Flood Insurance Manual Cover

National Flood Insurance Program

Adjuster Claims Manual
December 2000
Revised January 2002
Revised January 2004
Revised June 2010

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National Flood Insurance Program

Adjuster Claims Manual
December 2000
Revised January 2002
Revised January 2004
Revised June 2010

Prepared by the Claims and Underwriting Department
NFIP Bureau and Statistical Agent

This page is intentionally left blank.

CONTENTS
I.
A.
B.
C.

National Flood Insurance Program (NFIP) ............................................................... I-1
Background ................................................................................................................. I-1
The Write Your Own Program ..................................................................................... I-1
The NFIP Today .......................................................................................................... I-1
1. NFIP Direct Program ............................................................................................. I-1
2. WYO Program ....................................................................................................... I-1
D. Flood Hazard Zones .................................................................................................... I-2
E. Program Phases and Coverage Limits ........................................................................ I-3
1. Program Phases.................................................................................................... I-3
2. Amounts of Insurance Available ............................................................................ I-4
II. Adjuster Participation in the NFIP............................................................................ II-1
A. Qualifications............................................................................................................... II-1
1. Residential, Manufactured (Mobile) Home/Travel Trailer,
and Commercial Authorization ............................................................................... II-1
2. Large Commercial and RCBAP Authorization........................................................ II-2
B. Authorization Requirements ........................................................................................ II-2
C. Adjustment Standards and Requirements ................................................................... II-3
1. General Standards and Requirements................................................................... II-3
2. Specific Standards and Requirements ................................................................... II-4
D. NFIP Fee Schedule Billing........................................................................................... II-8
1. Gross Losses ........................................................................................................ II-8
2. Increased Cost of Compliance (ICC) Claims.......................................................... II-8
III. NFIP Disaster Response ........................................................................................... III-1
A. Disaster Response Field Offices ................................................................................. III-1
1. Adjuster Control Office .......................................................................................... III-1
2. Claims Coordinating Office .................................................................................... III-1
3. Flood Insurance Claims Office ............................................................................... III-1
4. Flood Response Office .......................................................................................... III-1
B. Single Adjuster Program and Claims Coordinating Office ............................................ III-2
1. Objective ............................................................................................................... III-2
2. Background ........................................................................................................... III-2
3. Implementation ...................................................................................................... III-2
4. Adjuster Briefing .................................................................................................... III-3
IV. Policy Changes Affecting the Liberalization Clause ............................................... IV-1
V. Standard Flood Insurance Policy ............................................................................. V-1
A. Introduction ................................................................................................................. V-1
1. The Three Policy Forms ........................................................................................ V-1
2. Use of New Policy Forms ...................................................................................... V-1
3. Currency of Information ......................................................................................... V-1
B. Coverage Comparison Table....................................................................................... V-1
C. Policy Forms and Commentaries................................................................................. V-3
Dwelling Form ............................................................................................................. V-5
General Property Form................................................................................................ V-43
Residential Condominium Building Association Policy ................................................. V-79

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VI.
A.
B.
C.
D.
E.

Increased Cost of Compliance (ICC) ...................................................................... VI-1
Principal Features of ICC Coverage .......................................................................... VI-1
Coverage Questions and Answers ............................................................................ VI-1
Eligibility Questions and Answers ............................................................................. VI-2
Claims Adjustment Questions and Answers .............................................................. VI-4
Other Frequently Asked Questions and Answers ...................................................... VI-7

VII.
A.
B.
C.
D.
E.
F.
G.

Basic Adjustment Issues ........................................................................................ VII-1
Actual Cash Value (ACV) .......................................................................................... VII-1
Additions and Extensions .......................................................................................... VII-1
Adjuster Preliminary Damage Assessment (APDA) ................................................... VII-1
Advance Payments ................................................................................................... VII-1
Basements ................................................................................................................ VII-1
Contents Manipulation. .............................................................................................. VII-1
Depreciation .............................................................................................................. VII-2
1. Building Physical Depreciation .............................................................................. VII-2
2. Contents Physical Depreciation ............................................................................. VII-2
Evidence of Loss ....................................................................................................... VII-2
1. Insured’s Responsibilities....................................................................................... VII-2
2. Adjuster’s Responsibilities ..................................................................................... VII-3
Flood Definition ......................................................................................................... VII-3
Improvements and Betterments ................................................................................ VII-3
Lease Agreements/Insurable Interest ....................................................................... VII-3
Non-Waiver Agreement ............................................................................................ VII-4
Other Insurance Clause ............................................................................................. VII-4
1. Introduction ........................................................................................................... VII-4
2. Examples .............................................................................................................. VII-5
Overhead and Profit ................................................................................................... VII-6
Pollution Damage ...................................................................................................... VII-7
Proof of Loss Requirements and Waiver .................................................................... VII-7
Repair vs. Replacement............................................................................................. VII-7
1. Appliances ............................................................................................................. VII-7
2. Furniture ................................................................................................................ VII-7
Replacement Cost Coverage (RCC) and Hold Back .................................................. VII-8
Reservation of Rights Letter....................................................................................... VII-8
Reserves ................................................................................................................... VII-8
Salvage ..................................................................................................................... VII-9
Self-Propelled Vehicles .............................................................................................. VII-9
Special Loss Settlement ............................................................................................ VII-9
Subrogation ............................................................................................................... VII-10

H.
I.
J.
K.
L.
M.
N.
O.
P.
Q.
R.
S.
T.
U.
V.
W.
X.

VIII. Special Adjustment Issues...................................................................................... VIII-1
A. Air Conditioning Condensers and Solar Heating Elements ........................................ VIII-1
B. Bailee Goods ............................................................................................................. VIII-1
C. Boathouses: Coverage for Non-Boathouse Parts of Building
into Which Boats Are Floated ...................................................................................... VIII-1
D. Carpeting and Drapes ................................................................................................ VIII-2
E. Cisterns ..................................................................................................................... VIII-2
F. Closed Basin Lakes and Continuous Lake Flooding .................................................. VIII-2
1. Closed Basin Lakes ............................................................................................... VIII-2
2. Continuous Lake Flooding ..................................................................................... VIII-2
G. Coastal Barrier Resources System (CBRS) ............................................................... VIII-3

