FLOOD CO-INSURANCE PENALTY
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FLOOD CO-INSURANCE PENALTY - 11/21/2005 9:15:18 AM
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TomS
Posts: 117
Joined: 4/19/2004
Home base: Texarkana, TX
Status: offline
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Here is the shake out after all is said and done! Could I get some responses as to the exact payment recommendations you would provide to NFIP when closing file/ (I realize a stupid question, but am interested in the feed back from one and all) CLAIM ESTIMATE IS 224,856.00 DEPRECIATION IS $ 40,253.00 ACV IS 184,603.00 RCV OF RISK IS 343,530.00 @ 80 % IS 274,824.00 COVERAGE IS 185,200.00 2116 S.F. HOME AND FOR THE SAKE OF RESPONSES, LETS ALL ASSUME NO PROBLEMS WITH ANY PART OF CLAIM EXCEPT FOR POTENTIAL CO-INSURANCE PROBLEMS BASED ON NUMBERS ABOVE. ASSUMING ALL CALCULATIONS ARE CORRECT THEN THIS RISK WOULD NOT QUALIFY FOR RCV AND THE CO-INSURANCE PENALTY SHOULD BE APPLIED,ETC. WHAT WOULD BE THE PAYMENT RECOMMENDATIONS TO NFIP BE IN YOUR HUMBLE OPINIONS? THANKS FOR TAKING THE TIME OUT OF YOUR BUSY SCHEDULE TO ASSIST IN THIS MATTER. T
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RE: FLOOD CO-INSURANCE PENALTY - 11/21/2005 9:32:18 AM
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mcmoore
Posts: 28
Joined: 4/27/2004
Home base: Leesburg, FL
Status: offline
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Tom,
The only flood policy that a true co-insurance penalty applies to is the RCBAP (Condo Association Policy).
In your scenario the Insured is due the ACV claim amount less the applicable deductible.
Hope this helps,
Mark
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RE: FLOOD CO-INSURANCE PENALTY - 11/21/2005 12:29:36 PM
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mh0825
Posts: 587
Joined: 8/31/2005
Home base: Gainesville, FL
Status: offline
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mcmoore - I disagree with you that all the other flood forms are ACV.
There is recoverable depreciation on homes if they are insured at least to 80% of their value. Homes that are insured up to or more than 80% of the value qualify for RCV on the home. There are some things where depreciation would not be recoverable. Some softwares pick up on this and show you the recoverable and non recoverable.
TomS:
With your information above, the home does not qualify for RCV and the depreciation is not recoverable. Since 80% of the home is worth more than what the insured could get coverage for, the insured would have to get full coverage on the building. The home would then be force qulaified. It appears that all you owe on the claim is the ACV ($184,603).
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RE: FLOOD CO-INSURANCE PENALTY - 11/21/2005 3:12:25 PM
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mcmoore
Posts: 28
Joined: 4/27/2004
Home base: Leesburg, FL
Status: offline
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Mat,
In all fairness I was talking about co-insurance and I never stated that all the other flood forms are ACV. I was simply answering TomS question by stating in the scenario he laid out the Insured was due ACV less deductible. Your statement regarding homes ( principle residences only) that are insured to 80% of the replacement cost value or the maximum coverage of $250,000.00 qualify for recoverable depreciation is correct.
Mark
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RE: FLOOD CO-INSURANCE PENALTY - 11/21/2005 3:38:08 PM
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johnpostava
Posts: 170
Joined: 4/19/2004
Home base: Orlando, FL
Status: offline
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Please remember, the only structures which could possibly qualify for RC coverage under the SFIP forms are:
1. Single-family, primary residences insured to value (80%)
2. RCBAP's properly insured to value (co-insurance does kick in here if underinsured - right-on Mark)
3. Certain mobile homes and travel trailers (Primary residences at least 16 feet wide and larger than 600 SF and insured to value (80%)).
Everything else is ACV. Contents always ACV.
Always do a proper valuation to determine the total SF value. MSB and SIMSOL have wonderful valuation tools for this purpose.
Now it's back to the examination table...
_____________________________
John A. Postava, R.P.A.
President
SIMSOL Software, Inc.
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