FEMA Recovery

The National Flood Insurance Program (NFIP) is a FEMA-sponsored program that enables property owners in participating communities to purchase flood insurance. Flood insurance is not a covered peril under a standard property insurance policy. If your property is located in a high-risk flood area and your community participates in the National Flood Insurance Program, chances are good that you have a flood insurance policy.

Even if you don’t live in a designated high-risk area, your property may be at risk. Do you know if you live in a community that participates in the NFIP and if you are eligible to purchase flood insurance through this Program? The One-Step Flood Risk Profile on Floodsmart.gov determines your flood risk based on your property’s location and estimates your premium based on your risk profile.

In moderate-to-low risk areas, the risk of flooding is reduced, although it remains a possibility. In these areas flood insurance is not required (as it is in the high-risk areas), but it is still strongly recommended for all property owners and renters. In fact, 25% of flood insurance claims come from these moderate-to-low risk areas.

Most homeowners in these low-to-moderate risk areas qualify for a Preferred Risk Policy at a much lower rate than the Standard Rated Policy. A Preferred Risk Policy offers two types of coverage: ‘Building and Contents’ or ‘Contents Only’. The Preferred Risk Policy offers multiple tiers of coverage based on the value of your property and how much coverage you require.

Before the flood waters rise, make sure you are covered!

For more on flood insurance and the National Flood Insurance Program, read the Adjusting Today issue on “Flood: Understanding and Recovering from One of Nature’s Worst Disasters“.

Repair vs. Replacement of a Facility under 44 CFR §206.226(f) (The 50 Percent Rule)

On 25 March 2009, FEMA’s update to the Disaster Assistance Policy 9524.4 regarding the 50 Percent Rule went into effect. This policy clarifies the application of 44 CFR §206.226(f) of whether a disaster-damaged facility is eligible for either repair or replacement under the provisions of the FEMA Public Assistance Program.

FEMA has outlined four conditions that define the eligible costs determinations.

(Chart courtesy of FEMA: http://www.fema.gov/government/grant/pa/9524_4.shtm)

There are two important factors to note in regards to this update:

1. FEMA staff creates the 50% repair versus replacement calculations. Therefore, it is imperative to review their work and check their assumptions and accuracy against real world costs for both repair and replacement.
2. FEMA often uses R.S. Means’ Construction Cost Estimator to determine which of the above conditions is met in regards to the 50 Percent Rule. This guide uses standard construction costs based on facility models to provide repair/replacement cost estimates for the damaged facility.  It is important to review the cost data to ensure that the facility model chosen should be the same form, function, and size as the damaged one (i.e., if the facility is a damaged library, the R.S. Means model for replacement should be a library, not a department store).

This summary of the update to Disaster Assistance Policy 9524.4 is not all-inclusive, and is only intended as an overview. If you are interested in further reading on the topic check out the Disaster Recovery Today issue entitled “Rebuilding under the FEMA Public Assistance Program – Repair? Replace? Relocate?“. This article examines how the FEMA Public Assistance Program affects the decision to repair, replace or relocate a damaged facility.

For a more thorough understanding of how this policy affects your FEMA claim, contact one of the Disaster Recovery Consultants at Adjusters International.

By Jeff Shaw

The latest issue of Disaster Recovery Today “Floodplain Management: Sound Techniques to Improve Your Recovery” discusses floodplain management and its impact on FEMA reimbursements.  Written by industry expert Jeff Shaw, this article takes an in-depth look at flood damage and explores the applicant’s ability to recover from this devastating peril.

Applying his extensive experience as a disaster recovery consultant, the author breaks down the concept of floodplain management into easily understood terms and helps clarify its interrelationship with the FEMA Public Assistance program. Mr. Shaw shares his insights about developing floodplain ordinances and procedures, addresses the issue of which eligible repair and replacement costs are paid for and by whom, defines applicable terms related to improvements, damage and market value, and discusses the consequences for failure to comply with floodplain management program requirements.

Read the full issue of Floodplain Management: Sound Techniques to Improve Your Recovery.