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1. Introduction ........................................................................................................... VIII-3
2. Coastal Barrier Resources Act .............................................................................. VIII-3
3. Coastal Barrier Improvement Act ........................................................................... VIII-4
4. Substantial Improvement: The 50 Percent Rule..................................................... VIII-4
H. Commercial Losses ..................................................................................................... VIII-4
I. Condemnation of Property........................................................................................... VIII-5
J. Condominium Unit Owner – Dwelling Form ................................................................ VIII-5
K. Constructive Total Loss ............................................................................................... VIII-5
L. Decks .......................................................................................................................... VIII-5
M. Elevated Buildings ....................................................................................................... VIII-6
1. Coverage Restrictions ........................................................................................... VIII-6
2. Coverage for Garages and Contents ..................................................................... VIII-6
3. Coverage for Building Property in a Building Enclosure
Below the Lowest Elevated Floor or in a Basement ............................................... VIII-7
N. Elevators ..................................................................................................................... VIII-8
O. Erosion and Wave Wash ............................................................................................. VIII-8
P. Fiberboard Sheathing/Blackboard ............................................................................... VIII-9
Q. Food in Freezers ......................................................................................................... VIII-9
R. Foundations ................................................................................................................ VIII-9
S. Freezers ...................................................................................................................... VIII-10
T. Garages ..................................................................................................................... VIII-10
U. Hydrostatic Pressure ................................................................................................... VIII-10
V. Ice and Debris Impact Damage ................................................................................... VIII-10
W. LOMA and LOMR ....................................................................................................... VIII-10
X. Manufactured (Mobile) Homes and Travel Trailers ...................................................... VIII-10
Y. Mudflow....................................................................................................................... VIII-11
Z. Property Removed to Safety ....................................................................................... VIII-11
A’. Reformation of Coverage ........................................................................................... VIII-11
B’. Repetitive Loss Structures and Previous Claims ......................................................... VIII-11
1. Repetitive Loss Structures ..................................................................................... VIII-11
2. Previous Claims .................................................................................................... VIII-11
C’. Scrip and Stored Value Cards ..................................................................................... VIII-12
D’. Seepage and High Water Table .................................................................................. VIII-12
E’. Stock (Personal Property) Losses-General Property Form........................................... VIII-12
F’. Swimming Pools, Hot Tubs, and Spas ........................................................................ VIII-12
G’. Travel Trailers ............................................................................................................. VIII-13
H’. Blinds .......................................................................................................................... VIII-13
I’. Water, Moisture, Mildew, or Mold Damage .................................................................. VIII-13
J’. Water Softeners .......................................................................................................... VIII-13
K’. Well Water Pumps ...................................................................................................... VIII-13
IX. Wind vs. Flood Issues............................................................................................... IX-1
X. Maintaining the Integrity of the NFIP
A. Quality Assurance Inspections .................................................................................... X-1
1. Routine Reinspections........................................................................................... X-1
2. Special Assist Reinspections ................................................................................. X-1
B. Fraud Prevention......................................................................................................... X-1
1. Detecting Possible Fraud....................................................................................... X-1
2. Reporting Possible Fraud ...................................................................................... X-2
C. Flood Insurance Reform Act of 2004 (FIRA) ............................................................... X-2
D. Audits ......................................................................................................................... X-2
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1.
2.
3.
4.
5.

Incorrect Estimate/Worksheet Calculation ............................................................ X-3
Insufficient Damage Documentation ..................................................................... X-3
Payment Processing Errors .................................................................................. X-3
Covered loss exceeded the value of certain items ................................................. X-3
Case Loss Reserving ............................................................................................ X-4

Appendix A: NFIP Forms Used in Claims Adjustment ................................................. A-1
Exhibit 1.
Adjuster Certification Application (F-673/81-110) .......................................... A-3
Exhibit 2.
Adjuster Preliminary Damage Assessment (F-674/81-109) ........................... A-5
Exhibit 3.
Cause of Loss and Subrogation Report (F-092/81-63) .................................. A-7
Exhibit 4.
Elevation Certificate, 2009 Revision (F-063/81-31) ....................................... A-9
Exhibit 5.
Increased Cost of Compliance (ICC) Adjuster Report (F-555/81-98)............. A-11
Exhibit 6.
Increased Cost of Compliance Proof of Loss (F-554/81-42A) ....................... A-13
Exhibit 7.
Manufactured (Mobile) Home/Travel Trailer Worksheet (F-136/81-96) ......... A-15
Exhibit 8.
Manufactured (Mobile) Home/Travel Trailer Worksheet
(Continued) (F-776/81-96A) .......................................................................... A-17
Exhibit 9.
National Flood Insurance Program Preliminary Report (F-093/81-57) ........... A-19
Exhibit 10. National Flood Insurance Program Narrative Report (F-095/81-59) .............. A-21
Exhibit 11. National Flood Insurance Program Final Report (F-094/81-58) ..................... A-23
Exhibit 12. Notice of Loss (F-102/81-43) ........................................................................ A-25
Exhibit 13. Proof of Loss (F-101/81-42) .......................................................................... A-27
Exhibit 14. Statement as to Full Cost of Repair or Replacement (F-103/81-44) .............. A-29
Exhibit 15. Worksheet – Building (F-099/81-41) ............................................................. A-31
Exhibit 16. Worksheet – Building (Cont’d) (F-100/81-41A).............................................. A-33
Exhibit 17. Worksheet – Contents – Personal Property (F-098/81-40) ............................ A-35
Appendix B: FEMA Bulletins ......................................................................................... B-1
Exhibit 1.
Claims Payments on Enclosures at or above the
Base Flood Elevation (W-04011) ................................................................. B-3
Exhibit 2.
Flood Insurance Claims Guidance (W-04020)............................................... B-7
Exhibit 3.
Flood Insurance Claims Guidance (elevated slabs) (W-04091)..................... B-9
Exhibit 4.
Waiver of the Two-Year Time Limit for ICC (W-06019) ................................. B-11
Exhibit 5.
Wind/Water Investigative Tips (W-08008) .................................................... B-13
Exhibit 6.
Claims Guidance-Detached Garages (W-08043) .......................................... B-17
Exhibit 7.
NFIP Adjuster Fee Schedule – 2008 Revision (W-08052) ............................. B-21
Exhibit 8.
Flood Insurance Claims Guidance (W-08070)............................................... B-25
Exhibit 9.
NFIP Case Loss Reserving Procedures (W-08095) ...................................... B-29
Exhibit 10. Formal Appeals Process – Issuance of Denial Letter (W-09002) .................. B-31
Exhibit 11. Substantially Damaged Structures (W-09077) .............................................. B-33
Exhibit 12. Update - NFIP Case Loss Reserving Procedures (W-10008)........................ B-35
Exhibit 13 Buildings Over Water That Were Originally Constructed
Over Land (W-10010) ................................................................................... B-37
Exhibit 14. Wind vs. Water – Adjusting Process (W-10017)............................................ B-41
Exhibit 15. Flood Insurance Guidance Concerning Contents
Manipulation (W-10035)................................................................................ B-51
Exhibit 16. Wind vs. Water – Adjusting Process Clarification (W-10060) ........................ B-53
Exhibit 17. Oil in Flood Water (W-10065a) ..................................................................... B-55

