[Code of Federal Regulations]
[Title 44, Volume 1]
[Revised as of October 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 44CFR61.17]

[Page 257-300]
 
              TITLE 44--EMERGENCY MANAGEMENT AND ASSISTANCE
 
 CHAPTER I--FEDERAL EMERGENCY MANAGEMENT AGENCY, DEPARTMENT OF HOMELAND 
                                SECURITY
 
PART 61_INSURANCE COVERAGE AND RATES--Table of Contents
 
Sec.  61.17  Group Flood Insurance Policy.

    (a) A Group Flood Insurance Policy (GFIP) is a policy covering all 
individuals named by a State as recipients under section 408 of the 
Stafford Act (42 U.S.C. 5174) of an Individuals and Households Program 
(IHP) award for flood damage as a result of major disaster declaration 
by the President.
    (b) The premium for the GFIP is a flat fee of $600 per insured. We 
may adjust the premium to reflect NFIP loss experience and any 
adjustment of benefits under the IHP program.
    (c) The amount of coverage is equivalent to the maximum grant amount 
established under section 408 of the Stafford Act (42 U.S.C. 5174).
    (d) The term of the GFIP is for 36 months and begins 60 days after 
the date of the disaster declaration.
    (e) Coverage for individual grantees begins on the thirtieth day 
after the NFIP receives the required data for individual grantees and 
their premium payments.
    (f) We will send a Certificate of Flood Insurance to each individual 
insured under the GFIP.
    (g) The GFIP is the Standard Flood Insurance Policy Dwelling Form (a 
copy of which is included in Appendix A(1) of this part), except that:
    (1) VI. DEDUCTIBLES does not apply to the GFIP. A special deductible 
of $200 (applicable separately to any building loss and any contents 
loss) applies to insured flood-damage losses sustained by the insured 
property in the course of any subsequent flooding event during the term 
of the GFIP. The deductible does not apply to:
    (i) III.C.2. Loss Avoidance Measures; or
    (ii) III. C.3. Condominium Loss Assessments coverage.
    (2) VII. GENERAL CONDITIONS, E. Cancellation of Policy by You, does 
not apply to the GFIP.
    (3) VII. GENERAL CONDITIONS, H. Policy Renewal, does not apply to 
the GFIP.
    (h) We will send a notice to the GFIP certificate holders 
approximately 60 days before the end of the thirty-six month term of the 
GFIP. The notice will encourage them to contact a local insurance agent 
or producer or a private insurance company selling NFIP policies under 
the Write Your Own program of the NFIP Standard Flood Insurance Policy, 
and advise them as to the amount of coverage they must maintain in order 
not to jeopardize their eligibility for future disaster assistance. The 
IHP program will provide the NFIP the amount of flood insurance coverage 
to be maintained by certificate holders.

[65 FR 60769, Oct. 12, 2000, as amended at 67 FR 61462, Sept. 30, 2002]

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                        Appendix A(1) to Part 61

  Federal Emergency Management Agency, Federal Insurance Administration

                     Standard Flood Insurance Policy

                              DWELLING FORM

    Please read the policy carefully. The flood insurance provided is 
subject to limitations, restrictions, and exclusions. This policy covers 
only:
    1. A non-condominium residential building designed for principal use 
as a dwelling place of one to four families, or
    2. A single family dwelling unit in a condominium building.

                              I. Agreement

    The Federal Emergency Management Agency (FEMA) provides flood 
insurance under the terms of the National Flood Insurance Act of 1968 
and its Amendments, and Title 44 of the Code of Federal Regulations.
    We will pay you for direct physical loss by or from flood to your 
insured property if you:
    1. Have paid the correct premium;
    2. Comply with all terms and conditions of this policy; and
    3. Have furnished accurate information and statements.
    We have the right to review the information you give us at any time 
and to revise your policy based on our review.

                             II. Definitions

    A. In this policy, ``you'' and ``your'' refer to the insured(s) 
shown on the Declarations Page of this policy and your spouse, if a 
resident of the same household. Insured(s) includes: Any mortgagee and 
loss payee named in the Application and Declarations Page, as well as 
any other mortgagee or loss payee determined to exist at the time of 
loss in the order of precedence. ``We,'' ``us,'' and ``our'' refer to 
the insurer.
    Some definitions are complex because they are provided as they 
appear in the law or regulations, or result from court cases. The 
precise definitions are intended to protect you.
    Flood, as used in this flood insurance 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 properties (one of which is your property) from:
    a. Overflow of inland or tidal waters,
    b. Unusual and rapid accumulation or runoff of surface waters from 
any source,
    c. Mudflow.
    2. Collapse or subsidence of land along the shore of a lake or 
similar body of water as a result of erosion or undermining caused by 
waves or currents of water exceeding anticipated cyclical levels that 
result in a flood as defined in A.1.a. above.
    B. The following are the other key definitions we use in this 
policy:
    1. Act. The National Flood Insurance Act of 1968 and any amendments 
to it.
    2. Actual Cash Value. The cost to replace an insured item of 
property at the time of loss, less the value of its physical 
depreciation.
    3. Application. The statement made and signed by you or your agent 
in applying for this policy. The application gives information we use to 
determine the eligibility of the risk, the kind of policy to be issued, 
and the correct premium payment. The application is part of this flood 
insurance policy. For us to issue you a policy, the correct premium 
payment must accompany the application.
    4. Base Flood. A flood having a one percent chance of being equaled 
or exceeded in any given year.
    5. Basement. Any area of the building, including any sunken room or 
sunken portion of a room, having its floor below ground level (subgrade) 
on all sides.
    6. Building.
    a. A structure with two or more outside rigid walls and a fully 
secured roof, that is affixed to a permanent site;
    b. A manufactured home (a ``manufactured home,'' also known as a 
mobile home, is a structure: built on a permanent chassis, transported 
to its site in one or more sections, and affixed to a permanent 
foundation); or
    c. A travel trailer without wheels, built on a chassis and affixed 
to a permanent foundation, that is regulated under the community's 
floodplain management and building ordinances or laws.
    Building does not mean a gas or liquid storage tank or a 
recreational vehicle, park trailer or other similar vehicle, except as 
described in B.6.c. above.
    7. Cancellation. The ending of the insurance coverage provided by 
this policy before the expiration date.
    8. Condominium. That form of ownership of real property in which 
each unit owner has an undivided interest in common elements.
    9. Condominium Association. The entity made up of the unit owners 
responsible for the maintenance and operation of:
    a. Common elements owned in undivided shares by unit owners; and
    b. Other real property in which the unit owners have use rights; 
where membership in the entity is a required condition of unit 
ownership.
    10. Declarations Page. A computer-generated summary of information 
you provided in the application for insurance. The Declarations Page 
also describes the term of the policy, limits of coverage, and displays 
the

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premium and our name. The Declarations Page is a part of this flood 
insurance policy.
    11. Described Location. The location where the insured building(s) 
or personal property are found. The described location is shown on the 
Declarations Page.
    12. Direct Physical Loss By or From Flood. Loss or damage to insured 
property, directly caused by a flood. There must be evidence of physical 
changes to the property.
    13. Dwelling. A building designed for use as a residence for no more 
than four families or a single-family unit in a building under a 
condominium form of ownership.
    14. Elevated Building. A building that has no basement and that has 
its lowest elevated floor raised above ground level by foundation walls, 
shear walls, posts, piers, pilings, or columns.
    15. Emergency Program. The initial phase of a community's 
participation in the National Flood Insurance Program. During this 
phase, only limited amounts of insurance are available under the Act.
    16. Expense Constant. A flat charge you must pay on each new or 
renewal policy to defray the expenses of the Federal Government related 
to flood insurance.
    17. Federal Policy Fee. A flat charge you must pay on each new or 
renewal policy to defray certain administrative expenses incurred in 
carrying out the National Flood Insurance Program. This fee covers 
expenses not covered by the Expense Constant.
    18. Improvements. Fixtures, alterations, installations, or additions 
comprising a part of the insured dwelling or the apartment in which you 
reside.
    19. Mudflow. A river of liquid and flowing mud on the surface 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 not mudflows.
    20. National Flood Insurance Program (NFIP). The program of flood 
insurance coverage and floodplain management administered under the Act 
and applicable Federal regulations in Title 44 of the Code of Federal 
Regulations, Subchapter B.
    21. Policy. The entire written contract between you and us. It 
includes:
    a. This printed form;
    b. The application and Declarations Page;
    c. Any endorsement(s) that may be issued; and
    d. Any renewal certificate indicating that coverage has been 
instituted for a new policy and new policy term.
    Only one dwelling, which you specifically described in the 
application, may be insured under this policy.
    22. Pollutants. Substances that include, but are not limited to, any 
solid, liquid, gaseous, or thermal irritant or contaminant, including 
smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. 
``Waste'' includes, but is not limited to, materials to be recycled, 
reconditioned, or reclaimed.
    23. Post-FIRM Building. A building for which construction or 
substantial improvement occurred after December 31, 1974, or on or after 
the effective date of an initial Flood Insurance Rate Map (FIRM), 
whichever is later.
    24. Probation Premium. A flat charge you must pay on each new or 
renewal policy issued covering property in a community the NFIP has 
placed on probation under the provisions of 44 CFR 59.24.
    25. Regular Program. The final phase of a community's participation 
in the National Flood Insurance Program. In this phase, a Flood 
Insurance Rate Map is in effect and full limits of coverage are 
available under the Act.
    26. Special Flood Hazard Area. An area having special flood or 
mudflow, and/or flood-related erosion hazards, and shown on a Flood 
Hazard Boundary Map or Flood Insurance Rate Map as Zone A, AO, A1-A30, 
AE, A99, AH, AR, AR/A, AR/AE, AR/AH, AR/AO, AR/A1-A30, V1-V30, VE, or V.
    27. Unit. A single-family unit you own in a condominium building.
    28. Valued Policy. A policy in which the insured and the insurer 
agree on the value of the property insured, that value being payable in 
the event of a total loss. The Standard Flood Insurance Policy is not a 
valued policy.

                          III. Property Covered

                    A. Coverage A--Building Property

    We insure against direct physical loss by or from flood to:
    1. The dwelling at the described location, or for a period of 45 
days at another location as set forth in III.C.2.b., Property Removed to 
Safety.
    2. Additions and extensions attached to and in contact with the 
dwelling by means of a rigid exterior wall, a solid load-bearing 
interior wall, a stairway, an elevated walkway, or a roof. At your 
option, additions and extensions connected by any of these methods may 
be separately insured. Additions and extensions attached to and in 
contact with the building by means of a common interior wall that is not 
a solid load-bearing wall are always considered part of the dwelling and 
cannot be separately insured.
    3. A detached garage at the described location. Coverage is limited 
to no more than 10% of the limit of liability on the dwelling. Use of 
this insurance is at your option but reduces the building limit of 
liability. We do not cover any detached garage used or held for use for 
residential (i.e., dwelling), business, or farming purposes.
    4. Materials and supplies to be used for construction, alteration, 
or repair of the

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dwelling or a detached garage while the materials and supplies are 
stored in a fully enclosed building at the described location or on an 
adjacent property.
    5. A building under construction, alteration, or repair at the 
described location.
    a. If the structure is not yet walled or roofed as described in the 
definition for building (see II.B.6.a.) then coverage applies:
    (1) Only while such work is in progress; or
    (2) If such work is halted, only for a period of up to 90 continuous 
days thereafter.
    b. However, coverage does not apply until the building is walled and 
roofed if the lowest floor, including the basement floor, of a non-
elevated building or the lowest elevated floor of an elevated building 
is:
    (1) Below the base flood elevation in Zones AH, AE, A1-A30, AR, AR/
AE, AR/AH, AR/A1-A30, AR/A, AR/AO; or
    (2) Below the base flood elevation adjusted to include the effect of 
wave action in Zones VE or V1-V30.
    The lowest floor levels are based on the bottom of the lowest 
horizontal structural member of the floor in Zones VE or V1-V30 and the 
top of the floor in Zones AH, AE, A1-A30, AR, AR/AE, AR/AH, AR/A1-A30, 
AR/A, AR/AO.
    6. A manufactured home or a travel trailer as described in the 
Definitions section (see II.B.6.b. and II.B.6.c.).
    If the manufactured home or travel trailer is in a special flood 
hazard area, it must be anchored in the following manner at the time of 
the loss:
    a. By over-the-top or frame ties to ground anchors; or
    b. In accordance with the manufacturer's specifications; or
    c. In compliance with the community's floodplain management 
requirements unless it has been continuously insured by the NFIP at the 
same described location since September 30, 1982.
    7. The following items of property which are covered under Coverage 
A only:
    a. Awnings and canopies;
    b. Blinds;
    c. Built-in dishwashers;
    d. Built-in microwave ovens;
    e. Carpet permanently installed over unfinished flooring;
    f. Central air conditioners;
    g. Elevator equipment;
    h. Fire sprinkler systems;
    i. Walk-in freezers;
    j. Furnaces and radiators;
    k. Garbage disposal units;
    l. Hot water heaters, including solar water heaters;
    m. Light fixtures;
    n. Outdoor antennas and aerials fastened to buildings;
    o. Permanently installed cupboards, bookcases, cabinets, paneling, 
and wallpaper;
    p. Plumbing fixtures;
    q. Pumps and machinery for operating pumps;
    r. Ranges, cooking stoves, and ovens;
    s. Refrigerators; and
    t. Wall mirrors, permanently installed.
    8. Items of property in a building enclosure below the lowest 
elevated floor of an elevated post-FIRM building located in Zones A1-
A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1-A30, V1-V30, or VE, or in a 
basement, regardless of the zone. Coverage is limited to the following:
    a. Any of the following items, if installed in their functioning 
locations and, if necessary for operation, connected to a power source:
    (1) Central air conditioners;
    (2) Cisterns and the water in them;
    (3) Drywall for walls and ceilings in a basement and the cost of 
labor to nail it, unfinished and unfloated and not taped, to the 
framing;
    (4) Electrical junction and circuit breaker boxes;
    (5) Electrical outlets and switches;
    (6) Elevators, dumbwaiters and related equipment, except for related 
equipment installed below the base flood elevation after September 30, 
1987;
    (7) Fuel tanks and the fuel in them;
    (8) Furnaces and hot water heaters;
    (9) Heat pumps;
    (10) Nonflammable insulation in a basement;
    (11) Pumps and tanks used in solar energy systems;
    (12) Stairways and staircases attached to the building, not 
separated from it by elevated walkways;
    (13) Sump pumps;
    (14) Water softeners and the chemicals in them, water filters, and 
faucets installed as an integral part of the plumbing system;
    (15) Well water tanks and pumps;
    (16) Required utility connections for any item in this list; and
    (17) Footings, foundations, posts, pilings, piers, or other 
foundation walls and anchorage systems required to support a building.
    b. Clean-up.

