Compliance Information When Moving From the NFIP to Private Flood

A common concern when moving from a national flood insurance (or FEMA) policy to the private market is if the private flood policy will be accepted by lenders and if it satisfies the NFIP’s requirement that certain zones maintain flood insurance. As an guide, if your home is located in a flood zone beginning with an A (such as AE, AH, or A) or a V, then you are required to have flood insurance.

 

 

Flood Guard is an admitted, residential flood product that is a private alternative to the National Flood Insurance Program (NFIP). Unlike most of the flood insurance products in the market, we do not base our rates off the NFIP flood zones. Instead, we use a 30×30 meter grid system, which allows us to provide rates at a more granular level and typically provide yearly premiums that are hundreds of dollars cheaper than others on the market. Our use of this grid system is also why we do not require an elevation certificate.

 

In an attempt to proactively provide you with all of the information you might need before switching to our admitted flood product, below is some commonly requested information by lenders. Typically, the additional information is satisfactory for lender’s compliance departments, to ensure Palomar Specialty’s flood product, Flood Guard, is in legal compliance and provides sufficient flood coverage for those properties located in NFIP-designated high-hazard flood zones.

Palomar Specialty’s NAIC #: 20338

Palomar’s California Department of Insurance Certificate of Authority #: 1969-5

(Other states certificate numbers are available as well)

Palomar Specialty’s AM Best Rating: “A-“ Excellent (http://palomarspecialty.com/financial-strength/)

 

Flood Guard’s policy language is the same as the NFIP, including our definition of a flood event. A flood event as defined in our policy means:

  1.  A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more neighboring properties (at least one of which is your property) from:
    1. Overflow of inland or tidal waters;
    2. Unusual and rapid accumulation or runoff of surface waters from any source; or
    3. “Mudflow”
      1. “Mudflow” means a river of liquid and flowing mud on the surfaces of normally dry land areas, as when earth is carried by a current of water. Other earth movements, such as landslide, slope failure, or a saturated soil mass moving by liquidity down a slope, are nor “mudflows.” A good rule of thumb is that the consistency should be slurpable through a straw. Although this would be the worst shake you’ve ever tasted.
  2. Collapse of subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves of water exceeding anticipated cyclical levels that result in a “flood” as defined above

 

Flood Guard meets the definitions of private flood insurance as defined by the Biggert-Waters Flood Insurance Reform Act of 2012. Flood Guard is issued by an insurance company that is licensed, admitted, or otherwise approved to engage in the business of insurance in the State or jurisdiction in which the insured building is located, by the insurance regulator of that State or jurisdiction.

 

Flood Guard also provides flood insurance coverage which is at least as broad as the coverage provided under a standard flood insurance policy under the national flood insurance program, including when considering deductibles, exclusions, and conditions offered by the insurer. In compliance with the Biggert-Waters Act, Flood Guard also complies with the requirement to give 45 days written notice of cancellation or non-renewal of flood insurance coverage to

  1. The Insured
  2. The regulated lending instituion or Federal agency lender

 

Flood Guard also contains a mortgage interest clause similar to the clause contained in a standard flood insurance policy under the national flood insurance program and a provision requiring an insured to file suit no later than one (1) year after date of a written denial of all or part of a claim under the policy. Flood Guard also contains cancellation provisions that are as restrictive as the provisions contained in a standard flood insurance policy under the national flood insurance program.

 

Our flood help desk is also able to provide more information. Please contact CE@ProspectGeneral.com if you need assistance with a Flood Guard quote or policy.