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I. NATIONAL FLOOD INSURANCE PROGRAM
A. BACKGROUND
The National Flood Insurance Program (NFIP) is a federal program that allows property owners
to purchase insurance protection against losses from flooding. This insurance is designed to
provide an alternative to costly, taxpayer-funded disaster assistance.
Congress established the NFIP with the passage of the National Flood Insurance Act of 1968
that provides the NFIP authority and guidelines. All changes since 1968 have been made as
amendments to this act. The Federal Emergency Management Agency (FEMA) administers
the NFIP.
Participation in the NFIP is based on an agreement between local participating communities and
the federal government. The community agrees to implement and enforce floodplain measures
(ordinances and laws) to reduce future flood damage to new construction in Special Flood
Hazard Areas; the federal government will make flood insurance available within the community
as financial protection against future flood losses.

B. THE WRITE YOUR OWN PROGRAM
In 1981, FEMA initiated efforts to once again involve the private-sector insurance industry in the
NFIP. A cooperative effort between FEMA and insurance company representatives led to the
creation of the Write Your Own (WYO) Program in July 1983. The WYO Companies issue and
service federally backed Standard Flood Insurance Policies under their own names, collect
premiums, and handle and pay claims. FEMA pays the WYO Companies a fee for these
services. In August 1983, FEMA extended an invitation to all licensed property and casualty
companies to participate in the WYO Program for fiscal year 1984.

C. THE NFIP TODAY
The NFIP now has two programs—the NFIP Direct Program and the WYO Program.
1. NFIP Direct Program
The program that deals with the issuing and servicing of flood insurance policies, and the
handling of resultant claims, directly by the federal government is known as the NFIP Direct
Program. The NFIP Servicing Agent assists and advises agents and adjusters who handle
Direct Program policies. The NFIP Servicing Agent also manages the Group Flood
Insurance Policy Program and the policies for buildings that are identified as Severe
Repetitive Loss Properties.
2. WYO Program
The WYO Program now accounts for approximately 90 percent of all flood policies. The
NFIP Bureau and Statistical Agent assist and advise the WYO Companies. However, this
does not diminish the authority of the WYO Company or relieve the company of its
obligations. The WYO Company still collects the premium, issues the policy, and provides
adjustment and payment for claims.

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D. FLOOD HAZARD ZONES
In addition to providing flood insurance for property, the NFIP is actively engaged in the
evaluation of existing and potential flood hazards and their long-term reduction. Accordingly,
various zones of flooding probability and severity have been established.
Flood Insurance Rate Maps (FIRMs) are produced to show the projected elevation to which
flooding is likely to occur in a Special Flood Hazard Area (SFHA). Community officials are
responsible for issuing building permits and must keep the FIRM and make the information
available. In some instances, the local agent may have the maps available. Maps can also be
obtained by contacting the FEMA Map Service Center at 1-800-358-9616. The zone
designations currently in use and the criteria by which they are grouped are as follows:
Zone Designation

Criteria

Zone A

SFHA in which the lowest floor elevation is required and
the Base Flood Elevations (BFEs) are not provided.

Zones A1-A30

SFHAs in which the lowest floor elevation is required and
the BFEs are provided.

Zone AE

SFHA designation used in place of Zones A1-A30 on
some maps.

Zone AH

SFHA in which shallow water depths (ponding) and/or
unpredictable flow paths between 1 and 3 feet deep occur.
BFEs are provided on the FIRM.

Zone AO

SFHA in which shallow water paths (sheet flow) and/or
unpredictable flow paths between 1 and 3 feet deep
occur. BFEs are not provided. Base flood depths may
be provided.

Zone A99

SFHA in which enough progress has been made on a
protective system such as dikes, dams, and levees to
consider it complete for insurance rating purposes. BFEs
are not provided.

Zone AR

SFHA in which there has been decertification of a
previously accredited flood protection system that is being
restored to provide base flood protection.

Zones AR/AE, AR/AH, AR/AO,
AR/A1-A30, and AR/A

Dual-zone SFHAs in which, because of flood risk from
water sources that the flood protection system does not
contain, there will continue to be hazard of flooding after
the flood protection system is adequately restored.

