Flood Coverage Application & Best Practices for Contract - - PowerPoint PPT Presentation

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Flood Coverage Application & Best Practices for Contract - - PowerPoint PPT Presentation

Aug 28, 2022 415 likes •617 views

Flood Coverage Application & Best Practices for Contract Certainty Donald L. Desender, Jr., ALCM James English Director, Risk Management & Compliance RVP & Property Practice Leader White Castle System, Inc. Gallagher Great

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W W W . C H I C AG O L A N D R I S K F O R U M . O R G

Flood

Coverage Application & Best Practices for Contract Certainty

Donald L. Desender, Jr., ALCM Director, Risk Management & Compliance White Castle System, Inc. James English RVP & Property Practice Leader Gallagher – Great Lakes & Midwest Regions

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Flood Coverage – Overview of Today’s Content

– Floods Facts – Why they matter to you? – National Flood Insurance Program (NFIP) – Cavalier Approach of Conventional Measures – New Tools to Prevent and Mitigate Flood Losses – Commercial Flood Coverage

  • Program Structure
  • Exposure Identification
  • Best Practices
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Floods Facts – Why they matter to you?

– Frequency & Severity – Economic Magnitude – Cost of Recovery – Some policies exclude Flood – Fortuity

  • Can happen anywhere

– Payment w/o Disaster Declaration – Federal Disaster Assistance

  • May require repayment

– Disaster Grant Adequacy – NFIP Limit Adequacy – Repayment Not Required (NFIP) – Coverage Required?

  • Government Mandate
  • Lender Requirement

Source: Federal Emergency Management Agency: https://www.fema.gov/national-flood-insurance-program

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National Flood Insurance Program (NFIP)

– Created in 1968 by U.S. Congress – Expires November 30, 2018; awaiting “Reauthorization” – Reduce impact on private/public structures – “Affordable” coverage – Encourage adoption/enforcement floodplain management regulations – Mitigate effect on new/improved structures – Reduce disaster impact via purchase/retention of (flood) insurance – Purchase via agent/insurer participating in the NFIP – Available in participating communities; most participate – NFIP Waiting Period, Coverage Limits, Valuation and Exclusions

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Conventional Measures to Control Flood Waters

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NEW TOOLS TO PREVENT AND MITIGATE FLOOD LOSSES

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Commercial Flood Coverage – Program Structure

– Flood definition varies by Policy

  • Does your Policy definition include Storm Surge and/or Tsunami?

– Flood Zones definition varies by Policy

  • High Hazard Zone; Moderate Hazard Zone; All Other Areas
  • Zones A, AE, … V or worldwide equivalent?
  • Areas that are expected or intended to be protected by a Levee
  • Decertification of a Levee

– Impact on coverage Limits, Deductibles or both – Deductibles |per occurrence, per location, NFIP limits, % of values, when?

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Commercial Flood Coverage – Program Structure (cont.)

– Overall Program Limit, Flood Coverage Limit and Sublimits – Annual Aggregate Limitation?

  • Underwriting Moratoriums & Cost/Ability to Reinstate, Post Loss?

– Does Your Program have two or more Layers?

  • Is your Flood coverage provided by two or more Program layers?
  • Concurrency of Policy Terms, Conditions and Definitions

– Sequence of Flood loss(es) matters, if Annual Aggregates apply

  • Priority of Payments, Drop Down & Step Down Language required
  • Coverage available for Subsequent Flood Loss?
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Commercial Flood Coverage – Exposure Identification

– CURRENT Flood Zones? As of what date? – What changes a Flood Zone? – Coverage impact of Flood Zone Changes? – Timing of Flood Zone Changes…?

  • After Submission and before Coverage Inception?
  • After Coverage Inception and before Date of Loss?

– Your knowledge of a Flood Zone change? – Your ability to amend your coverage, before a loss occurs?

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Commercial Flood Coverage – Best Practices

– Greater Contract Certainty

  • Schedule Flood Zone of all reported addresses (“for better or worse”)

– Applicable for entire Annual Policy Term, regardless of “interim changes”

– Apply “interim changes” of Flood Zones at next Annual Policy Term

– Consider unknown Flood exposures – i.e. supply chain/service providers

  • Select Flood Coverage Limits, based on your exposures
  • Amend Flood Limit(s) at subsequent Policy Inception, or as necessary
  • Review Coverage Extensions, for further limitations of coverage for Floods
  • Request/Secure Pre-Agreed Pricing to Reinstate Aggregate coverage limits
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James English RVP & Property Practice Leader Gallagher – Great Lakes and Midwest Regions 30150 Telegraph Rd., Suite 408 | Bingham Farms, MI 48025 P: 586.439.4378 | M: 313.815.8947 James_English@ajg.com | https://www.linkedin.com/in/jamesenglish4

Thank You!

Donald L. Desender, Jr., ALCM Director, Risk Management & Compliance White Castle System, Inc. 555 W. Goodale St. | Columbus, Ohio 43215 P: 614.559.2723 | desended@whitecastle.com