                    B. Coverage B--Personal Property

    1. If you have purchased personal property coverage, we insure 
against direct physical loss by or from flood to personal property 
inside a building at the described location, if:
    a. The property is owned by you or your household family members; 
and
    b. At your option, the property is owned by guests or servants.
    Personal property is also covered for a period of 45 days at another 
location as set forth in III.C.2.b., Property Removed to Safety.
    Personal property in a building that is not fully enclosed must be 
secured to prevent flotation out of the building. If the personal

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property does float out during a flood, it will be conclusively presumed 
that it was not reasonably secured. In that case there is no coverage 
for such property.
    2. Coverage for personal property includes the following property, 
subject to B.1. above, which is covered under Coverage B only:
    a. Air conditioning units, portable or window type;
    b. Carpets, not permanently installed, over unfinished flooring;
    c. Carpets over finished flooring;
    d. Clothes washers and dryers;
    e. ``Cook-out'' grills;
    f. Food freezers, other than walk-in, and food in any freezer; and
    g. Portable microwave ovens and portable dishwashers.
    3. Coverage for items of property in a building enclosure below the 
lowest elevated floor of an elevated post-FIRM building located in Zones 
A1-A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1-A30, V1-V30, or VE, or in 
a basement, regardless of the zone, is limited to the following items, 
if installed in their functioning locations and, if necessary for 
operation, connected to a power source:
    a. Air conditioning units, portable or window type;
    b. Clothes washers and dryers; and
    c. Food freezers, other than walk-in, and food in any freezer.
    4. If you are a tenant and have insured personal property under 
Coverage B in this policy, we will cover such property, including your 
cooking stove or range and refrigerator. The policy will also cover 
improvements made or acquired solely at your expense in the dwelling or 
apartment in which you reside, but for not more than 10% of the limit of 
liability shown for personal property on the Declarations Page. Use of 
this insurance is at your option but reduces the personal property limit 
of liability.
    5. If you are the owner of a unit and have insured personal property 
under Coverage B in this policy, we will also cover your interior walls, 
floor, and ceiling (not otherwise covered under a flood insurance policy 
purchased by your condominium association) for not more than 10% of the 
limit of liability shown for personal property on the Declarations Page. 
Use of this insurance is at your option but reduces the personal 
property limit of liability.
    6. Special Limits. We will pay no more than $2,500 for any one loss 
to one or more of the following kinds of personal property:
    a. Artwork, photographs, collectibles, or memorabilia, including but 
not limited to, porcelain or other figures, and sports cards;
    b. Rare books or autographed items;
    c. Jewelry, watches, precious and semi-precious stones, or articles 
of gold, silver, or platinum;
    d. Furs or any article containing fur which represents its principal 
value; or
    e. Personal property used in any business.
    7. We will pay only for the functional value of antiques.

                     C. Coverage C--Other Coverages

    1. Debris Removal.
    a. We will pay the expense to remove non-owned debris that is on or 
in insured property and debris of insured property anywhere.
    b. If you or a member of your household perform the removal work, 
the value of your work will be based on the Federal minimum wage.
    c. This coverage does not increase the Coverage A or Coverage B 
Limit of Liability.
    2. Loss Avoidance Measures
    a. Sandbags, Supplies, and Labor
    (1) We will pay up to $1,000 for costs you incur to protect the 
insured building from a flood or imminent danger of flood, for the 
following:
    (a) Your reasonable expenses to buy:
    (i) Sandbags, including sand to fill them;
    (ii) Fill for temporary levees;
    (iii) Pumps; and
    (iv) Plastic sheeting and lumber used in connection with these 
items.
    (b) The value of work, at the Federal minimum wage, that you or a 
member of your household perform.
    (2) This coverage for Sandbags, Supplies and Labor only applies if 
damage to insured property by or from flood is imminent and the threat 
of flood damage is apparent enough to lead a person of common prudence 
to anticipate flood damage. One of the following must also occur:
    (a) A general and temporary condition of flooding in the area near 
the described location must occur, even if the flood does not reach the 
building; or
    (b) A legally authorized official must issue an evacuation order or 
other civil order for the community in which the building is located 
calling for measures to preserve life and property from the peril of 
flood.
    This coverage does not increase the Coverage A or Coverage B Limit 
of Liability.
    b. Property Removed to Safety
    (1) We will pay up to $1,000 for the reasonable expenses you incur 
to move insured property to a place other than the described location 
that contains the property in order to protect it from flood or the 
imminent danger of flood.
    Reasonable expenses include the value of work, at the Federal 
minimum wage, you or a member of your household perform.
    (2) If you move insured property to a location other than the 
described location that contains the property, in order to protect it 
from flood or the imminent danger of flood, we will cover such property 
while at that location for a period of 45 consecutive days from the date 
you begin to move it there. The personal property that is moved must be

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placed in a fully enclosed building or otherwise reasonably protected 
from the elements.
    Any property removed, including a moveable home described in 
II.6.b.and c., must be placed above ground level or outside of the 
special flood hazard area.
    This coverage does not increase the Coverage A or Coverage B Limit 
of Liability.
    3. Condominium Loss Assessments.
    a. If this policy insures a unit, we will pay, up to the Coverage A 
limit of liability, your share of loss assessments charged against you 
by the condominium association in accordance with the condominium 
association's articles of association, declarations and your deed.
    The assessment must be made as a result of direct physical loss by 
or from flood during the policy term, to the building's common elements.
    b. We will not pay any loss assessment charged against you:
    (1) And the condominium association by any governmental body;
    (2) That results from a deductible under the insurance purchased by 
the condominium association insuring common elements;
    (3) That results from a loss to personal property, including 
contents of a condominium building;
    (4) That results from a loss sustained by the condominium 
association that was not reimbursed under a flood insurance policy 
written in the name of the association under the Act because the 
building was not, at the time of loss, insured for an amount equal to 
the lesser of:
    (a) 80% or more of its full replacement cost; or
    (b) The maximum amount of insurance permitted under the Act;
    (5) To the extent that payment under this policy for a condominium 
building loss, in combination with payments under any other NFIP 
policies for the same building loss, exceeds the maximum amount of 
insurance permitted under the Act for that kind of building; or
    (6) To the extent that payment under this policy for a condominium 
building loss, in combination with any recovery available to you as a 
tenant in common under any NFIP condominium association policies for the 
same building loss, exceeds the amount of insurance permitted under the 
Act for a single-family dwelling.
    Loss assessment coverage does not increase the Coverage A Limit of 
Liability.

               D. Coverage D--Increased Cost of Compliance

    1. General.
    This policy pays you to comply with a State or local floodplain 
management law or ordinance affecting repair or reconstruction of a 
structure suffering flood damage. Compliance activities eligible for 
payment are: elevation, floodproofing, relocation, or demolition (or any 
combination of these activities) of your structure. Eligible 
floodproofing activities are limited to:
    a. Non-residential structures.
    b. Residential structures with basements that satisfy FEMA's 
standards published in the Code of Federal Regulations [44 CFR 60.6 (b) 
or (c)].
    2. Limit of Liability.
    We will pay you up to $30,000 under this Coverage D--Increased Cost 
of Compliance, which only applies to policies with building coverage 
(Coverage A). Our payment of claims under Coverage D is in addition to 
the amount of coverage which you selected on the application and which 
appears on the Declarations Page. But the maximum you can collect under 
this policy for both Coverage A--Building Property and Coverage D--
Increased Cost of Compliance cannot exceed the maximum permitted under 
the Act. We do not charge a separate deductible for a claim under 
Coverage D.
    3. Eligibility
    a. A structure covered under Coverage A--Building Property 
sustaining a loss caused by a flood as defined by this policy must:
    (1) Be a ``repetitive loss structure.'' A repetitive loss structure 
is one that meets the following conditions:
    (a) The structure is covered by a contract of flood insurance issued 
under the NFIP.
    (b) The structure has suffered flood damage on two occasions during 
a 10-year period which ends on the date of the second loss.
    (c) The cost to repair the flood damage, on average, equaled or 
exceeded 25% of the market value of the structure at the time of each 
flood loss.
    (d) In addition to the current claim, the NFIP must have paid the 
previous qualifying claim, and the State or community must have a 
cumulative, substantial damage provision or repetitive loss provision in 
its floodplain management law or ordinance being enforced against the 
structure; or
    (2) Be a structure that has had flood damage in which the cost to 
repair equals or exceeds 50% of the market value of the structure at the 
time of the flood. The State or community must have a substantial damage 
provision in its floodplain management law or ordinance being enforced 
against the structure.
    b. This Coverage D pays you to comply with State or local floodplain 
management laws or ordinances that meet the minimum standards of the 
National Flood Insurance Program found in the Code of Federal 
Regulations at 44 CFR 60.3. We pay for compliance activities that exceed 
those standards under these conditions:
    (1) 3.a.(1) above.
    (2) Elevation or floodproofing in any risk zone to preliminary or 
advisory base flood

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elevations provided by FEMA which the State or local government has 
adopted and is enforcing for flood-damaged structures in such areas. 
(This includes compliance activities in B, C, X, or D zones which are 
being changed to zones with base flood elevations. This also includes 
compliance activities in zones where base flood elevations are being 
increased, and a flood-damaged structure must comply with the higher 
advisory base flood elevation.) Increased Cost of Compliance coverage 
does not apply to situations in B, C, X, or D zones where the community 
has derived its own elevations and is enforcing elevation or 
floodproofing requirements for flood-damaged structures to elevations 
derived solely by the community.
    (3) Elevation or floodproofing above the base flood elevation to 
meet State or local ``freeboard'' requirements, i.e., that a structure 
must be elevated above the base flood elevation.
    c. Under the minimum NFIP criteria at 44 CFR 60.3(b)(4), States and 
communities must require the elevation or floodproofing of structures in 
unnumbered A zones to the base flood elevation where elevation data is 
obtained from a Federal, State, or other source. Such compliance 
activities are also eligible for Coverage D.
    d. This coverage will also pay for the incremental cost, after 
demolition or relocation, of elevating or floodproofing a structure 
during its rebuilding at the same or another site to meet State or local 
floodplain management laws or ordinances, subject to Exclusion D.5.g. 
below.
    e. This coverage will also pay to bring a flood-damaged structure 
into compliance with state or local floodplain management laws or 
ordinances even if the structure had received a variance before the 
present loss from the applicable floodplain management requirements.
    4. Conditions.
    a. When a structure covered under Coverage A--Building Property 
sustains a loss caused by a flood, our payment for the loss under this 
Coverage D will be for the increased cost to elevate, floodproof, 
relocate, or demolish (or any combination of these activities) caused by 
the enforcement of current State or local floodplain management 
ordinances or laws. Our payment for eligible demolition activities will 
be for the cost to demolish and clear the site of the building debris or 
a portion thereof caused by the enforcement of current State or local 
floodplain management ordinances or laws. Eligible activities for the 
cost of clearing the site will include those necessary to discontinue 
utility service to the site and ensure proper abandonment of on-site 
utilities.
    b. When the building is repaired or rebuilt, it must be intended for 
the same occupancy as the present building unless otherwise required by 
current floodplain management ordinances or laws.
    5. Exclusions.
    Under this Coverage D (Increased Cost of Compliance) we will not pay 
for:
    a. The cost to comply with any floodplain management law or 
ordinance in communities participating in the Emergency Program.
    b. The cost associated with enforcement of any ordinance or law that 
requires any insured or others to test for, monitor, clean up, remove, 
contain, treat, detoxify or neutralize, or in any way respond to, or 
assess the effects of pollutants.
    c. The loss in value to any insured building or other structure due 
to the requirements of any ordinance or law.
    d. The loss in residual value of the undamaged portion of a building 
demolished as a consequence of enforcement of any State or local 
floodplain management law or ordinance.
    e. Any Increased Cost of Compliance under this Coverage D:
    (1) Until the building is elevated, floodproofed, demolished, or 
relocated on the same or to another premises; and
    (2) Unless the building is elevated, floodproofed, demolished, or 
relocated as soon as reasonably possible after the loss, not to exceed 
two years.
    f. Any code upgrade requirements, e.g., plumbing or electrical 
wiring, not specifically related to the State or local floodplain 
management law or ordinance.
    g. Any compliance activities needed to bring additions or 
improvements made after the loss occurred into compliance with State or 
local floodplain management laws or ordinances.
    h. Loss due to any ordinance or law that you were required to comply 
with before the current loss.
    i. Any rebuilding activity to standards that do not meet the NFIP's 
minimum requirements. This includes any situation where the insured has 
received from the State or community a variance in connection with the 
current flood loss to rebuild the property to an elevation below the 
base flood elevation.
    j. Increased Cost of Compliance for a garage or carport.
    k. Any structure insured under an NFIP Group Flood Insurance Policy.
    l. Assessments made by a condominium association on individual 
condominium unit owners to pay increased costs of repairing commonly 
owned buildings after a flood in compliance with State or local 
floodplain management ordinances or laws.
    6. Other Provisions.

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    a. Increased Cost of Compliance coverage will not be included in the 
calculation to determine whether coverage meets the 80% insurance-to-
value requirement for replacement cost coverage as set forth in VII. 
General Conditions, V. Loss Settlement.
    b. All other conditions and provisions of the policy apply.