Zone V

Coastal high-hazard SFHA in which inundation by tidal
floods with velocity occurs. BFEs are not provided.

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Zone Designation (continued)

Criteria (continued)

Zones V1-V30

Coastal high-hazard SFHAs in which inundation by tidal
floods with velocity occurs. BFEs are provided.

Zone VE

SFHA designation used in place of Zones V1-V30 on
some maps.

Zone VO

SFHA in which shallow water depths and/or unpredictable
flow paths between 1 and 3 feet deep with velocity occur.

Zones B, C, and X

Areas in which moderate or minimal flooding may result
from severe storm activity or local drainage problems.
Because they are not SFHAs, these zones may be lightly
shaded or unshaded on the FIRM. Zone X is the
designation for B and C Zones and is used in place of
these zones on some maps.

Zone D

Area of undetermined flood hazard in which the population
usually is very sparse. The designation of Zone D can
also be used when one community has incorporated
portions of another community’s area where no map has
been prepared.

E. PROGRAM PHASES AND COVERAGE LIMITS
1. Program Phases
Flood insurance may be written only in those communities that have been designated by
FEMA as participating in the NFIP.
a. Emergency Program
This is the initial phase of a community’s participation in the NFIP. Limited amounts of
coverage are available.
b. Regular Program
This is the final phase of a community’s participation in the NFIP. In this phase, a Flood
Insurance Rate Map is adopted and enforced by the community and full limits of
coverage are available.
2. Amounts of Insurance Available
The table on the next page shows maximum amounts of insurance available under the
Standard Flood Insurance Policy (SFIP) for building coverage and contents coverage, in
both Emergency Program communities and Regular Program communities.

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AMOUNTS OF INSURANCE AVAILABLE:
DWELLING FORM AND GENERAL PROPERTY FORM1
EMERGENCY
PROGRAM

REGULAR PROGRAM

Insurance
Limits

Basic
Insurance
Limits

Additional
Insurance
Limits

Total
Insurance
Limits

Single-Family Dwelling

$ 35,0002

$ 60,000

$190,000

$250,000

Two- to Four-Family Dwelling

$ 35,0002

$ 60,000

$190,000

$250,000

Other Residential

$100,0003

$175,000

$75,000

$250,000

Non-Residential

$100,0003

$175,000

$325,000

$500,000

Residential

$ 10,000

$ 25,000

$ 75,000

$100,000

Non-Residential

$100,000

$150,000

$350,000

$500,000

BUILDING COVERAGE

CONTENTS COVERAGE

1

For the Residential Condominium Building Association Policy (which is written only in Regular Program
communities), the amount of building coverage available is the lesser of replacement cost value or
$250,000 times the number of insured units in the building. See the CONDO section of the Flood
Insurance Manual for contents coverage options.

2

In Alaska, Guam, Hawaii, and the U.S. Virgin Islands, the amount of building coverage available in the
Emergency Program for Single-Family Dwellings and Two- to Four-Family Dwellings is $50,000.

3

In Alaska, Guam, Hawaii, and the U.S. Virgin Islands, the amount of building coverage available in the
Emergency Program for Other Residential and Non-Residential buildings is $150,000.

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II. ADJUSTER PARTICIPATION IN THE NFIP
A. QUALIFICATIONS
The Federal Emergency Management Agency (FEMA) requires all independent adjusters who
adjust flood losses for the National Flood Insurance Program (NFIP) to be NFIP flood certified.
They must attend a NFIP claims presentation annually in order to maintain their active status
of certification.
The National Flood Insurance Program (NFIP) Bureau and Statistical Agent is required to
maintain a database of independent adjusters who qualify to adjust flood claims under policies
issued by the NFIP Direct and the Write Your Own (WYO) carriers who utilize the services of
the independent adjusting community. The qualifications reflect that the NFIP, like many other
insurers, has its own distinct characteristics concerning coverage and adjusting requirements.
The adjuster database is designed to reflect by Flood Certification Number or other means
that the approved adjuster has attended regular or special workshops that are held throughout
the country. An adjuster may also attend a FEMA-recognized approved claims presentation
conducted by independent adjusting firms or WYO Companies to maintain their active
certification status. The records reflect the adjuster’s name and the date and location
of the workshop.
The purpose of these workshops is to keep the adjusting community current with claims
procedures and guidance required for adjusting losses under the three forms of the Standard
Flood Insurance Policy-the Dwelling Form, the General Property Form, and the Residential
Condominium Building Association Policy (RCBAP). For this reason, all independent adjusters
who wish to be certified must submit the Adjuster Certification Application. WYO Company staff
adjusters should be guided by their particular company’s procedures.
The application contains five areas of authorization. An adjuster can be authorized in all five
categories or any combination thereof, if the adjuster’s qualifications meet the requirements.
The five categories are as follows:
•
•
•
•
•

Residential
Manufactured (Mobile) Home/Travel Trailer
Commercial
Large Commercial
Condominium (RCBAP)

1. Residential, Manufactured (Mobile) Home/Travel Trailer, and
Commercial Authorization
To be approved for Residential, Manufactured (Mobile) Home/Travel Trailer, or Small
Commercial losses, or any combination thereof, an adjuster should:
a. Have at least 4 consecutive years of full-time property loss adjusting experience;
b. Be capable of preparing an accurate scope of damage and dollar estimate to $50,000 for
manufactured (mobile) home/travel trailers, and $250,000 for residential and up to
$500,000 for commercial losses.

