faxed to the NFIP Bureau and Statistical Agency (BSA) at (800) 457-4232. A copy of the PDA must be included in your Closing Report to NCSI along with verification that it was sent to BSA, when it was sent, and to whom. The adjuster should also discuss with the insured, if ICC possibilities exist.
10. Before the information we provide you on the Coverage Verification Sheet is accepted, the adjuster should verify that it is the correct information. Any differences should be supported in the Narrative Report and with photos.
D. Building Losses
1. Scope of coverage in basements and below the lowest elevated floor of a Post-FIRM elevated building.
1. The following Building Elements are covered:
· Foundation elements, required utility connections, sump pumps, well water tanks, oil tanks and the oil in them, cisterns and the water in them, natural gas tanks and the gas in them, pumps and/or tanks used in conjunction with solar energy, furnaces, hot water heaters, air conditioners, heat pumps, electrical junction boxes and circuit breaker boxes, clean-up, and elevators, dumbwaiters, and their equipment if installed below the Base Flood Elevation (BFE) prior to 10/01/87
· Building Elements covered only in basements are: unfinished and unpainted drywalls and ceilings including fiberglass insulation.
2. The following Building Elements are not covered:
· Improvements such as finished walls, floors, and ceilings. Building equipment and fixtures not specifically covered.
4. Contents, with the exception of washers, dryers, freezers and the food in them (insured must carry contents coverage) are not covered (See - Personal Property).
Note: In the case of elevated buildings, coverage limitation applies only to Post-FIRM elevated buildings in special hazard areas designated as zones A1-30 (AE), AH, AR, AR/A, AR/AE, AR/AO, AR/A1-30, and V1-30 (VE).
2. All building damage estimates must be detailed - area by area, room by room, and line by line. Only itemized estimates on a Unit Cost Basis are acceptable. Include the Replacement Cost, Depreciation, the Actual Cash Value, and all measurements.
3. A diagram(s) of all insured structure(s) must be provided with the estimate.
4. A Narrative Report is required for all claims and should identify any special issues or changes in the property. The Narrative Report should include, but not be limited to notes involving prior losses and repairs, Salvage (See D., 18.below), and possible Subrogation.
5. For the purposes of flood claims “Basement” means any area of the building having its floor sub-grade (below ground level) on all sides. If you can walk out at the natural grade, the basement restrictions do not apply. All walkouts must be documented by photos showing the exterior and interior at the point of entry including the relationship with the natural grade.
1. Land subsidence, seepage and sewer backup are subject to an additional $250.00 deductible if there is no exterior water line or other evidence that the damaged building was physically touched by flood waters.
Coverage exists if the following criteria are met:
1. There is a general and temporary condition of flooding in the area.
2. The flooding is the proximate cause of the land subsidence, sewer backup, or seepage.
3. The damage occurs no later than 72 hours after the flood has receded.
4. The insured building must be insured at the time of loss , for at least 80% of its replacement cost or to the maximum amount of NFIP insurance available.
7. Do NOT include sales tax or permit fees as separate line items, taxes must be included in the unit cost. Permits are included in overhead.
8.
Complete and send
a residential building evaluation to support property values. A Marshall &
Swift or comparable detailed property evaluation is required on large or total
losses and when the Replacement Cost Coverage in Article 3 of the SFIP is
applicable.
9. All building items that are to be replaced should be depreciated on a line item basis. Depreciation is recorded in the building estimate’s depreciation column.
10. An Overhead and Profit (O&P) affidavit or signed, accepted general contractor contract is required to allow the full 10% Overhead and 10 % Profit. O&P is not applicable to clean up, carpet replacement, appliances, additional outside service charges (unless there is a general contractor running the job for all these items), or the policyholder’s labor.
11.
Prepare all
estimates for the entire loss. Do not
stop at the building policy limit.
12. Under the Dwelling Policy to qualify for Replacement Cost Coverage (building only) the building must be insured to at least 80% of its replacement cost, the policyholder must occupy risk at least 80% of the calendar year, and the risk must be a single-family dwelling. The Residential Condominium Building Association Policy (RCBAP) is a replacement cost policy with co-insurance provisions.
13. Include brand name, model number, and serial number for all appliances.
14. Only the Dwelling Policy allows coverage for appurtenant structures (limited to garages and carports used only as garages or for storage). Only 10% of the building policy limit may apply. This is not an additional amount of insurance.
15. Additions and extensions must be attached to the main insured building by a common wall.
16. If damage to foundations is not caused directly by washout, undermining, scouring, or otherwise directly by flooding, the policyholder may choose to hire a licensed engineer to support the claim of direct flood damage. The engineer’s report must include the date of the loss, the cause of the loss, and the engineers expert opinion regarding the connection between the damage and the described flood loss. If we, subsequent to our pronouncement that the damage is not caused directly by flooding, determine that the damage is covered by the SFIP, the policyholder will be reimbursed the reasonable incurred cost of the engineer’s report.
17. When applicable, a completed subrogation referral form must be sent with the Closing Report.
18. Salvage recovery must be considered and commented on in every instance. If applicable, the policyholder may be allowed to buy-back salvageable building items. All buy-back items should be clearly identified on the worksheet along with the buy-back credit amount for each item. A salvor may also be utilized. Please call us we will give you the name(s) and telephone number(s) of salvors working in the area. Comments concerning salvage disposition should be included in the Narrative Report. If salvage is not to be considered, indicate why in the Narrative Report.
19. All Other Insurance should be commented upon in the Closing Report. This item is particularly important in determining primary vs. excess insurance when adjusting sewer backup, commercial, and mobile home claims. A copy of the other insurance policy, including the declarations page, and insuring agreement should be part of your Closing Report.
20. Equipment or fixtures are considered building items if they are either installed or bolted down, and will not be removed if the building is sold.
21. Coverage for landings is limited to 16SF plus staircase for ingress/egress.
22. Ranges, refrigerators, and other built-in appliances can only be considered building items. Please refer to Article 4, Coverage A of the SFIP for a complete list of building only items.
23. $750 is available for payment of mitigation expenses specifically noted in the SFIP. The policyholder must supply receipts for supplies and the names, addresses, and Social Security Numbers for family members supplying labor. Commercial risks must have employees payroll documented or Federal minimum wage is implemented.
Building property not covered:
1. Fences, retaining walls, seawalls, bulkheads, wharves, piers, bridges and docks.
2. Indoor and outdoor swimming pools.
3. Open structures and property over water (see policy for exception).
4. Underground structures and equipment including septic systems.
5. Land, land values, lawns, trees, shrubs, plants and crops.
6. Walks, walkways, decks, driveways, patios and all other surfaces located outside the perimeter exterior walls of the building.
E. Personal Property Losses
1. Always adjust personal property losses based on the Actual Cash Value (ACV) of the property. Replacement Cost Coverage is not available for personal property claims. Stock, merchandise, and inventory claims are adjusted at Cost.
2. Sales taxes should be included in the unit cost.
3. There is a separate deductible for building and personal property coverage.
4. Artwork, rare books, jewelry, furs, pictures, frames, etc. in the aggregate are subject to $250.00 limit.
5. Include the age and quantity of all items.
6. Include brand name, model and serial numbers for all major appliances, sound equipment, and computers.
7. Personal property coverage applies if the property is owned by the insured and stored in another building at the property address. The building must have at least two rigid walls, a roof, and the property must be secured from flotation. There may be coverage off premises for 45 days after loss. See the policy for details
8. Prepare all estimates for the entire loss.