                        IV. Property Not Covered

    We do not cover any of the following:
    1. Personal property not inside a building;
    2. A building, and personal property in it, located entirely in, on, 
or over water or seaward of mean high tide if it was constructed or 
substantially improved after September 30, 1982;
    3. Open structures, including a building used as a boathouse or any 
structure or building into which boats are floated, and personal 
property located in, on, or over water;
    4. Recreational vehicles other than travel trailers described in the 
Definitions section (see II.B.6.c.) whether affixed to a permanent 
foundation or on wheels;
    5. Self-propelled vehicles or machines, including their parts and 
equipment. However, we do cover self-propelled vehicles or machines not 
licensed for use on public roads that are:
    a. Used mainly to service the described location or
    b. Designed and used to assist handicapped persons, while the 
vehicles or machines are inside a building at the described location;
    6. Land, land values, lawns, trees, shrubs, plants, growing crops, 
or animals;
    7. Accounts, bills, coins, currency, deeds, evidences of debt, 
medals, money, scrip, stored value cards, postage stamps, securities, 
bullion, manuscripts, or other valuable papers;
    8. Underground structures and equipment, including wells, septic 
tanks, and septic systems;
    9. Those portions of walks, walkways, decks, driveways, patios and 
other surfaces, all whether protected by a roof or not, located outside 
the perimeter, exterior walls of the insured building or the building in 
which the insured unit is located;
    10. Containers, including related equipment, such as, but not 
limited to, tanks containing gases or liquids;
    11. Buildings or units and all their contents if more than 49% of 
the actual cash value of the building is below ground, unless the lowest 
level is at or above the base flood elevation and is below ground by 
reason of earth having been used as insulation material in conjunction 
with energy efficient building techniques;
    12. Fences, retaining walls, seawalls, bulkheads, wharves, piers, 
bridges, and docks;
    13. Aircraft or watercraft, or their furnishings and equipment;
    14. Hot tubs and spas that are not bathroom fixtures, and swimming 
pools, and their equipment, such as, but not limited to, heaters, 
filters, pumps, and pipes, wherever located;
    15. Property not eligible for flood insurance pursuant to the 
provisions of the Coastal Barrier Resources Act and the Coastal Barrier 
Improvement Act and amendments to these Acts;
    16. Personal property you own in common with other unit owners 
comprising the membership of a condominium association.

                              V. Exclusions

    A. We only pay for direct physical loss by or from flood, which 
means that we do not pay you for:
    1. Loss of revenue or profits;
    2. Loss of access to the insured property or described location;
    3. Loss of use of the insured property or described location;
    4. Loss from interruption of business or production;
    5. Any additional living expenses incurred while the insured 
building is being repaired or is unable to be occupied for any reason;
    6. The cost of complying with any ordinance or law requiring or 
regulating the construction, demolition, remodeling, renovation, or 
repair of property, including removal of any resulting debris. This 
exclusion does not apply to any eligible activities we describe in 
Coverage D--Increased Cost of Compliance; or
    7. Any other economic loss you suffer.
    B. We do not insure a loss directly or indirectly caused by a flood 
that is already in progress at the time and date:
    1. The policy term begins; or
    2. Coverage is added at your request.
    C. We do not insure for loss to property caused directly by earth 
movement even if the earth movement is caused by flood. Some examples of 
earth movement that we do not cover are:
    1. Earthquake;
    2. Landslide;
    3. Land subsidence;
    4. Sinkholes;
    5. Destabilization or movement of land that results from 
accumulation of water in subsurface land area; or
    6. Gradual erosion.
    We do, however, pay for losses from mudflow and land subsidence as a 
result of erosion that are specifically covered under our definition of 
flood (see II.A.1.c. and II.A.2.).
    D. We do not insure for direct physical loss caused directly or 
indirectly by any of the following:
    1. The pressure or weight of ice;
    2. Freezing or thawing;
    3. Rain, snow, sleet, hail, or water spray;

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    4. Water, moisture, mildew, or mold damage that results primarily 
from any condition:
    a. Substantially confined to the dwelling; or
    b. That is within your control, including but not limited to:
    (1) Design, structural, or mechanical defects;
    (2) Failure, stoppage, or breakage of water or sewer lines, drains, 
pumps, fixtures, or equipment; or
    (3) Failure to inspect and maintain the property after a flood 
recedes;
    5. Water or water-borne material that:
    a. Backs up through sewers or drains;
    b. Discharges or overflows from a sump, sump pump or related 
equipment; or
    c. Seeps or leaks on or through the covered property;
unless there is a flood in the area and the flood is the proximate cause 
of the sewer or drain backup, sump pump discharge or overflow, or the 
seepage of water;
    6. The pressure or weight of water unless there is a flood in the 
area and the flood is the proximate cause of the damage from the 
pressure or weight of water;
    7. Power, heating, or cooling failure unless the failure results 
from direct physical loss by or from flood to power, heating, or cooling 
equipment on the described location;
    8. Theft, fire, explosion, wind, or windstorm;
    9. Anything you or any member of your household do or conspires to 
do to deliberately cause loss by flood; or
    10. Alteration of the insured property that significantly increases 
the risk of flooding.
    E. We do not insure for loss to any building or personal property 
located on land leased from the Federal Government, arising from or 
incident to the flooding of the land by the Federal Government, where 
the lease expressly holds the Federal Government harmless under flood 
insurance issued under any Federal Government program.
    F. We do not pay for the testing for or monitoring of pollutants 
unless required by law or ordinance.

                             VI. Deductibles

    A. When a loss is covered under this policy, we will pay only that 
part of the loss that exceeds your deductible amount, subject to the 
limit of liability that applies. The deductible amount is shown on the 
Declarations Page.
    However, when a building under construction, alteration, or repair 
does not have at least two rigid exterior walls and a fully secured roof 
at the time of loss, your deductible amount will be two times the 
deductible that would otherwise apply to a completed building.
    B. In each loss from flood, separate deductibles apply to the 
building and personal property insured by this policy.
    C. The deductible does NOT apply to:
    1. III.C.2. Loss Avoidance Measures;
    2. III.C.3. Condominium Loss Assessments; or
    3. III.D. Increased Cost of Compliance.

                         VII. General Conditions

                         A. Pair and Set Clause

    In case of loss to an article that is part of a pair or set, we will 
have the option of paying you:
    1. An amount equal to the cost of replacing the lost, damaged, or 
destroyed article, minus its depreciation, or
    2. The amount that represents the fair proportion of the total value 
of the pair or set that the lost, damaged, or destroyed article bears to 
the pair or set.

               B. Concealment or Fraud and Policy Voidance

    1. With respect to all insureds under this policy, this policy:
    a. Is void;
    b. Has no legal force or effect;
    c. Cannot be renewed; and
    d. Cannot be replaced by a new NFIP policy, if, before or after a 
loss, you or any other insured or your agent have at any time:
    (1) Intentionally concealed or misrepresented any material fact or 
circumstance;
    (2) Engaged in fraudulent conduct; or
    (3) Made false statements; relating to this policy or any other NFIP 
insurance.
    2. This policy will be void as of the date wrongful acts described 
in B.1.above were committed.
    3. Fines, civil penalties, and imprisonment under applicable Federal 
laws may also apply to the acts of fraud or concealment described above.
    4. This policy is also void for reasons other than fraud, 
misrepresentation, or wrongful act. This policy is void from its 
inception and has no legal force under the following conditions:
    a. If the property is located in a community that was not 
participating in the NFIP on the policy's inception date and did not 
join or reenter the program during the policy term and before the loss 
occurred; or
    b. If the property listed on the application is otherwise not 
eligible for coverage under the NFIP.

                           C. Other Insurance

    1. If a loss covered by this policy is also covered by other 
insurance that includes flood coverage not issued under the Act, we will 
not pay more than the amount of insurance you are entitled to for lost, 
damaged, or

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destroyed property insured under this policy subject to the following:
    a. We will pay only the proportion of the loss that the amount of 
insurance that applies under this policy bears to the total amount of 
insurance covering the loss, unless C.1.b. or c. immediately below 
applies.
    b. If the other policy has a provision stating that it is excess 
insurance, this policy will be primary.
    c. This policy will be primary (but subject to its own deductible) 
up to the deductible in the other flood policy (except another policy as 
described in C.1.b. above). When the other deductible amount is reached, 
this policy will participate in the same proportion that the amount of 
insurance under this policy bears to the total amount of both policies, 
for the remainder of the loss.
    2. If there is other insurance in the name of your condominium 
association covering the same property covered by this policy, then this 
policy will be in excess over the other insurance.

                   D. Amendments, Waivers, Assignment

    This policy cannot be changed nor can any of its provisions be 
waived without the express written consent of the Federal Insurance 
Administrator. No action we take under the terms of this policy 
constitutes a waiver of any of our rights. You may assign this policy in 
writing when you transfer title of your property to someone else except 
under these conditions:
    1. When this policy covers only personal property; or
    2. When this policy covers a structure during the course of 
construction.

                  E. Cancellation of the Policy by You

    1. You may cancel this policy in accordance with the applicable 
rules and regulations of the NFIP.
    2. If you cancel this policy, you may be entitled to a full or 
partial refund of premium also under the applicable rules and 
regulations of the NFIP.

                   F. Non-Renewal of the Policy by Us

    Your policy will not be renewed:
    1. If the community where your covered property is located stops 
participating in the NFIP, or
    2. If your building has been declared ineligible under section 1316 
of the Act.

                G. Reduction and Reformation of Coverage

    1. If the premium we received from you was not enough to buy the 
kind and amount of coverage you requested, we will provide only the 
amount of coverage that can be purchased for the premium payment we 
received.
    2. The policy can be reformed to increase the amount of coverage 
resulting from the reduction described in G.1. above to the amount you 
requested as follows:
    a. Discovery of Insufficient Premium or Incomplete Rating 
Information Before a Loss:
    (1) If we discover before you have a flood loss that your premium 
payment was not enough to buy the requested amount of coverage, we will 
send you and any mortgagee or trustee known to us a bill for the 
required additional premium for the current policy term (or that portion 
of the current policy term following any endorsement changing the amount 
of coverage). If you or the mortgagee or trustee pay the additional 
premium within 30 days from the date of our bill, we will reform the 
policy to increase the amount of coverage to the originally requested 
amount effective to the beginning of the current policy term (or 
subsequent date of any endorsement changing the amount of coverage).
    (2) If we determine before you have a flood loss that the rating 
information we have is incomplete and prevents us from calculating the 
additional premium, we will ask you to send the required information. 
You must submit the information within 60 days of our request. Once we 
determine the amount of additional premium for the current policy term, 
we will follow the procedure in G.2.a.(1) above.
    (3) If we do not receive the additional premium (or additional 
information) by the date it is due, the amount of coverage can only be 
increased by endorsement subject to any appropriate waiting period.
    b. Discovery of Insufficient Premium or Incomplete Rating 
Information After a Loss:
    (1) If we discover after you have a flood loss that your premium 
payment was not enough to buy the requested amount of coverage, we will 
send you and any mortgagee or trustee known to us a bill for the 
required additional premium for the current and the prior policy terms. 
If you or the mortgagee or trustee pay the additional premium within 30 
days of the date of our bill, we will reform the policy to increase the 
amount of coverage to the originally requested amount effective to the 
beginning of the prior policy term.
    (2) If we discover after you have a flood loss that the rating 
information we have is incomplete and prevents us from calculating the 
additional premium, we will ask you to send the required information. 
You must submit the information before your claim can be paid. Once we 
determine the amount of additional premium for the current and prior 
policy terms, we will follow the procedure in G.2.b.(1) above.
    (3) If we do not receive the additional premium by the date it is 
due, your flood insurance claim will be settled based on the reduced 
amount of coverage. The amount of

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coverage can only be increased by endorsement subject to any appropriate 
waiting period.
    3. However, if we find that you or your agent intentionally did not 
tell us, or falsified, any important fact or circumstance or did 
anything fraudulent relating to this insurance, the provisions of 
Condition B. Concealment or Fraud and Policy Voidance apply.

                            H. Policy Renewal

    1. This policy will expire at 12:01 a.m. on the last day of the 
policy term.
    2. We must receive the payment of the appropriate renewal premium 
within 30 days of the expiration date.
    3. If we find, however, that we did not place your renewal notice 
into the U.S. Postal Service, or if we did mail it, we made a mistake, 
e.g., we used an incorrect, incomplete, or illegible address, which 
delayed its delivery to you before the due date for the renewal premium, 
then we will follow these procedures:
    a. If you or your agent notified us, not later than one year after 
the date on which the payment of the renewal premium was due, of non-
receipt of a renewal notice before the due date for the renewal premium, 
and we determine that the circumstances in the preceding paragraph 
apply, we will mail a second bill providing a revised due date, which 
will be 30 days after the date on which the bill is mailed.
    b. If we do not receive the premium requested in the second bill by 
the revised due date, then we will not renew the policy. In that case, 
the policy will remain an expired policy as of the expiration date shown 
on the Declarations Page.
    4. In connection with the renewal of this policy, we may ask you 
during the policy term to recertify, on a Recertification Questionnaire 
we will provide to you, the rating information used to rate your most 
recent application for or renewal of insurance.

            I. Conditions Suspending or Restricting Insurance

    We are not liable for loss that occurs while there is a hazard that 
is increased by any means within your control or knowledge.

                     J. Requirements in Case of Loss

    In case of a flood loss to insured property, you must:
    1. Give prompt written notice to us;
    2. As soon as reasonably possible, separate the damaged and 
undamaged property, putting it in the best possible order so that we may 
examine it;
    3. Prepare an inventory of damaged property showing the quantity, 
description, actual cash value, and amount of loss. Attach all bills, 
receipts, and related documents;
    4. Within 60 days after the loss, send us a proof of loss, which is 
your statement of the amount you are claiming under the policy signed 
and sworn to by you, and which furnishes us with the following 
information:
    a. The date and time of loss;
    b. A brief explanation of how the loss happened;
    c. Your interest (for example, ``owner'') and the interest, if any, 
of others in the damaged property;
    d. Details of any other insurance that may cover the loss;
    e. Changes in title or occupancy of the covered property during the 
term of the policy;
    f. Specifications of damaged buildings and detailed repair 
estimates;
    g. Names of mortgagees or anyone else having a lien, charge, or 
claim against the insured property;
    h. Details about who occupied any insured building at the time of 
loss and for what purpose; and
    i. The inventory of damaged personal property described in J.3. 
above.
    5. In completing the proof of loss, you must use your own judgment 
concerning the amount of loss and justify that amount.
    6. You must cooperate with the adjuster or representative in the 
investigation of the claim.
    7. The insurance adjuster whom we hire to investigate your claim may 
furnish you with a proof of loss form, and she or he may help you 
complete it. However, this is a matter of courtesy only, and you must 
still send us a proof of loss within 60 days after the loss even if the 
adjuster does not furnish the form or help you complete it.
    8. We have not authorized the adjuster to approve or disapprove 
claims or to tell you whether we will approve your claim.
    9. At our option, we may accept the adjuster's report of the loss 
instead of your proof of loss. The adjuster's report will include 
information about your loss and the damages you sustained. You must sign 
the adjuster's report. At our option, we may require you to swear to the 
report.