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c. Have attended an NFIP workshop and be able to demonstrate knowledge of the SFIP
and of NFIP adjustment criteria for all policy forms; and
d. Be familiar with manufactured (mobile) home/travel trailer and Increased Cost of
Compliance coverages and criteria.
These requirements will be checked and verified prior to approval.
2. Large Commercial and RCBAP Certification
To be approved for Large Commercial or RCBAP losses, or both, an adjuster should:
a. Have at least 5 consecutive years of full-time large-loss property adjusting experience;
b. For Large Commercial be capable of preparing an accurate scope of damage and dollar
estimate of $ 500,000 or more
c. For RCBAP be capable of preparing an accurate scope of damage and dollar estimate
of $ 1,000,000 or more
d. Submit written recommendations from three insurance company supervisor’s or claim
management personnel. The recommendations must reflect adjusting experience only;
and
e. FEMA encourages adjusters to have Errors and Omissions (E & O) Insurance coverage.
There are some WYO companies that require adjusters who are assigned to handle their
claims to have E&O coverage.
These requirements will be checked and verified prior to approval.

B. AUTHORIZATION REQUIREMENTS
FEMA recognizes that specialized knowledge is required in order for the adjuster to properly
adjust NFIP losses. Adjusters must know the differences between the Standard Flood Insurance
Policy (SFIP) and private industry property insurance forms. They must know interpretations of
coverage made by FEMA and the unique reporting requirements of the NFIP. Accordingly,
FEMA has made it a contractual requirement for the NFIP Bureau and Statistical Agent to
maintain a list of adjusters who are authorized to handle NFIP losses.
The requirement that independent adjusters be certified by the NFIP applies to all independent
adjusters seeking to handle flood losses. FEMA also encourages, but does not require staff
adjusters handling WYO claims to be certified by the NFIP Bureau and Statistical Agent. The
WYO companies are free to choose whatever adjusters they wish, either, staff adjusters or
independent adjusters, to adjust their flood losses and are likewise free to establish any related
qualifications or requirements for adjusters. A WYO staff adjuster handling a direct loss
assigned under the Single Adjuster Program (SAP) is not required to submit an application for
NFIP certification. In this case, WYO staff adjusters are deemed certified to handle SAP claims
by virtue of their being staff adjusters for a WYO Company and that the WYO Company
assigned the claim. (For further discussion of this situation, see Single Adjuster Program and
Claims Coordinating Office in Subsection III. B. of this manual, page III-2.) Independent
adjusters must be flood certified in order to adjust losses under the SAP.

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Adjusters seeking recertification must attend an annual presentation and submit a properly
completed and signed Adjuster Certification Application, (FF81-110). This form can be found at
http://www.fema.gov/library/viewRecord.do?id=2581.
The application can be sent via any of the following methods:
1) E-mailed to [email protected];
2) Faxed to (301) 577-3421; or
3) Mail to P.O. Box 310, Lanham, MD 20706
Adjusters who are already certified and not seeking any changes to the categories in which they
are certified, only need to attend an adjuster presentation. Adjusters who do not attend one of
the annual NFIP claims presentations will be placed in an inactive status until such time they
attend a NFIP claims presentations.
After the application has been processed the adjusters will be notified by email of their approval,
upgrade, no change or denial. The adjusters that are newly approved or requested an upgrade
to their classification will receive notification by email.
All adjusters who attend an approved NFIP Claims Presentation will be e-mailed a PDF of their
FCN cards confirming their “active” status to handle NFIP flood claims.

C. ADJUSTMENT STANDARD AND REQUIREMENTS
FEMA’s adjustment standards and requirements have been revised and expanded to clarify
NFIP expectations of flood adjusters. What follows supersedes the “NFIP Minimum Standards
and Reporting Procedures,” which have been distributed in the past and should be carefully
reviewed by adjusters.
1. General Standards and Requirements
a. Authority of the Adjuster. The NFIP expects every adjuster handling NFIP flood losses
to understand and to communicate to the policyholders that the adjuster does not have
the authority to deny a claim or to commit the NFIP or the WYO Company to pay a claim
and that all adjustments are recommendations only, subject to review by the NFIP
Servicing Agent or the WYO Company.
b. Knowledge of the Program. The NFIP expects every adjuster handling flood losses to
be thoroughly familiar with the provisions of the Standard Flood Insurance Policy (SFIP).
The adjusters should also know coverage interpretations issued by FEMA, and
explained during the NFIP Claims Presentations. All claims are adjusted in compliance
with these provisions.
c. Professionalism. Because the adjuster represents the NFIP to the policyholder and
public, the NFIP expects that every adjuster will conduct themselves in accordance with
the highest standards of integrity and ethics and be courteous and professional in all
dealings with policyholders.

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2. Specific Standards and Requirements
a. Adjuster Preliminary Damage Assessment. The adjuster completes the Adjuster
Preliminary Damage Assessment form (PDA) on building claims that meet the criteria for
substantial damage. After the adjuster conducts the inspection of the risk, the form must
be completed and submitted to the NFIP Bureau and Statistical Agent by fax at (301)
577-2421, e-mail [email protected], or by mail to P.O. Box 310, Lanham,
MD 20706 (refer to FEMA Bulletin W-09077, issued November 20, 2009).
b. Building Replacement Cost (RC) Special Loss Settlement, and Actual Cash Value
(ACV). The adjuster prepares accurate calculations of the insured building’s
replacement cost and actual cash value and properly conclude the claim on an RC or
ACV basis as applicable.
c. Contents Claim Adjustment. The NFIP requires the adjuster to assist the insured when
necessary with the preparation of the contents claim, to verify that all contents included
in the adjustment are covered under the SFIP, and to determine or verify accurate local
replacement costs and reasonable physical deprecation. Applicable depreciation should
be shown separately for each item.
d. Special Limits. The special limitations on some contents (jewelry, furs, contents used in
business, etc.) should be properly applied. Appropriate documentation supporting the
claim value should accompany the worksheets.
e. Loss Avoidance Measures. Claims for removal of insured property due to the imminent
danger of flooding must be documented and verified in order to be covered under the
SFIP. Only the value of work performed by the insured and a member of the household
is covered.
f.