                       K. Our Options After a Loss

    Options we may, in our sole discretion, exercise after loss include 
the following:
    1. At such reasonable times and places that we may designate, you 
must:
    a. Show us or our representative the damaged property;
    b. Submit to examination under oath, while not in the presence of 
another insured, and sign the same; and
    c. Permit us to examine and make extracts and copies of:
    (1) Any policies of property insurance insuring you against loss and 
the deed establishing your ownership of the insured real property;

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    (2) Condominium association documents including the Declarations of 
the condominium, its Articles of Association or Incorporation, Bylaws, 
rules and regulations, and other relevant documents if you are a unit 
owner in a condominium building; and
    (3) All books of accounts, bills, invoices and other vouchers, or 
certified copies pertaining to the damaged property if the originals are 
lost.
    2. We may request, in writing, that you furnish us with a complete 
inventory of the lost, damaged or destroyed property, including:
    a. Quantities and costs;
    b. Actual cash values or replacement cost (whichever is 
appropriate);
    c. Amounts of loss claimed;
    d. Any written plans and specifications for repair of the damaged 
property that you can reasonably make available to us; and
    e. Evidence that prior flood damage has been repaired.
    3. If we give you written notice within 30 days after we receive 
your signed, sworn proof of loss, we may:
    a. Repair, rebuild, or replace any part of the lost, damaged, or 
destroyed property with material or property of like kind and quality or 
its functional equivalent; and
    b. Take all or any part of the damaged property at the value that we 
agree upon or its appraised value.

                         L. No Benefit to Bailee

    No person or organization, other than you, having custody of covered 
property will benefit from this insurance.

                             M. Loss Payment

    1. We will adjust all losses with you. We will pay you unless some 
other person or entity is named in the policy or is legally entitled to 
receive payment. Loss will be payable 60 days after we receive your 
proof of loss (or within 90 days after the insurance adjuster files the 
adjuster's report signed and sworn to by you in lieu of a proof of loss) 
and:
    a. We reach an agreement with you;
    b. There is an entry of a final judgment; or
    c. There is a filing of an appraisal award with us, as provided in 
VII. P.
    2. If we reject your proof of loss in whole or in part you may:
    a. Accept our denial of your claim;
    b. Exercise your rights under this policy; or
    c. File an amended proof of loss as long as it is filed within 60 
days of the date of the loss.

                             N. Abandonment

    You may not abandon to us damaged or undamaged property insured 
under this policy.

                               O. Salvage

    We may permit you to keep damaged property insured under this policy 
after a loss, and we will reduce the amount of the loss proceeds payable 
to you under the policy by the value of the salvage.

                              P. Appraisal

    If you and we fail to agree on the actual cash value or, if 
applicable, replacement cost of your damaged property to settle upon the 
amount of loss, then either may demand an appraisal of the loss. In this 
event, you and we will each choose a competent and impartial appraiser 
within 20 days after receiving a written request from the other. The two 
appraisers will choose an umpire. If they cannot agree upon an umpire 
within 15 days, you or we may request that the choice be made by a judge 
of a court of record in the state where the covered property is located. 
The appraisers will separately state the actual cash value, the 
replacement cost, and the amount of loss to each item. If the appraisers 
submit a written report of an agreement to us, the amount agreed upon 
will be the amount of loss. If they fail to agree, they will submit 
their differences to the umpire. A decision agreed to by any two will 
set the amount of actual cash value and loss, or if it applies, the 
replacement cost and loss.
    Each party will:
    1. Pay its own appraiser; and
    2. Bear the other expenses of the appraisal and umpire equally.

                           Q. Mortgage Clause

    The word ``mortgagee'' includes trustee.
    Any loss payable under Coverage A--Building Property will be paid to 
any mortgagee of whom we have actual notice, as well as any other 
mortgagee or loss payee determined to exist at the time of loss, and 
you, as interests appear. If more than one mortgagee is named, the order 
of payment will be the same as the order of precedence of the mortgages.
    If we deny your claim, that denial will not apply to a valid claim 
of the mortgagee, if the mortgagee:
    1. Notifies us of any change in the ownership or occupancy, or 
substantial change in risk of which the mortgagee is aware;
    2. Pays any premium due under this policy on demand if you have 
neglected to pay the premium; and
    3. Submits a signed, sworn proof of loss within 60 days after 
receiving notice from us of your failure to do so.
    All of the terms of this policy apply to the mortgagee.
    The mortgagee has the right to receive loss payment even if the 
mortgagee has started foreclosure or similar action on the building.

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    If we decide to cancel or not renew this policy, it will continue in 
effect for the benefit of the mortgagee only for 30 days after we notify 
the mortgagee of the cancellation or non-renewal.
    If we pay the mortgagee for any loss and deny payment to you, we are 
subrogated to all the rights of the mortgagee granted under the mortgage 
on the property. Subrogation will not impair the right of the mortgagee 
to recover the full amount of the mortgagee's claim.

                           R. Suit Against Us

    You may not sue us to recover money under this policy unless you 
have complied with all the requirements of the policy. If you do sue, 
you must start the suit within one year after the date of the written 
denial of all or part of the claim, and you must file the suit in the 
United States District Court of the district in which the covered 
property was located at the time of loss. This requirement applies to 
any claim that you may have under this policy and to any dispute that 
you may have arising out of the handling of any claim under the policy.

                             S. Subrogation

    Whenever we make a payment for a loss under this policy, we are 
subrogated to your right to recover for that loss from any other person. 
That means that your right to recover for a loss that was partly or 
totally caused by someone else is automatically transferred to us, to 
the extent that we have paid you for the loss. We may require you to 
acknowledge this transfer in writing. After the loss, you may not give 
up our right to recover this money or do anything that would prevent us 
from recovering it. If you make any claim against any person who caused 
your loss and recover any money, you must pay us back first before you 
may keep any of that money.

                       T. Continuous Lake Flooding

    1. If an insured building has been flooded by rising lake waters 
continuously for 90 days or more and it appears reasonably certain that 
a continuation of this flooding will result in a covered loss to the 
insured building equal to or greater than the building policy limits 
plus the deductible or the maximum payable under the policy for any one 
building loss, we will pay you the lesser of these two amounts without 
waiting for the further damage to occur if you sign a release agreeing:
    a. To make no further claim under this policy;
    b. Not to seek renewal of this policy;
    c. Not to apply for any flood insurance under the Act for property 
at the described location; and
    d. Not to seek a premium refund for current or prior terms.
    If the policy term ends before the insured building has been flooded 
continuously for 90 days, the provisions of this paragraph T.1. will 
apply when the insured building suffers a covered loss before the policy 
term ends.
    2. If your insured building is subject to continuous lake flooding 
from a closed basin lake, you may elect to file a claim under either 
paragraph T.1. above or T.2. (A ``closed basin lake'' is a natural lake 
from which water leaves primarily through evaporation and whose surface 
area now exceeds or has exceeded one square mile at any time in the 
recorded past. Most of the nation's closed basin lakes are in the 
western half of the United States where annual evaporation exceeds 
annual precipitation and where lake levels and surface areas are subject 
to considerable fluctuation due to wide variations in the climate. These 
lakes may overtop their basins on rare occasions.) Under this paragraph 
T.2., we will pay your claim as if the building is a total loss even 
though it has not been continuously inundated for 90 days, subject to 
the following conditions:
    a. Lake flood waters must damage or imminently threaten to damage 
your building.
    b. Before approval of your claim, you must:
    (1) Agree to a claim payment that reflects your buying back the 
salvage on a negotiated basis; and
    (2) Grant the conservation easement described in FEMA's ``Policy 
Guidance for Closed Basin Lakes'' to be recorded in the office of the 
local recorder of deeds. FEMA, in consultation with the community in 
which the property is located, will identify on a map an area or areas 
of special consideration (ASC) in which there is a potential for flood 
damage from continuous lake flooding. FEMA will give the community the 
agreed-upon map showing the ASC. This easement will only apply to that 
portion of the property in the ASC. It will allow certain agricultural 
and recreational uses of the land. The only structures it will allow on 
any portion of the property within the ASC are certain simple 
agricultural and recreational structures. If any of these allowable 
structures are insurable buildings under the NFIP and are insured under 
the NFIP, they will not be eligible for the benefits of this paragraph 
T.2. If a U.S. Army Corps of Engineers certified flood control project 
or otherwise certified flood control project later protects the 
property, FEMA will, upon request, amend the ASC to remove areas 
protected by those projects. The restrictions of the easement will then 
no longer apply to any portion of the property removed from the ASC; and
    (3) Comply with paragraphs T.1.a. through T.1.d. above.

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    c. Within 90 days of approval of your claim, you must move your 
building to a new location outside the ASC. FEMA will give you an 
additional 30 days to move if you show there is sufficient reason to 
extend the time.
    d. Before the final payment of your claim, you must acquire an 
elevation certificate and a floodplain development permit from the local 
floodplain administrator for the new location of your building.
    e. Before the approval of your claim, the community having 
jurisdiction over your building must:
    (1) Adopt a permanent land use ordinance, or a temporary moratorium 
for a period not to exceed 6 months to be followed immediately by a 
permanent land use ordinance, that is consistent with the provisions 
specified in the easement required in paragraph T.2.b. above.
    (2) Agree to declare and report any violations of this ordinance to 
FEMA so that under Section 1316 of the National Flood Insurance Act of 
1968, as amended, flood insurance to the building can be denied; and
    (3) Agree to maintain as deed-restricted, for purposes compatible 
with open space or agricultural or recreational use only, any affected 
property the community acquires an interest in. These deed restrictions 
must be consistent with the provisions of paragraph T.2.b. above, except 
that, even if a certified project protects the property, the land use 
restrictions continue to apply if the property was acquired under the 
Hazard Mitigation Grant Program or the Flood Mitigation Assistance 
Program. If a non-profit land trust organization receives the property 
as a donation, that organization must maintain the property as deed-
restricted, consistent with the provisions of paragraph T.2.b. above.
    f. Before the approval of your claim, the affected State must take 
all action set forth in FEMA's ``Policy Guidance for Closed Basin 
Lakes.''
    g. You must have NFIP flood insurance coverage continuously in 
effect from a date established by FEMA until you file a claim under 
paragraph T.2. If a subsequent owner buys NFIP insurance that goes into 
effect within 60 days of the date of transfer of title, any gap in 
coverage during that 60-day period will not be a violation of this 
continuous coverage requirement. For the purpose of honoring a claim 
under this paragraph T.2, we will not consider to be in effect any 
increased coverage that became effective after the date established by 
FEMA. The exception to this is any increased coverage in the amount 
suggested by your insurer as an inflation adjustment.
    h. This paragraph T.2. will be in effect for a community when the 
FEMA Regional Director for the affected region provides to the 
community, in writing, the following:
    (1) Confirmation that the community and the State are in compliance 
with the conditions in paragraphs T.2.e. and T.2.f. above, and
    (2) The date by which you must have flood insurance in effect.

                    U. Duplicate Policies Not Allowed

    1. We will not insure your property under more than one NFIP policy.
    If we find that the duplication was not knowingly created, we will 
give you written notice. The notice will advise you that you may choose 
one of several options under the following procedures:
    a. If you choose to keep in effect the policy with the earlier 
effective date, you may also choose to add the coverage limits of the 
later policy to the limits of the earlier policy. The change will become 
effective as of the effective date of the later policy.
    b. If you choose to keep in effect the policy with the later 
effective date, you may also choose to add the coverage limits of the 
earlier policy to the limits of the later policy. The change will be 
effective as of the effective date of the later policy.
    In either case, you must pay the pro rata premium for the increased 
coverage limits within 30 days of the written notice. In no event will 
the resulting coverage limits exceed the permissible limits of coverage 
under the Act or your insurable interest, whichever is less. We will 
make a refund to you, according to applicable NFIP rules, of the premium 
for the policy not being kept in effect.
    2. Your option under Condition U. Duplicate Policies Not Allowed to 
elect which NFIP policy to keep in effect does not apply when duplicates 
have been knowingly created. Losses occurring under such circumstances 
will be adjusted according to the terms and conditions of the earlier 
policy. The policy with the later effective date must be canceled.

                           V. Loss Settlement

                             1. Introduction

    This policy provides three methods of settling losses: Replacement 
Cost, Special Loss Settlement, and Actual Cash Value. Each method is 
used for a different type of property, as explained in a-c. below.
    a. Replacement Cost Loss Settlement, described in V.2. below, 
applies to a single-family dwelling provided:
    (1) It is your principal residence, which means that, at the time of 
loss, you or your spouse lived there for 80% of:
    (a) The 365 days immediately preceding the loss; or
    (b) The period of your ownership, if you owned the dwelling for less 
than 365 days; and
    (2) At the time of loss, the amount of insurance in this policy that 
applies to the dwelling is 80% or more of its full replacement cost 
immediately before the loss, or is

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the maximum amount of insurance available under the NFIP.
    b. Special Loss Settlement, described in V.3. below, applies to a 
single-family dwelling that is a manufactured or mobile home or a travel 
trailer.
    c. Actual Cash Value loss settlement applies to a single-family 
dwelling not subject to replacement cost or special loss settlement, and 
to the property listed in V.4. below.

                   2. Replacement Cost Loss Settlement

    The following loss settlement conditions apply to a single-family 
dwelling described in V.1.a. above:
    a. We will pay to repair or replace the damaged dwelling after 
application of the deductible and without deduction for depreciation, 
but not more than the least of the following amounts:
    (1) The building limit of liability shown on your Declarations Page;
    (2) The replacement cost of that part of the dwelling damaged, with 
materials of like kind and quality and for like use; or
    (3) The necessary amount actually spent to repair or replace the 
damaged part of the dwelling for like use.
    b. If the dwelling is rebuilt at a new location, the cost described 
above is limited to the cost that would have been incurred if the 
dwelling had been rebuilt at its former location.
    c. When the full cost of repair or replacement is more than $1,000, 
or more than 5% of the whole amount of insurance that applies to the 
dwelling, we will not be liable for any loss under V.2.a. above or 
V.4.a.(2) below unless and until actual repair or replacement is 
completed.
    d. You may disregard the replacement cost conditions above and make 
claim under this policy for loss to dwellings on an actual cash value 
basis. You may then make claim for any additional liability according to 
V.2.a., b., and c. above, provided you notify us of your intent to do so 
within 180 days after the date of loss.
    e. If the community in which your dwelling is located has been 
converted from the Emergency Program to the Regular Program during the 
current policy term, then we will consider the maximum amount of 
available NFIP insurance to be the amount that was available at the 
beginning of the current policy term.

                       3. Special Loss Settlement

    a. The following loss settlement conditions apply to a single-family 
dwelling that:
    (1) is a manufactured or mobile home or a travel trailer, as defined 
in II.B.6.b. and c.,
    (2) is at least 16 feet wide when fully assembled and has an area of 
at least 600 square feet within its perimeter walls when fully 
assembled, and
    (3) is your principal residence as specified in V.1.a.(1) above.
    b. If such a dwelling is totally destroyed or damaged to such an 
extent that, in our judgment, it is not economically feasible to repair, 
at least to its pre-damage condition, we will, at our discretion pay the 
least of the following amounts:
    (1) The lesser of the replacement cost of the dwelling or 1.5 times 
the actual cash value, or
    (2) The building limit of liability shown on your Declarations Page.
    c. If such a dwelling is partially damaged and, in our judgment, it 
is economically feasible to repair it to its pre-damage condition, we 
will settle the loss according to the Replacement Cost conditions in 
V.2.above.

                  4. Actual Cash Value Loss Settlement

    The types of property noted below are subject to actual cash value 
(or in the case of V.4.a.(2), below, proportional) loss settlement.
    a. A dwelling, at the time of loss, when the amount of insurance on 
the dwelling is both less than 80% of its full replacement cost 
immediately before the loss and less than the maximum amount of 
insurance available under the NFIP. In that case, we will pay the 
greater of the following amounts, but not more than the amount of 
insurance that applies to that dwelling:
    (1) The actual cash value, as defined in II.B.2., of the damaged 
part of the dwelling; or
    (2) A proportion of the cost to repair or replace the damaged part 
of the dwelling, without deduction for physical depreciation and after 
application of the deductible.
    This proportion is determined as follows: If 80% of the full 
replacement cost of the dwelling is less than the maximum amount of 
insurance available under the NFIP, then the proportion is determined by 
dividing the actual amount of insurance on the dwelling by the amount of 
insurance that represents 80% of its full replacement cost. But if 80% 
of the full replacement cost of the dwelling is greater than the maximum 
amount of insurance available under the NFIP, then the proportion is 
determined by dividing the actual amount of insurance on the dwelling by 
the maximum amount of insurance available under the NFIP.
    b. A two-, three-, or four-family dwelling.
    c. A unit that is not used exclusively for single-family dwelling 
purposes.
    d. Detached garages.
    e. Personal property.
    f. Appliances, carpets, and carpet pads.
    g. Outdoor awnings, outdoor antennas or aerials of any type, and 
other outdoor equipment.

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    h. Any property covered under this policy that is abandoned after a 
loss and remains as debris anywhere on the described location.
    i. A dwelling that is not your principal residence.

                     5. Amount of Insurance Required

    To determine the amount of insurance required for a dwelling 
immediately before the loss, we do not include the value of:
    a. Footings, foundations, piers, or any other structures or devices 
that are below the undersurface of the lowest basement floor and support 
all or part of the dwelling;
    b. Those supports listed in V.5.a. above, that are below the surface 
of the ground inside the foundation walls if there is no basement; and
    c. Excavations and underground flues, pipes, wiring, and drains.

    Note: The Coverage D--Increased Cost of Compliance limit of 
liability is not included in the determination of the amount of 
insurance required.

                       VIII. Liberalization Clause

    If we make a change that broadens your coverage under this edition 
of our policy, but does not require any additional premium, then that 
change will automatically apply to your insurance as of the date we 
implement the change, provided that this implementation date falls 
within 60 days before or during the policy term stated on the 
Declarations Page.

                          IX. What Law Governs

    This policy and all disputes arising from the handling of any claim 
under the policy are governed exclusively by the flood insurance 
regulations issued by FEMA, the National Flood Insurance Act of 1968, as 
amended (42 U.S.C. 4001, et seq.), and Federal common law.
    In Witness Whereof, we have signed this policy below and hereby 
enter into this Insurance Agreement.
                                                          Jo Ann Howard,
                        Administrator, Federal Insurance Administration.

[65 FR 60769, Oct. 12, 2000, as amended at 68 FR 9897, Mar. 3, 2003]

                        Appendix A(2) to Part 61

  Federal Emergency Management Agency, Federal Insurance Administration

                     Standard Flood Insurance Policy

                          GENERAL PROPERTY FORM

    Please read the policy carefully. The flood insurance coverage 
provided is subject to limitations, restrictions, and exclusions.
    This policy provides no coverage:
    1. In a regular program community, for a residential condominium 
building, as defined in this policy; and
    2. Except for personal property coverage, for a unit in a 
condominium building.

                              I. Agreement

    The Federal Emergency Management Agency (FEMA) provides flood 
insurance under the terms of the National Flood Insurance Act of 1968 
and its Amendments, and Title 44 of the Code of Federal Regulations.
    We will pay you for direct physical loss by or from flood to your 
insured property if you:
    1. Have paid the correct premium;
    2. Comply with all terms and conditions of this policy; and
    3. Have furnished accurate information and statements.
    We have the right to review the information you give us at any time 
and to revise your policy based on our review.

                             II. Definitions

    A. In this policy, ``you'' and ``your'' refer to the insured(s) 
shown on the Declarations Page of this policy. Insured(s) includes: Any 
mortgagee and loss payee named in the Application and Declarations page, 
as well as any other mortgagee or loss payee determined to exist at the 
time of loss in the order of precedence. ``We,'' ``us,'' and ``our'' 
refer to the insurer.
    Some definitions are complex because they are provided as they 
appear in the law or regulations, or result from court cases. The 
precise definitions are intended to protect you.
    Flood, as used in this flood insurance 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 properties (one of which is your property) from:
    a. Overflow of inland or tidal waters;
    b. Unusual and rapid accumulation or runoff of surface waters from 
any source;
    c. Mudflow.
    2. The collapse or subsidence of land along the shore of a lake or 
similar body of water as a result of erosion or undermining caused by 
waves or currents of water exceeding anticipated cyclical levels which 
result in a flood as defined in A.1.a. above.
    B. The following are the other key definitions we use in this 
policy:
    1. Act. The National Flood Insurance Act of 1968 and any amendments 
to it.
    2. Actual Cash Value. The cost to replace an insured item of 
property at the time of loss, less the value of its physical 
depreciation.
    3. Application. The statement made and signed by you or your agent 
in applying for

[[Page 273]]

this policy. The application gives information we use to determine the 
eligibility of the risk, the kind of policy to be issued, and the 
correct premium payment. The application is part of this flood insurance 
policy. For us to issue you a policy, the correct premium payment must 
accompany the application.
    4. Base Flood. A flood having a one percent chance of being equaled 
or exceeded in any given year.
    5. Basement. Any area of the building, including any sunken room or 
sunken portion of a room, having its floor below ground level (subgrade) 
on all sides.
    6. Building.
    a. A structure with two or more outside rigid walls and a fully 
secured roof, that is affixed to a permanent site;
    b. A manufactured home (``a manufactured home,'' also known as a 
mobile home, is a structure: built on a permanent chassis, transported 
to its site in one or more sections, and affixed to a permanent 
foundation); or
    c. A travel trailer without wheels, built on a chassis and affixed 
to a permanent foundation, that is regulated under the community's 
floodplain management and building ordinances or laws.
    Building does not mean a gas or liquid storage tank or a 
recreational vehicle, park trailer, or other similar vehicle, except as 
described in B.6.c., above.
    7. Cancellation. The ending of the insurance coverage provided by 
this policy before the expiration date.
    8. Condominium. That form of ownership of real property in which 
each unit owner has an undivided interest in common elements.
    9. Condominium Association. The entity, formed by the unit owners, 
responsible for the maintenance and operation of:
    a. Common elements owned in undivided shares by unit owners; and
    b. Other real property in which the unit owners have use rights 
where membership in the entity is a required condition of unit 
ownership.
    10. Declarations Page. A computer-generated summary of information 
you provided in the application for insurance. The Declarations Page 
also describes the term of the policy, limits of coverage, and displays 
the premium and our name. The Declarations Page is a part of this flood 
insurance policy.
    11. Described Location. The location where the insured building or 
personal property is found. The described location is shown on the 
Declarations Page.
    12. Direct Physical Loss By or From Flood. Loss or damage to insured 
property, directly caused by a flood. There must be evidence of physical 
changes to the property.
    13. Elevated Building. A building that has no basement and that has 
its lowest elevated floor raised above ground level by foundation walls, 
shear walls, posts, piers, pilings, or columns.
    14. Emergency Program. The initial phase of a community's 
participation in the National Flood Insurance Program. During this 
phase, only limited amounts of insurance are available under the Act.
    15. Expense Constant. A flat charge you must pay on each new or 
renewal policy to defray the expenses of the Federal Government related 
to flood insurance.
    16. Federal Policy Fee. A flat charge you must pay on each new or 
renewal policy to defray certain administrative expenses incurred in 
carrying out the National Flood Insurance Program. This fee covers 
expenses not covered by the expense constant.
    17. Improvements. Fixtures, alterations, installations, or additions 
comprising a part of the insured building.
    18. Mudflow. 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 not mudflows.
    19. National Flood Insurance Program (NFIP). The program of flood 
insurance coverage and floodplain management administered under the Act 
and applicable Federal regulations in Title 44 of the Code of Federal 
Regulations, Subchapter B.
    20. Policy. The entire written contract between you and us. It 
includes:
    a. This printed form;
    b. The application and Declarations Page;
    c. Any endorsement(s) that may be issued; and,
    d. Any renewal certificate indicating that coverage has been 
instituted for a new policy and new policy term.
    Only one building, which you specifically described in the 
application, may be insured under this policy.
    21. Pollutants. Substances that include, but that are not limited 
to, any solid, liquid, gaseous or thermal irritant or contaminant, 
including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and 
waste. ``Waste'' includes, but is not limited to, materials to be 
recycled, reconditioned, or reclaimed.
    22. Post-FIRM Building. A building for which construction or 
substantial improvement occurred after December 31, 1974, or on or after 
the effective date of an initial Flood Insurance Rate Map (FIRM), 
whichever is later.
    23. Probation Premium. A flat charge you must pay on each new or 
renewal policy issued covering property in a community that has been 
placed on probation under the provisions of 44 CFR 59.24.
    24. Regular Program. The final phase of a community's participation 
in the National Flood Insurance Program. In this phase, a Flood 
Insurance Rate Map is in effect and

[[Page 274]]

full limits of coverage are available under the Act.
    25. Residential Condominium Building. A building, owned and 
administered as a condominium, containing one or more family units and 
in which at least 75% of the floor area is residential.
    26. Special Flood Hazard Area. An area having special flood or 
mudflow, and/or flood-related erosion hazards, and shown on a Flood 
Hazard Boundary Map or Flood Insurance Rate Map as Zone A, AO, A1-A30, 
AE, A99, AH, AR, AR/A, AR/AE, AR/AH, AR/AO, AR/A1-A30, V1-V30, VE, V.
    27. Stock means merchandise held in storage or for sale, raw 
materials, and in-process or finished goods, including supplies used in 
their packing or shipping.
    Stock does not include any property not covered under Section IV. 
Property Not
    Covered, except the following:
    a. Parts and equipment for self-propelled vehicles;
    b. Furnishings and equipment for watercraft;
    c. Spas and hot-tubs, including their equipment; and
    d. Swimming pool equipment.
    28. Unit. A unit in a condominium building.
    29. Valued Policy. A policy in which the insured and the insurer 
agree on the value of the property insured, that value being payable in 
the event of a total loss. The Standard Flood Insurance Policy is not a 
valued policy.

                          III. Property Covered

                    A. Coverage A--Building Property

    We insure against direct physical loss by or from flood to:
    1. The building described on the Declarations Page at the described 
location. If the building is a condominium building and the named 
insured is the condominium association, Coverage A includes all units 
within the building and the improvements within the units, provided the 
units are owned in common by all unit owners.
    2. We also insure building property for a period of 45 days at 
another location, as set forth in III.C.2.b., Property Removed to 
Safety.
    3. Additions and extensions attached to and in contact with the 
building by means of a rigid exterior wall, a solid load-bearing 
interior wall, a stairway, an elevated walkway, or a roof. At your 
option, additions and extensions connected by any of these methods may 
be separately insured. Additions and extensions attached to and in 
contact with the building by means of a common interior wall that is not 
a solid load-bearing wall are always considered part of the building and 
cannot be separately insured.
    4. The following fixtures, machinery, and equipment, which are 
covered under Coverage A only:
    a. Awnings and canopies;
    b. Blinds;
    c. Carpet permanently installed over unfinished flooring;
    d. Central air conditioners;
    e. Elevator equipment;
    f. Fire extinguishing apparatus;
    g. Fire sprinkler systems;
    h. Walk-in freezers;
    i. Furnaces;
    j. Light fixtures;
    k. Outdoor antennas and aerials attached to buildings;
    l. Permanently installed cupboards, bookcases, paneling, and 
wallpaper;
    m. Pumps and machinery for operating pumps;
    n. Ventilating equipment; and
    o. Wall mirrors, permanently installed;
    p. In the units within the building, installed:
    (1) Built-in dishwashers;
    (2) Built-in microwave ovens;
    (3) Garbage disposal units;
    (4) Hot water heaters, including solar water heaters;
    (5) Kitchen cabinets;
    (6) Plumbing fixtures;
    (7) Radiators;
    (8) Ranges;
    (9) Refrigerators; and
    (10) Stoves.
    5. Materials and supplies to be used for construction, alteration, 
or repair of the insured building while the materials and supplies are 
stored in a fully enclosed building at the described location or on an 
adjacent property.
    6. A building under construction, alteration, or repair at the 
described location.
    a. If the structure is not yet walled or roofed as described in the 
definition for building (see II. 6.a.), then coverage applies:
    (1) Only while such work is in progress; or
    (2) If such work is halted, only for a period of up to 90 continuous 
days thereafter.
    b. However, coverage does not apply until the building is walled and 
roofed if the lowest floor, including the basement floor, of a non-
elevated building or the lowest elevated floor of an elevated building 
is:
    (1) Below the base flood elevation in Zones AH, AE, A1-A30, AR, AR/
AE, AR/AH, AR/A1-A30, AR/A, AR/AO; or
    (2) Below the base flood elevation adjusted to include the effect of 
wave action in Zones VE or V1-V30.
    The lowest floor levels are based on the bottom of the lowest 
horizontal structural member of the floor in Zones VE or V1-V30 and the 
top of the floor in Zones AH, AE, A1-A30, AR, AR/AE, AR/AH, AR/A1-A30, 
AR/A, AR/AO.