Final Report. The NFIP Final Report is required on all NFIP Direct and WYO
losses. The adjuster should not close his or her file until all items on the Final Report
are completed.

g. Identification of Building Equipment and Major Appliances. The NFIP requires the
adjuster to provide identifying information (manufacturer, model and serial number, and
whenever possible, capacity, etc.) on major building equipment such as furnaces, central
air conditioning units and major appliances such as refrigerators, washers, dryers,
televisions, etc.
h. Identification of Minor Appliances. The adjuster should provide identifying information
on certain items for claims control and validation purposes.
i.

Inspection. The adjuster is required to inspect the property within 48 hours of receiving
the loss assignment. This is also time to complete the Adjuster Preliminary Damage
Assessment Form. The Adjuster Preliminary Damage Assessment form must be
completed and submitted to the NFIP Bureau and Statistical Agent by fax at (301) 5773421, e-mail [email protected], or by mail to P.O. Box 310, Lanham, MD
20706 (refer to FEMA Bulletin W-09077, issued November 20, 2009). The initial
inspection will include preparation of a preliminary scope of damages. The adjuster
assigned to the loss must inspect it personally and should not take a contractor along to
inspect or scope the loss. If it is not possible for the adjuster to inspect the loss within the
required time frame, the adjuster must explain why in the NFIP Preliminary Report and

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advise when the loss will be inspected. Visits to the insured risk without an appointment
should be avoided.
j.

Insured’s copy. When the claim has been concluded, the adjuster furnishes the insured
with a copy of all building and contents worksheets and proof(s) of loss.

k. Manufactured (Mobile) Home/Travel Trailer Worksheet. The adjuster should
complete a Manufactured (Mobile) Home/Travel Trailer Worksheet for every
manufactured (mobile) home/travel trailer loss.
l.

Narrative Report. One or more NIFP Narrative Reports may be submitted for any flood
claim in which the circumstances are unusual, suspect, or especially complicated, and
additional explanation is appropriate. Only facts should be included in reports. Opinions
or accusations have no place in reports.

m. Origin of Loss Verified. The adjuster verifies that the reported claim was caused by
direct physical loss by or from flood as defined in the SFIP.
n. Partial (Advance) Payments. FEMA encourages advance payments to the insured and
the adjuster should advise the insured of the availability of a partial (advance) payment.
If the insured requests a partial payment, the adjuster must prepare documentation
necessary to support the recommendation to the insurer of the amount of payment
requested, including an NFIP Proof of Loss form or advance payment receipt. The range
of partial payment amounts will be approved by the WYO Companies or the NFIP
Servicing Agent. The partial payment should not be for more than 50 percent of the
anticipated total claim payment and preferably should be made against the contents
claim. If paid under the building coverage, the mortgagee(s) must be included on the
claim check.
o. Preliminary Report Complete. The NFIP Preliminary Report is required on all flood
losses; however, adjusters who handle losses for WYO Companies may use the
company’s preliminary form or comparable form provided by the company. The
Preliminary Report is due to the company within 15 days after the claim has been
assigned to the adjuster and the adjuster should complete all items in the Preliminary
Report. Information unknown at the time the Preliminary Report is submitted must be
supplied in a later report.
An estimated reserve amount (the dollar value of future payments) should be provided to
the insurer. If there are changes in the value of future payments during the adjustment of
the claim the adjuster should notify the insurer. The depth of flood water and its duration
in the insured building are important and the duration should be verified by a local official
when possible or when in the adjuster’s judgment it seems necessary.
p. Prior Losses Checked. The adjuster should verify that damages from any prior loss
have been repaired before the subject loss occurred, and must exclude from the
adjustment any unrepaired prior damages. The adjuster is expected to review to the
extent necessary, using judgment, experience, and investigative skills to determine if
prior damage(s) have been repaired.
In those instances, were prior loss history is warranted the WYO Company
representative should contact the NFIP Bureau and Statistical Agent to determine
the prior losses history on claims if the previous losses were insured through a
different carrier.

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q. Progress Notes in the File. The adjuster’s file should contain adequate notes about the
progress of the claim and the scope of damages, calculations of replacement cost and
actual cash value, and a diagram of the insured building with measurements. The
adjuster will make his or her notes available to the NFIP General Adjuster(s) during the
reinspection process.
r. Prompt Contact. The adjuster initiates contact with the insured or agent by the end of
the business day after receiving the loss assignment. This initial contact preferably will
be by telephone; but, if contact by telephone is not possible, the adjuster should send
the insured or agent a postcard or letter acknowledging the assignment. The postcard or
letter should include the adjuster’s telephone number where the adjuster can be
reached. Also, when the insured, agent, or company staff person leaves a telephone
message for the adjuster, the adjuster is expected to return the call by the end of the
business day after the message was left. In the majority of flood events, these standards
are easily met. However, there have been instances where the insured property was
severely damaged, hindering the adjuster’s ability to contact the insured within the
required time. The adjuster should contact the carrier and seek guidance on how to
proceed with the loss.
s. Proof of Loss. The adjuster may assist the insured in completing the Proof of Loss;
however, this assistance is only a courtesy. Insureds must use their own judgment
concerning the amount of the loss and they must justify that amount. A fully completed
NFIP Proof of Loss form, signed and sworn to, with the required documentation is
required on every claim on which any payment is recommended.
Unless in very large events the Federal Insurance Administrator extends the time in
writing (Bulletin) the insured must send the signed and sworn to Proof of Loss with all
required supporting documentation to the insurer within 60 days after the date of loss.
Only the Federal Insurance Administrator can waive this or any SFIP provision. All
waiver requests are made through the insurer. Proofs of Loss and/or NFIP Final Reports
are issued as follows:
•

•
•
t.