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    7. A manufactured home or a travel trailer as described in the 
Definitions
    Section (see II.B.6.b.and II.B.6.c.).
    If the manufactured home or travel trailer is in a special flood 
hazard area, it must be anchored in the following manner at the time of 
the loss:
    a. By over-the-top or frame ties to ground anchors; or
    b. In accordance with the manufacturer's specifications; or
    c. In compliance with the community's floodplain management 
requirements unless it has been continuously insured by the NFIP at the 
same described location since September 30, 1982.
    8. Items of property in a building enclosure below the lowest 
elevated floor of an elevated post-FIRM building located in zones A1-
A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1-A30, V1-V30, or VE, or in a 
basement, regardless of the zone. Coverage is limited to the following:
    a. Any of the following items, if installed in their functioning 
locations and, if necessary for operation, connected to a power source:
    (1) Central air conditioners;
    (2) Cisterns and the water in them;
    (3) Drywall for walls and ceilings in a basement and the cost of 
labor to nail it, unfinished and unfloated and not taped, to the 
framing;
    (4) Electrical junction and circuit breaker boxes;
    (5) Electrical outlets and switches;
    (6) Elevators, dumbwaiters, and related equipment, except for 
related equipment installed below the base flood elevation after 
September 30, 1987;
    (7) Fuel tanks and the fuel in them;
    (8) Furnaces and hot water heaters;
    (9) Heat pumps;
    (10) Nonflammable insulation in a basement;
    (11) Pumps and tanks used in solar energy systems;
    (12) Stairways and staircases attached to the building, not 
separated from it by elevated walkways;
    (13) Sump pumps;
    (14) Water softeners and the chemicals in them, water filters, and 
faucets installed as an integral part of the plumbing system;
    (15) Well water tanks and pumps;
    (16) Required utility connections for any item in this list; and
    (17) Footings, foundations, posts, pilings, piers, or other 
foundation walls and anchorage systems required to support a building.
    b. Clean-up.

                    B. Coverage B--Personal Property

    1. If you have purchased personal property coverage, we insure, 
subject to B. 2., 3., and 4. below, against direct physical loss by or 
from flood to personal property inside the fully enclosed insured 
building:
    a. Owned solely by you, or in the case of a condominium, owned 
solely by the condominium association and used exclusively in the 
conduct of the business affairs of the condominium association; or
    b. Owned in common by the unit owners of the condominium 
association.
    We also insure such personal property for 45 days while stored at a 
temporary location, as set forth in III.C.2.b., Property Removed to 
Safety.
    2. When this policy covers personal property, coverage will be 
either for household personal property or other than household personal 
property, while within the insured building, but not both.
    a. If this policy covers household personal property, it will insure 
household personal property usual to a living quarters, that:
    (1) Belongs to you, or a member of your household, or at your 
option:
    (a) Your domestic worker;
    (b) Your guest; or
    (2) You may be legally liable for.
    b. If this policy covers other than household personal property, it 
will insure your:
    (1) Furniture and fixtures;
    (2) Machinery and equipment;
    (3) Stock; and
    (4) Other personal property owned by you and used in your business, 
subject to IV. Property Not Covered.
    3. Coverage for personal property includes the following property, 
subject to B.1.a. and B.1.b. above, which is covered under Coverage B. 
only:
    a. Air conditioning units installed in the building;
    b. Carpet, not permanently installed, over unfinished flooring;
    c. Carpets over finished flooring;
    d. Clothes washers and dryers;
    e. ``Cook-out'' grills;
    f. Food freezers, other than walk-in, and the food in any freezer;
    g. Outdoor equipment and furniture stored inside the insured 
building;
    h. Ovens and the like; and
    i. Portable microwave ovens and portable dishwashers.
    4. Items of property in a building enclosure below the lowest 
elevated floor of an elevated post-FIRM building located in zones A1-
A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1-A30, V1-V30, or VE, or in a 
basement, regardless of the zone, is limited to the following items, if 
installed in their functioning locations and, if necessary for 
operation, connected to a power source:
    a. Air conditioning units--portable or window type;
    b. Clothes washers and dryers; and
    c. Food freezers, other than walk-in, and food in any freezer.

[[Page 276]]

    5. Special Limits. We will pay no more than $2,500 for any loss to 
one or more of the following kinds of personal property:
    a. Artwork, photographs, collectibles, or memorabilia, including but 
not limited to, porcelain or other figures, and sports cards;
    b. Rare books or autographed items;
    c. Jewelry, watches, precious and semi-precious stones, articles of 
gold, silver, or platinum;
    d. Furs or any article containing fur which represents its principal 
value; or
    6. We will pay only for the functional value of antiques.
    7. If you are a tenant, you may apply up to 10% of the Coverage B 
limit to improvements:
    a. Made a part of the building you occupy; and
    b. You acquired, or made at your expense, even though you cannot 
legally remove.
    This coverage does not increase the amount of insurance that applies 
to insured personal property.
    8. If you are a condominium unit owner, you may apply up to 10% of 
the Coverage B limit to cover loss to interior:
    a. walls,
    b. floors, and
    c. ceilings,
that are not covered under a policy issued to the condominium 
association insuring the condominium building.
    This coverage does not increase the amount of insurance that applies 
to insured personal property.
    9. If you are a tenant, personal property must be inside the fully 
enclosed building.

                     C. Coverage C--Other Coverages

    1. Debris Removal.
    a. We will pay the expense to remove non-owned debris that is on or 
in insured property and debris of insured property anywhere.
    b. If you or a member of your household perform the removal work, 
the value of your work will be based on the Federal minimum wage.
    c. This coverage does not increase the Coverage A or Coverage B 
limit of liability.
    2. Loss Avoidance Measures.
    a. Sandbags, Supplies, and Labor
    (1) We will pay up to $1,000 for the costs you incur to protect the 
insured building from a flood or imminent danger of flood, for the 
following:
    (a) Your reasonable expenses to buy:
    (i) Sandbags, including sand to fill them;
    (ii) Fill for temporary levees;
    (iii) Pumps; and
    (iv) Plastic sheeting and lumber used in connection with these 
items; and
    (b) The value of work, at the Federal minimum wage, that you 
perform.
    (2) This coverage for Sandbags, Supplies, and Labor only applies if 
damage to insured property by or from flood is imminent and the threat 
of flood damage is apparent enough to lead a person of common prudence 
to anticipate flood damage. One of the following must also occur:
    (a) A general and temporary condition of flooding in the area near 
the described location must occur, even if the flood does not reach the 
insured building; or
    (b) A legally authorized official must issue an evacuation order or 
other civil order for the community in which the insured building is 
located calling for measures to preserve life and property from the 
peril of flood.
    This coverage does not increase the Coverage A or Coverage B limit 
of liability.
    b. Property Removed to Safety
    (1) We will pay up to $1,000 for the reasonable expenses you incur 
to move insured property to a place other than the described location 
that contains the property in order to protect it from flood or the 
imminent danger of flood.
    Reasonable expenses include the value of work, at the Federal 
minimum wage, that you perform.
    (2) If you move insured property to a place other than the described 
location that contains the property, in order to protect it from flood 
or the imminent danger of flood, we will cover such property while at 
that location for a period of 45 consecutive days from the date you 
begin to move it there. The personal property that is moved must be 
placed in a fully enclosed building, or otherwise reasonably protected 
from the elements.
    Any property removed, including a moveable home described in II.6.b. 
and c., must be placed above ground level or outside of the special 
flood hazard area.
    This coverage does not increase the Coverage A or Coverage B limit 
of liability.
    3. Pollution Damage.
    We will pay for damage caused by pollutants to covered property if 
the discharge, seepage, migration, release, or escape of the pollutants 
is caused by or results from flood. The most we will pay under this 
coverage is $10,000. This coverage does not increase the Coverage A or 
Coverage B limits of liability. Any payment under this provision when 
combined with all other payments for the same loss cannot exceed the 
replacement cost or actual cash value, as appropriate, of the covered 
property. This coverage does not include the testing for or monitoring 
of pollutants unless required by law or ordinance.

               D. Coverage D--Increased Cost of Compliance

    1. General.
    This policy pays you to comply with a State or local floodplain 
management law or ordinance affecting repair or reconstruction of a 
structure suffering flood damage. Compliance activities eligible for 
payment are:

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elevation, floodproofing, relocation, or demolition (or any combination 
of these activities) of your structure. Eligible floodproofing 
activities are limited to:
    a. Non-residential structures. b. Residential structures with 
basements that satisfy FEMA's standards published in the Code of Federal 
Regulations [44 CFR 60.6 (b) or (c)].
    2. Limit of Liability.
    We will pay you up to $30,000 under this Coverage D--Increased Cost 
of Compliance, which only applies to policies with building coverage 
(Coverage A). Our payment of claims under Coverage D is in addition to 
the amount of coverage which you selected on the application and which 
appears on the Declarations Page. But the maximum you can collect under 
this policy for both Coverage A (Building Property) and Coverage D 
(Increased Cost of Compliance) cannot exceed the maximum permitted under 
the Act. We do NOT charge a separate deductible for a claim under 
Coverage D.
    3. Eligibility.
    a. A structure covered under Coverage A--Building Property 
sustaining a loss caused by a flood as defined by this policy must:
    (1) Be a ``repetitive loss structure.'' A ``repetitive loss 
structure'' is one that meets the following conditions:
    (a) The structure is covered by a contract of flood insurance issued 
under the NFIP.
    (b) The structure has suffered flood damage on 2 occasions during a 
10-year period which ends on the date of the second loss.
    (c) The cost to repair the flood damage, on average, equaled or 
exceeded 25% of the market value of the structure at the time of each 
flood loss.
    (d) In addition to the current claim, the NFIP must have paid the 
previous qualifying claim, and the State or community must have a 
cumulative, substantial damage provision or repetitive loss provision in 
its floodplain management law or ordinance being enforced against the 
structure; or
    (2) Be a structure that has had flood damage in which the cost to 
repair equals or exceeds 50% of the market value of the structure at the 
time of the flood. The State or community must have a substantial damage 
provision in its floodplain management law or ordinance being enforced 
against the structure.
    b. This Coverage D pays you to comply with State or local floodplain 
management laws or ordinances that meet the minimum standards of the 
National Flood Insurance Program found in the Code of Federal 
Regulations at 44 CFR 60.3. We pay for compliance activities that exceed 
those standards under these conditions:
    (1) 3.a.(1) above.
    (2) Elevation or floodproofing in any risk zone to preliminary or 
advisory base flood elevations provided by FEMA which the State or local 
government has adopted and is enforcing for flood-damaged structures in 
such areas. (This includes compliance activities in B, C, X, or D zones 
which are being changed to zones with base flood elevations. This also 
includes compliance activities in zones where base flood elevations are 
being increased, and a flood-damaged structure must comply with the 
higher advisory base flood elevation.) Increased Cost of Compliance 
coverage does not apply to situations in B, C, X, or D zones where the 
community has derived its own elevations and is enforcing elevation or 
floodproofing requirements for flood-damaged structures to elevations 
derived solely by the community.
    (3) Elevation or floodproofing above the base flood elevation to 
meet State or local ``freeboard'' requirements, i.e., that a structure 
must be elevated above the base flood elevation.
    c. Under the minimum NFIP criteria at 44 CFR 60.3(b)(4), States and 
communities must require the elevation or floodproofing of structures in 
unnumbered A zones to the base flood elevation where elevation data is 
obtained from a Federal, State, or other source. Such compliance 
activities are also eligible for Coverage D.
    d. This coverage will also pay for the incremental cost, after 
demolition or relocation, of elevating or floodproofing a structure 
during its rebuilding at the same or another site to meet State or local 
floodplain management laws or ordinances, subject to Exclusion D.5.g. 
below.
    e. This coverage will also pay to bring a flood-damaged structure 
into compliance with State or local floodplain management laws or 
ordinances even if the structure had received a variance before the 
present loss from the applicable floodplain management requirements.
    4. Conditions.
    a. When a structure covered under Coverage A--Building Property 
sustains a loss caused by a flood, our payment for the loss under this 
Coverage D will be for the increased cost to elevate, floodproof, 
relocate, or demolish (or any combination of these activities) caused by 
the enforcement of current State or local floodplain management 
ordinances or laws. Our payment for eligible demolition activities will 
be for the cost to demolish and clear the site of the building debris or 
a portion thereof caused by the enforcement of current State or local 
floodplain management ordinances or laws. Eligible activities for the 
cost of clearing the site will include those necessary to discontinue 
utility service to the site and ensure proper abandonment of on-site 
utilities.
    b. When the building is repaired or rebuilt, it must be intended for 
the same occupancy as the present building unless otherwise required by 
current floodplain management ordinances or laws.
    5. Exclusions.

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    Under this Coverage D--Increased Cost of Compliance, we will not pay 
for:
    a. The cost to comply with any floodplain management law or 
ordinance in communities participating in the Emergency Program.
    b. The cost associated with enforcement of any ordinance or law that 
requires any insured or others to test for, monitor, clean up, remove, 
contain, treat, detoxify or neutralize, or in any way respond to, or 
assess the effects of pollutants.
    c. The loss in value to any insured building or other structure due 
to the requirements of any ordinance or law.
    d. The loss in residual value of the undamaged portion of a building 
demolished as a consequence of enforcement of any State or local 
floodplain management law or ordinance.
    e. Any Increased Cost of Compliance under this Coverage D:
    (1) Until the building is elevated, floodproofed, demolished, or 
relocated on the same or to another premises; and
    (2) Unless the building is elevated, floodproofed, demolished, or 
relocated as soon as reasonably possible after the loss, not to exceed 
two years.
    f. Any code upgrade requirements, e.g., plumbing or electrical 
wiring, not specifically related to the State or local floodplain 
management law or ordinance.
    g. Any compliance activities needed to bring additions or 
improvements made after the loss occurred into compliance with State or 
local floodplain management laws or ordinances.
    h. Loss due to any ordinance or law that you were required to comply 
with before the current loss.
    i. Any rebuilding activity to standards that do not meet the NFIP's 
minimum requirements. This includes any situation where the insured has 
received from the State or community a variance in connection with the 
current flood loss to rebuild the property to an elevation below the 
base flood elevation.
    j. Increased Cost of Compliance for a garage or carport.
    k. Any structure insured under an NFIP Group Flood Insurance Policy.
    l. Assessments made by a condominium association on individual 
condominium unit owners to pay increased costs of repairing commonly 
owned buildings after a flood in compliance with State or local 
floodplain management ordinances or laws.
    6. Other Provisions.
    All other conditions and provisions of the policy apply.

                        IV. Property Not Covered

    A. We do not cover any of the following property:
    1. Personal property not inside the fully enclosed building;
    2. A building, and personal property in it, located entirely in, on, 
or over water or seaward of mean high tide, if it was constructed or 
substantially improved after September 30, 1982;
    3. Open structures, including a building used as a boathouse or any 
structure or building into which boats are floated, and personal 
property located in, on, or over water;
    4. Recreational vehicles other than travel trailers described in the 
II.B.6.c., whether affixed to a permanent foundation or on wheels;
    5. Self-propelled vehicles or machines, including their parts and 
equipment. However, we do cover self-propelled vehicles or machines, 
provided they are not licensed for use on public roads and are:
    a. Used mainly to service the described location; or
    b. Designed and used to assist handicapped persons, while the 
vehicles or machines are inside a building at the described location;
    6. Land, land values, lawns, trees, shrubs, plants, growing crops, 
or animals;
    7. Accounts, bills, coins, currency, deeds, evidences of debt, 
medals, money, scrip, stored value cards, postage stamps, securities, 
bullion, manuscripts, or other valuable papers;
    8. Underground structures and equipment, including wells, septic 
tanks, and septic systems;
    9. Those portions of walks, walkways, decks, driveways, patios, and 
other surfaces, all whether protected by a roof or not, located outside 
the perimeter, exterior walls of the insured building;
    10. Containers including related equipment, such as, but not limited 
to, tanks containing gases or liquids;
    11. Buildings or units and all their contents if more than 49% of 
the actual cash value of the building or unit is below ground, unless 
the lowest level is at or above the base flood elevation and is below 
ground by reason of earth having been used as insulation material in 
conjunction with energy efficient building techniques;
    12. Fences, retaining walls, seawalls, bulkheads, wharves, piers, 
bridges, and docks;
    13. Aircraft or watercraft, or their furnishings and equipment;
    14. Hot tubs and spas that are not bathroom fixtures, and swimming 
pools, and their equipment such as, but not limited to, heaters, 
filters, pumps, and pipes, wherever located;
    15. Property not eligible for flood insurance pursuant to the 
provisions of the Coastal Barrier Resources Act and the Coastal Barrier 
Improvement Act of 1990 and amendments to these Acts;

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    16. Personal property owned by or in the care, custody or control of 
a unit owner, except for property of the type and under the 
circumstances set forth under III. Coverage B--Personal Property of this 
policy;
    17. A residential condominium building located in a Regular Program 
community.

                              V. Exclusions

    A. We only provide coverage for direct physical loss by or from 
flood, which means that we do not pay you for:
    1. Loss of revenue or profits;
    2. Loss of access to the insured property or described location;
    3. Loss of use of the insured property or described location;
    4. Loss from interruption of business or production;
    5. Any additional expenses incurred while the insured building is 
being repaired or is unable to be occupied for any reason;
    6. The cost of complying with any ordinance or law requiring or 
regulating the construction, demolition, remodeling, renovation or 
repair of property, including removal of any resulting debris. This 
exclusion does not apply to any eligible activities that we describe in 
Coverage D--Increased Cost of Compliance; or
    7. Any other economic loss you suffer.
    B. We do not insure a loss directly or indirectly caused by a flood 
that is already in progress at the time and date:
    1. The policy term begins; or
    2. Coverage is added at your request.
    C. We do not insure for loss to property caused directly by earth 
movement even if the earth movement is caused by flood. Some examples of 
earth movement that we do not cover are:
    1. Earthquake;
    2. Landslide;
    3. Land subsidence;
    4. Sinkholes;
    5. Destabilization or movement of land that results from 
accumulation of water in subsurface land areas; or
    6. Gradual erosion.
    We do, however, pay for losses from mudflow and land subsidence as a 
result of erosion that are specifically covered under our definition of 
flood (see A.1.c. and II.A.2.).
    D. We do not insure for direct physical loss caused directly or 
indirectly by:
    1. The pressure or weight of ice;
    2. Freezing or thawing;
    3. Rain, snow, sleet, hail, or water spray;
    4. Water, moisture, mildew, or mold damage that results primarily 
from any condition:
    a. Substantially confined to the insured building; or
    b. That is within your control including, but not limited to:
    (1) Design, structural, or mechanical defects;
    (2) Failures, stoppages, or breakage of water or sewer lines, 
drains, pumps, fixtures, or equipment; or
    (3) Failure to inspect and maintain the property after a flood 
recedes;
    5. Water or water-borne material that:
    a. Backs up through sewers or drains;
    b. Discharges or overflows from a sump, sump pump, or related 
equipment; or
    c. Seeps or leaks on or through the covered property;
unless there is a flood in the area and the flood is the proximate cause 
of the sewer or drain backup, sump pump discharge or overflow, or the 
seepage of water;
    6. The pressure or weight of water unless there is a flood in the 
area and the flood is the proximate cause of the damage from the 
pressure or weight of water;
    7. Power, heating, or cooling failure unless the failure results 
from direct physical loss by or from flood to power, heating, or cooling 
equipment situated on the described location;
    8. Theft, fire, explosion, wind, or windstorm;
    9. Anything that you or your agents do or conspire to do to cause 
loss by flood deliberately; or
    10. Alteration of the insured property that significantly increases 
the risk of flooding.
    E. We do not insure for loss to any building or personal property 
located on land leased from the Federal Government, arising from or 
incident to the flooding of the land by the Federal Government, where 
the lease expressly holds the Federal Government harmless under flood 
insurance issued under any Federal Government program.

                             VI. Deductibles

    A. When a loss is covered under this policy, we will pay only that 
part of the loss that exceeds the applicable deductible amount, subject 
to the limit of liability that applies. The deductible amount is shown 
on the Declarations Page.
    However, when a building under construction, alteration, or repair 
does not have at least two rigid exterior walls and a fully secured roof 
at the time of loss, your deductible amount will be two times the 
deductible that would otherwise apply to a completed building.
    B. In each loss from flood, separate deductibles apply to the 
building and personal property insured by this policy.
    C. No deductible applies to:
    1. III.C.2. Loss Avoidance Measures; or
    2. III.D. Increased Cost of Compliance.

                         VII. General Conditions

                         A. Pair and Set Clause

    In case of loss to an article that is part of a pair or set, we will 
have the option of paying you:

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    1. An amount equal to the cost of replacing the lost, damaged, or 
destroyed article, less depreciation, or
    2. An amount which represents the fair proportion of the total value 
of the pair or set that the lost, damaged, or destroyed article bears to 
the pair or set.

               B. Concealment or Fraud and Policy Voidance

    1. With respect to all insureds under this policy, this policy:
    a. Is void,
    b. Has no legal force or effect,
    c. Cannot be renewed, and
    d. Cannot be replaced by a new NFIP policy, if, before or after a 
loss, you or any other insured or your agent have at any time:
    (1) Intentionally concealed or misrepresented any material fact or 
circumstance,
    (2) Engaged in fraudulent conduct, or
    (3) Made false statements relating to this policy or any other NFIP 
insurance.
    2. This policy will be void as of the date wrongful acts described 
in B.1. above were committed.
    3. Fines, civil penalties, and imprisonment under applicable Federal 
laws may also apply to the acts of fraud or concealment described above.
    4. This policy is also void for reasons other than fraud, 
misrepresentation, or wrongful act. This policy is void from its 
inception and has no legal force under the following conditions:
    a. If the property is located in a community that was not 
participating in the NFIP on the policy's inception date and did not 
join or re-enter the program during the policy term and before the loss 
occurred; or
    b. If the property listed on the application is otherwise not 
eligible for coverage under the NFIP.

                           C. Other Insurance

    1. If a loss covered by this policy is also covered by other 
insurance that includes flood coverage not issued under the Act, we will 
not pay more than the amount of insurance that you are entitled to for 
lost, damaged, or destroyed property insured under this policy subject 
to the following:
    a. We will pay only the proportion of the loss that the amount of 
insurance that applies under this policy bears to the total amount of 
insurance covering the loss, unless C.1.b. or c. below applies.
    b. If the other policy has a provision stating that it is excess 
insurance, this policy will be primary.
    c. This policy will be primary (but subject to its own deductible) 
up to the deductible in the other flood policy (except another policy as 
described in C.1.b. above). When the other deductible amount is reached, 
this policy will participate in the same proportion that the amount of 
insurance under this policy bears to the total amount of both policies, 
for the remainder of the loss.
    2. Where this policy covers a condominium association and there is a 
flood insurance policy in the name of a unit owner that covers the same 
loss as this policy, then this policy will be primary.

                   D. Amendments, Waivers, Assignment

    This policy cannot be changed nor can any of its provisions be 
waived without the express written consent of the Federal Insurance 
Administrator. No action that we take under the terms of this policy can 
constitute a waiver of any of our rights. You may assign this policy in 
writing when you transfer title of your property to someone else except 
under these conditions:
    1. When this policy covers only personal property; or
    2. When this policy covers a structure during the course of 
construction.

                    E. Cancellation of Policy by You

    1. You may cancel this policy in accordance with the applicable 
rules and regulations of the NFIP.
    2. If you cancel this policy, you may be entitled to a full or 
partial refund of premium also under the applicable rules and 
regulations of the NFIP.

                   F. Non-Renewal of the Policy by Us

    Your policy will not be renewed:
    1. If the community where your covered property is located stops 
participating in the NFIP; or
    2. If your building has been declared ineligible under section 1316 
of the Act.

                G. Reduction and Reformation of Coverage

    1. If the premium we received from you was not enough to buy the 
kind and amount of coverage that you requested, we will provide only the 
amount of coverage that can be purchased for the premium payment we 
received.
    2. The policy can be reformed to increase the amount of coverage 
resulting from the reduction described in G.1. above to the amount you 
requested as follows:
    a. Discovery of Insufficient Premium or Incomplete Rating 
Information Before a Loss.
    (1) If we discover before you have a flood loss that your premium 
payment was not enough to buy the requested amount of coverage, we will 
send you and any mortgagee or trustee known to us a bill for the 
required additional premium for the current policy term (or that portion 
of the current policy term following any endorsement changing the amount 
of coverage). If you or the mortgagee or trustee pay the additional 
premium within 30 days from the date of our bill, we will reform the 
policy to increase the

[[Page 281]]

amount of coverage to the originally requested amount effective to the 
beginning of the current policy term (or subsequent date of any 
endorsement changing the amount of coverage).
    (2) If we determine before you have a flood loss that the rating 
information we have is incomplete and prevents us from calculating the 
additional premium, we will ask you to send the required information. 
You must submit the information within 60 days of our request. Once we 
determine the amount of additional premium for the current policy term, 
we will follow the procedure in G.2.a.(1) above.
    (3) If we do not receive the additional premium (or additional 
information) by the date it is due, the amount of coverage can only be 
increased by endorsement subject to any appropriate waiting period.
    b. Discovery of Insufficient Premium or Incomplete Rating 
Information After a Loss.
    (1) If we discover after you have a flood loss that your premium 
payment was not enough to buy the requested amount of coverage, we will 
send you and any mortgagee or trustee known to us a bill for the 
required additional premium for the current and the prior policy terms. 
If you or the mortgagee or trustee pay the additional premium within 30 
days of the date of our bill, we will reform the policy to increase the 
amount of coverage to the originally requested amount effective to the 
beginning of the prior policy term.
    (2) If we discover after you have a flood loss that the rating 
information we have is incomplete and prevents us from calculating the 
additional premium, we will ask you to send the required information. 
You must submit the information before your claim can be paid. Once we 
determine the amount of additional premium for the current and prior 
policy terms, we will follow the procedure in G.2.b.(1) above.
    (3) If we do not receive the additional premium by the date it is 
due, your flood insurance claim will be settled based on the reduced 
amount of coverage. The amount of coverage can only be increased by 
endorsement subject to any appropriate waiting period.
    3. However, if we find that you or your agent intentionally did not 
tell us, or falsified, any important fact or circumstance or did 
anything fraudulent relating to this insurance, the provisions of 
Condition B. above apply.

                            H. Policy Renewal

    1. This policy will expire at 12:01 a.m. on the last day of the 
policy term.
    2. We must receive the payment of the appropriate renewal premium 
within 30 days of the expiration date.
    3. If we find, however, that we did not place your renewal notice 
into the U.S. Postal Service, or if we did mail it, we made a mistake, 
e.g., we used an incorrect, incomplete, or illegible address, which 
delayed its delivery to you before the due date for the renewal premium, 
then we will follow these procedures:
    a. If you or your agent notified us, not later than one year after 
the date on which the payment of the renewal premium was due, of 
nonreceipt of a renewal notice before the due date for the renewal 
premium, and we determine that the circumstances in the preceding 
paragraph apply, we will mail a second bill providing a revised due 
date, which will be 30 days after the date on which the bill is mailed.
    b. If we do not receive the premium requested in the second bill by 
the revised due date, then we will not renew the policy. In that case, 
the policy will remain as an expired policy as of the expiration date 
shown on the Declarations Page.
    4. In connection with the renewal of this policy, we may ask you 
during the policy term to re-certify, on a Recertification Questionnaire 
that we will provide to you, the rating information used to rate your 
most recent application for or renewal of insurance.