On claims up to $7,500, the signed NFIP Final Report form will suffice for this
purpose. The WYO Company may request the policyholder’s signature on the Final
Report to be sworn to. If the claim payment is more than $7,500, a separate Proof of
Loss form is submitted.
If the insured qualifies for replacement cost coverage, the adjuster submits the
Statement as to Full Cost of Repair or Replacement for the additional amount
recoverable under the replacement cost provisions.
If the insured qualifies for Increased Cost of Compliance (ICC) coverage, a signed
and sworn to Increased Cost of Compliance Proof of Loss form is submitted.

Proper Building Depreciation. Depreciation is applied reasonably and accurately. This
refers both to the determination of the building’s actual cash value (replacement cost
less the value of physical depreciation) and the repair estimate. Depreciation is shown
separately, as applicable, for each line item in the adjustment, including overhead and
profit. “Lump sum” depreciation is not acceptable. Replacement cost, depreciation, and
actual cash value for each item are shown in this manner on all claims, regardless of
whether the claim is concluded on an RCV or ACV basis.

u. WYO Errors (Proper Building Scope and Estimate). The NFIP expects the adjuster to
accurately identify the covered damages caused by flood and to allow only the cost of
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repairs and/or replacements reasonably caused by direct physical loss by or from
flood. The WYO Companies and the NFIP Servicing Agent rely upon the judgment of
adjusters in the preparation of the scope of loss and the estimate of damage. It is
natural and expected that the judgment or opinion of the adjuster at the scene
immediately after the disaster may differ from those reviewing estimates either on the
scene at a later date or by a reviewer in a remote location after the claim has been
resolved. Claim payments arising out of policies issued by the insurer are binding upon
the Federal government. However, non-judgmental errors, at its discretion, are not
binding on the Federal Government.
•

Non-judgmental matters involving inadvertent error (e.g., payment of a loss
under a policy issued on an ineligible risk, payment of a loss, twice, for the same
item of damage, payment for nonexistent items of damage, payment of a loss in
respect to which the damages are unverified, such as where an adjuster might
scope the damage as to one building, then settle multiple, similar buildings on the
same basis without actually verifying the damage, etc.) are governed by Article IX
of the Arrangement, dealing with errors and omissions, in which it is provided
that the responsible party (Federal Emergency Management Agency (FEMA)
or the WYO Company) will rectify the error as soon as possible after discovery.
FEMA management, in such cases, will resolve the manner in which the error
is to be rectified with the WYO Company management. In such cases, redress
may be sought, for example, from the policyholder or adjusting firm responsible for
the error, either by the company, in a claim for reimbursement, or FEMA in a
federal claims collect effort, as is appropriate. NFIP and WYO Company joint
reinspection representatives are encouraged to highlight the above situations
in their reports, thereby calling such instances to the attention of WYO Company
and FEMA management.

•

Judgmental matters where there may be a difference of opinion between WYO
claims Management and the Federal Emergency Management Agency (FEMA)
as to whether a claim payment involved on excessive, or inadequate, loss
payment (e.g., differing views on the amount of depreciation taken, whether a
general condition of flooding existed, whether sufficient verification of damages
was obtained, etc.) are governed by Article II (F) of the Arrangement, which provides
that “The Company shall investigate, adjust, settle and defend all claims or losses
arising from policies issued under this Arrangement. Payment of flood insurance
claims by the Company shall be binding upon the FEMA.” Such matters will be
subjected of claims operational reviews and special meetings between WYO
management and FEMA management. The above wording was designed primarily
for reinspections of buildings and may not express the documentation requirements
of large commercial contents claims. What is expressed is the long-held principal
that FEMA will not recoup from the WYO Companies or the NFIP Direct Servicing
Agent when an error is judgmental.

v. Proper Photographs. The adjuster should take as many photographs as are necessary
to portray the damage. Photographs of non-damaged property can oftentimes be as
important as photographs of damaged property.
w. Salvage. The salvage value of all total-loss items must be considered. Where the size of
the salvageable loss makes it appropriate, a salvor should be engaged, with the
authorization of the NFIP Servicing Agent or WYO Company. Otherwise, the reasonable
salvage value of property left with the insured is deducted from the covered loss.

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x. Subrogation. When the adjuster identifies subrogation potential, he or she must
determine the grounds for a possible subrogation recovery. The investigation is
considered a routine part of a loss adjustment. The adjuster completes the
Cause of Loss and Subrogation Report form and any details of the investigation should
be provided to the insurer.
y. Timely Reporting. The adjuster’s NFIP Preliminary Report is submitted within 15 days
after receipt of the loss assignment. The NFIP Final Report is due 30 days later. If the
claim has not been concluded within 45 days, subsequent reports are due every 30 days
after the Preliminary Report, or otherwise as specifically directed by the claims
examiner, until the claim is concluded.
D.

NFIP FEE SCHEDULE BILLING

Payment of the adjuster’s service fee will be according to the NFIP fee schedule. The scheduled
fee for handling a loss is based on the NFIP-approved adjustment. The fee includes all travel,
photographs, reporting, telephone, and office investigation expenses to conclude the claim,
including identification of possible subrogation, salvage, and fraud. Customarily, the claim file
contents will include coverage verification; normal adjuster investigation documentation,
including statements where necessary; building reports and investigations; damage verification;
and other documentation relevant to the adjustment of the claim under the NFIP’s and the WYO
Company’s traditional claim adjustment procedures.
There are two fee schedules (pages B-22 and B-23)—one for gross losses and one for
Increased Cost of Compliance claims.
1. Gross Losses
For gross losses sustained on or after September 1, 2008, use the NFIP Fee Schedule
[Gross Loss] (page B-22). Use this schedule whether the claim will be closed without
payment or will be paid up to the limit of $250,000 or more.
2. Increased Cost of Compliance (ICC) Claims
For Increased Cost of Compliance claims, use the NFIP ICC Fee Schedule (page B-23).
Use this schedule whether the claim will be closed without payment or will be paid up to the
increased limit of $30,000 that became effective on May 1, 2003.

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III. NFIP DISASTER RESPONSE
A. DISASTER RESPONSE FIELD OFFICES
1. Adjuster Control Office
The Adjuster Control Office (ACO) is a temporary catastrophe office set up by the NFIPDirect Servicing Agent (DSA) that enables them to efficiently assign claims to certified flood
adjusting companies.
2. Claims Coordinating Office
The Claims Coordinating Office (CCO) is the repository for receiving notices of loss involving
hurricane, wind, and flood damage. The wind and flood losses are matched by property
address and assigned to a single adjuster who represents both insurers. The assignments
are made by the Windpools for the NFIP Servicing Agent and the WYO companies. (See
Subsection III.B. of this manual, Single Adjuster Program and Claims Coordinating Office
for details).
3. Flood Insurance Claims Office
The NFIP Direct Servicing Agent (DSA) will establish an on-site Flood Insurance Claims
Office (FICO) following a major flood event to enable the efficient processing of flood claim
payments on claims made on NFIP Direct policies. Examining staff and General Adjuster
staff is present at the FICO to assist flood adjusters in properly closing DSA flood claims.
The FICO only handles flood claims on DSA flood policies; FICO is unable to assist on any
WYO flood claim.
4. Flood Response Office
The Flood Response Office (FRO) is established to efficiently coordinate with private-sector
windpool associations, WYO companies, FIMA’s Joint Field Office (JFO) and Disaster
Recovery Centers, and FIMA’s regional staff engaged in mitigation and floodplain
management compliance activities in local communities.
Major activities of the FRO include the following:
a. Coordination with WYO companies to provide guidance, define the scope of coverage,
and facilitate the adjustment of losses sustained by policyholders of the NFIP who are
insured by WYO companies.
b. Coordination with WYO companies, the NFIP Servicing Agent, and state windpool
associations under the Single Adjuster Program (SAP) and NFIP Claims Coordinating
Office (CCO).
c. Support and coordination with the JFOs to advise the Federal Coordinating Officer
on flood insurance activities, help avoid duplication of benefits, provide information
and assistance to NFIP policyholders, and speed the delivery of flood insurance
claim payments.
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d. Distribution and utilization at the FRO and Disaster Recovery Centers of a series of
educational and informational brochures to provide guidance to the flood-insured public,
agents, adjusters, and federal and state officials in matters related to the NFIP’s overall
catastrophe response procedures.
e. Implementation of support services such as the reinspection program, special
adjuster meetings, and claim troubleshooting activities. Additional activities include
surveying flood disaster areas, assessing the extent of damage, and advising FIMA
of the findings.

B. SINGLE ADJUSTER PROGRAM AND CLAIMS COORDINATING OFFICE
1. Objective
In conjunction with the Claims Coordinating Office (CCO), the Single Adjuster Program
(SAP) provides the most efficient use of adjusting resources in a catastrophic hurricane
situation to improve service to the mutual policyholders of both wind damage and flood
damage insurers.
2. Background
There are currently over a million coastal flood insurance policies at risk, many of which
could be subject to a combined wind/flood loss.
Through the establishment of a CCO at the time of a catastrophe, many of these potential
combined losses can be identified and assigned to adjusting companies jointly representing
the WYO companies and the Coastal Plans (e.g., Windpool Associations, Fair Plans, Beach
Plans, and Joint Underwriting Associations).
The purpose of the CCO is to provide a central clearinghouse for receiving notices of loss
involving hurricane, wind, and flood damage. This is accomplished by the systematic
identification of wind and flood losses at the same property address followed by assignment
of the loss to a single adjuster who represents both insurers. Adjuster assignments are
made by the Windpools for the NFIP Servicing Agent and WYO companies. The CCO, in
cooperation with the WYO companies, Windpools, and other property insurers, oversees the
SAP. This measure avoids duplicate assignments of losses and better deploys the available
adjuster resources in a major hurricane event.
3. Implementation
FIMA and the various Windpools determine whether a catastrophic event will necessitate an
SAP response. The National Weather Service’s declaration of a tropical storm or hurricane
event begins the watch for a possible single adjuster response. In general, FIMA approves
the SAP response when the storm is 48 hours from landfall.
The NFIP deploys their team to the affected area prior to landfall of the storm. The WYO
companies are advised by telephone, email or fax, through their designated Single Adjuster
Liaison, as to the areas and states that will be subjected to the SAP response. At that point,
the WYO companies are asked to immediately notify their agents of the SAP procedures for
reporting the losses.

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The telephone call, e-mail, or fax to the WYO companies is followed by a written notice
directing all WYO companies to have their agency force submit all flood losses that are
reasonably believed to involve wind and flood damage to the CCO.
Telephone contact also is made and a written notice is simultaneously sent to the
participating State Coastal Plan, Joint Underwriting Association, etc., advising them of the
opening of the CCO, which is co-located with or near the State Coastal Plan at a
predetermined site. The on-site CCO becomes fully operational within 24 hours after the
storm’s landfall.
When the CCO is operational, the WYO companies are notified of all of their assigned
claims. Reports reflecting the assigned claims are faxed each day. Once the assignment is
made and communicated to each company, the WYO Company manages its own loss
adjustment. However, the CCO personnel ensure that the adjuster receives the loss
assignment containing all the relevant information.
4. Adjuster Briefing
The NFIP General Adjusters and FIMA will conduct adjusting briefings before and after
major storms. These briefings will address regional problems, construction issues, adjuster
certification, and community and state ordinances, etc. The adjuster briefing location, date
and time will be posted through the Clearinghouse at www.nfipiservice.com.

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IV. POLICY CHANGES AFFECTING THE
LIBERALIZATION CLAUSE
When the NFIP makes a change that broadens coverage under the current policy edition, that
will not require any additional premium, then that change will automatically include the
broadened coverage in similar and existing policies. However, the change will only be
effectuated if the implementation date falls within 60 days before, or during, the policy term
stated on the Declarations Page.

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