            I. Conditions Suspending or Restricting Insurance

    We are not liable for loss that occurs while there is a hazard that 
is increased by any means within your control or knowledge.

                     J. Requirements in Case of Loss

    In case of a flood loss to insured property, you must:
    1. Give prompt written notice to us;
    2. As soon as reasonably possible, separate the damaged and 
undamaged property, putting it in the best possible order so that we may 
examine it;
    3. Prepare an inventory of damaged property showing the quantity, 
description, actual cash value, and amount of loss. Attach all bills, 
receipts, and related documents;
    4. Within 60 days after the loss, send us a proof of loss, which is 
your statement of the amount you are claiming under the policy signed 
and sworn to by you, and which furnishes us with the following 
information:
    a. The date and time of loss;
    b. A brief explanation of how the loss happened;
    c. Your interest (for example, ``owner'') and the interest, if any, 
of others in the damaged property;
    d. Details of any other insurance that may cover the loss;
    e. Changes in title or occupancy of the insured property during the 
term of the policy;
    f. Specifications of damaged buildings and detailed repair 
estimates;

[[Page 282]]

    g. Names of mortgagees or anyone else having a lien, charge, or 
claim against the insured property;
    h. Details about who occupied any insured building at the time of 
loss and for what purpose; and
    i. The inventory of damaged property described in J.3. above.
    5. In completing the proof of loss, you must use your own judgment 
concerning the amount of loss and justify that amount.
    6. You must cooperate with the adjuster or representative in the 
investigation of the claim.
    7. The insurance adjuster whom we hire to investigate your claim may 
furnish you with a proof of loss form, and she or he may help you 
complete it. However, this is a matter of courtesy only, and you must 
still send us a proof of loss within sixty days after the loss even if 
the adjuster does not furnish the form or help you complete it.
    8. We have not authorized the adjuster to approve or disapprove 
claims or to tell you whether we will approve your claim.
    9. At our option, we may accept the adjuster's report of the loss 
instead of your proof of loss. The adjuster's report will include 
information about your loss and the damages you sustained. You must sign 
the adjuster's report. At our option, we may require you to swear to the 
report.

                       K. Our Options After a Loss

    Options we may, in our sole discretion, exercise after loss include 
the following:
    1. At such reasonable times and places that we may designate, you 
must:
    a. Show us or our representative the damaged property;
    b. Submit to examination under oath, while not in the presence of 
another insured, and sign the same; and
    c. Permit us to examine and make extracts and copies of:
    (1) Any policies of property insurance insuring you against loss and 
the deed establishing your ownership of the insured real property;
    (2) Condominium association documents including the Declarations of 
the condominium, its Articles of Association or Incorporation, Bylaws, 
and rules and regulations; and
    (3) All books of accounts, bills, invoices, and other vouchers, or 
certified copies pertaining to the damaged property if the originals are 
lost.
    2. We may request, in writing, that you furnish us with a complete 
inventory of the lost, damaged, or destroyed property, including:
    a. Quantities and costs;
    b. Actual cash values;
    c. Amounts of loss claimed;
    d. Any written plans and specifications for repair of the damaged 
property that you can reasonably make available to us; and
    e. Evidence that prior flood damage has been repaired.
    3. If we give you written notice within 30 days after we receive 
your signed, sworn proof of loss, we may:
    a. Repair, rebuild, or replace any part of the lost, damaged, or 
destroyed property with material or property of like kind and quality or 
its functional equivalent; and
    b. Take all or any part of the damaged property at the value that we 
agree upon or its appraised value.

                         L. No Benefit to Bailee

    No person or organization, other than you, having custody of covered 
property will benefit from this insurance.

                             M. Loss Payment

    1. We will adjust all losses with you. We will pay you unless some 
other person or entity is named in the policy or is legally entitled to 
receive payment. Loss will be payable 60 days after we receive your 
proof of loss (or within 90 days after the insurance adjuster files an 
adjuster's report signed and sworn to by you in lieu of a proof of loss) 
and:
    a. We reach an agreement with you;
    b. There is an entry of a final judgment; or
    c. There is a filing of an appraisal award with us, as provided in 
VII. P.
    2. If we reject your proof of loss in whole or in part you may:
    a. Accept such denial of your claim;
    b. Exercise your rights under this policy; or
    c. File an amended proof of loss as long as it is filed within 60 
days of the date of the loss.

                             N. Abandonment

    You may not abandon damaged or undamaged insured property to us.

                               O. Salvage

    We may permit you to keep damaged insured property after a loss, and 
we will reduce the amount of the loss proceeds payable to you under the 
policy by the value of the salvage.

                              P. Appraisal

    If you and we fail to agree on the actual cash value of the damaged 
property so as to determine the amount of loss, either may demand an 
appraisal of the loss. In this event, you and we will each choose a 
competent and impartial appraiser within 20 days after receiving a 
written request from the other. The two appraisers will choose an 
umpire. If they cannot agree upon an umpire within 15 days, you or we 
may request that the choice be made by a judge of a court of record in 
the

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state where the insured property is located. The appraisers will 
separately state the actual cash value and the amount of loss to each 
item. If the appraisers submit a written report of an agreement to us, 
the amount agreed upon will be the amount of loss. If they fail to 
agree, they will submit their differences to the umpire. A decision 
agreed to by any two will set the amount of actual cash value and loss.
    Each party will:
    1. Pay its own appraiser; and
    2. Bear the other expenses of the appraisal and umpire equally.

                           Q. Mortgage Clause

    The word ``mortgagee'' includes trustee.
    Any loss payable under Coverage A--Building Property will be paid to 
any mortgagee of whom we have actual notice, as well as any other 
mortgagee or loss payee determined to exist at the time of loss, and 
you, as interests appear. If more than one mortgagee is named, the order 
of payment will be the same as the order of precedence of the mortgages. 
If we deny your claim, that denial will not apply to a valid claim of 
the mortgagee, if the mortgagee:
    1. Notifies us of any change in the ownership or occupancy, or 
substantial change in risk of which the mortgagee is aware;
    2. Pays any premium due under this policy on demand if you have 
neglected to pay the premium; and
    3. Submits a signed, sworn proof of loss within 60 days after 
receiving notice from us of your failure to do so.
    All terms of this policy apply to the mortgagee.
    The mortgagee has the right to receive loss payment even if the 
mortgagee has started foreclosure or similar action on the building.
    If we decide to cancel or not renew this policy, it will continue in 
effect for the benefit of the mortgagee only for 30 days after we notify 
the mortgagee of the cancellation or non-renewal.
    If we pay the mortgagee for any loss and deny payment to you, we are 
subrogated to all the rights of the mortgagee granted under the mortgage 
on the property. Subrogation will not impair the right of the mortgagee 
to recover the full amount of the mortgagee's claim.

                           R. Suit Against Us

    You may not sue us to recover money under this policy unless you 
have complied with all the requirements of the policy. If you do sue, 
you must start the suit within one year of the date of the written 
denial of all or part of the claim, and you must file the suit in the 
United States District Court of the district in which the insured 
property was located at the time of loss. This requirement applies to 
any claim that you may have under this policy and to any dispute that 
you may have arising out of the handling of any claim under the policy.

                             S. Subrogation

    Whenever we make a payment for a loss under this policy, we are 
subrogated to your right to recover for that loss from any other person. 
That means that your right to recover for a loss that was partly or 
totally caused by someone else is automatically transferred to us, to 
the extent that we have paid you for the loss. We may require you to 
acknowledge this transfer in writing. After the loss, you may not give 
up our right to recover this money or do anything that would prevent us 
from recovering it. If you make any claim against any person who caused 
your loss and recover any money, you must pay us back first before you 
may keep any of that money.

                       T. Continuous Lake Flooding

    1. If an insured building has been flooded by rising lake waters 
continuously for 90 days or more and it appears reasonably certain that 
a continuation of this flooding will result in a covered loss to the 
insured building equal to or greater than the building policy limits 
plus the deductible or the maximum payable under the policy for any one 
building loss, we will pay you the lesser of these two amounts without 
waiting for the further damage to occur if you sign a release agreeing:
    a. To make no further claim under this policy;
    b. Not to seek renewal of this policy;
    c. Not to apply for any flood insurance under the Act for property 
at the described location; and
    d. Not to seek a premium refund for current or prior terms.
    If the policy term ends before the insured building has been flooded 
continuously for 90 days, the provisions of this paragraph T.1. will 
apply when as the insured building suffers a covered loss before the 
policy term ends.
    2. If your insured building is subject to continuous lake flooding 
from a closed basin lake, you may elect to file a claim under either 
paragraph T.1. above or this paragraph T.2. (A ``closed basin lake'' is 
a natural lake from which water leaves primarily through evaporation and 
whose surface area now exceeds or has exceeded one square mile at any 
time in the recorded past. Most of the nation's closed basin lakes are 
in the western half of the United States, where annual evaporation 
exceeds annual precipitation and where lake levels and surface areas are 
subject to considerable fluctuation due to wide variations in the 
climate. These lakes may overtop their basins on rare occasions.) Under 
this paragraph T.2 we will pay your

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claim as if the building is a total loss even though it has not been 
continuously inundated for 90 days, subject to the following conditions:
    a. Lake flood waters must damage or imminently threaten to damage 
your building.
    b. Before approval of your claim, you must:
    (1) Agree to a claim payment that reflects your buying back the 
salvage on a negotiated basis; and
    (2) Grant the conservation easement described in FEMA's ``Policy 
Guidance for Closed Basin Lakes,'' to be recorded in the office of the 
local recorder of deeds. FEMA, in consultation with the community in 
which the property is located, will identify on a map an area or areas 
of special consideration (ASC) in which there is a potential for flood 
damage from continuous lake flooding. FEMA will give the community the 
agreed-upon map showing the ASC. This easement will only apply to that 
portion of the property in the ASC. It will allow certain agricultural 
and recreational uses of the land. The only structures that it will 
allow on any portion of the property within the ASC are certain, simple 
agricultural and recreational structures. If any of these allowable 
structures are insurable buildings under the NFIP and are insured under 
the NFIP, they will not be eligible for the benefits of this paragraph 
T.2. If a U.S. Army Corps of Engineers certified flood control project 
or otherwise certified flood control project later protects the 
property, FEMA will, upon request, amend the ASC to remove areas 
protected by those projects. The restrictions of the easement will then 
no longer apply to any portion of the property removed from the ASC; and
    (3) Comply with paragraphs T.1.a. through T.1.d. above.
    c. Within 90 days of approval of your claim, you must move your 
building to a new location outside the ASC. FEMA will give you an 
additional 30 days to move if you show that there is sufficient reason 
to extend the time.
    d. Before the final payment of your claim, you must acquire an 
elevation certificate and a floodplain development permit from the local 
floodplain administrator for the new location of your building.
    e. Before the approval of your claim, the community having 
jurisdiction over your building must:
    (1) Adopt a permanent land use ordinance, or a temporary moratorium 
for a period not to exceed 6 months to be followed immediately by a 
permanent land use ordinance, that is consistent with the provisions 
specified in the easement required in paragraph T.2.b. above.
    (2) Agree to declare and report any violations of this ordinance to 
FEMA so that under Sec. 1316 of the National Flood Insurance Act of 
1968, as amended, flood insurance to the building can be denied; and
    (3) Agree to maintain as deed-restricted, for purposes compatible 
with open space or agricultural or recreational use only, any affected 
property the community acquires an interest in. These deed restrictions 
must be consistent with the provisions of paragraph T.2.b. above except 
that even if a certified project protects the property, the land use 
restrictions continue to apply if the property was acquired under the 
Hazard Mitigation Grant Program or the Flood Mitigation Assistance 
Program. If a non-profit land trust organization receives the property 
as a donation, that organization must maintain the property as deed-
restricted, consistent with the provisions of paragraph T.2.b. above.
    f. Before the approval of your claim, the affected State must take 
all action set forth in FEMA's ``Policy Guidance for Closed Basin 
Lakes.''
    g. You must have NFIP flood insurance coverage continuously in 
effect from a date established by FEMA until you file a claim under this 
paragraph T.2. If a subsequent owner buys NFIP insurance that goes into 
effect within 60 days of the date of transfer of title, any gap in 
coverage during that 60-day period will not be a violation of this 
continuous coverage requirement. For the purpose of honoring a claim 
under this paragraph T.2, we will not consider to be in effect any 
increased coverage that became effective after the date established by 
FEMA. The exception to this is any increased coverage in the amount 
suggested by your insurer as an inflation adjustment.
    h. This paragraph T.2. will be in effect for a community when the 
FEMA Regional Director for the affected region provides to the 
community, in writing, the following:
    (1) Confirmation that the community and the State are in compliance 
with the conditions in paragraphs T.2.e. and T.2.f. above, and
    (2) The date by which you must have flood insurance in effect.

                    U. Duplicate Policies Not Allowed

    1. Property may not be insured under more than one NFIP policy.
    If we find that the duplication was not knowingly created, we will 
give you written notice. The notice will advise you that you may choose 
one of several options under the following procedures:
    a. If you choose to keep in effect the policy with the earlier 
effective date, you may also choose to add the coverage limits of the 
later policy to the limits of the earlier policy. The change will become 
effective as of the effective date of the later policy.
    b. If you choose to keep in effect the policy with the later 
effective date, you may also choose to add the coverage limits of the 
earlier policy to the limits of the later policy. The change will be 
effective as of the effective date of the later policy.

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    In either case, you must pay the pro rata premium for the increased 
coverage limits within 30 days of the written notice. In no event will 
the resulting coverage limits exceed the permissible limits of coverage 
under the Act or your insurable interest, whichever is less. We will 
make a refund to you, according to applicable NFIP rules, of the premium 
for the policy not being kept in effect.
    2. Your option under this Condition U. Duplicate Policies Not 
Allowed to elect which NFIP policy to keep in effect does not apply when 
duplicates have been knowingly created. Losses occurring under such 
circumstances will be adjusted according to the terms and conditions of 
the earlier policy. The policy with the later effective date must be 
canceled.

                           V. Loss Settlement

    We will pay the least of the following amounts after application of 
the deductible:
    1. The applicable amount of insurance under this policy;
    2. The actual cash value; or
    3. The amount it would cost to repair or replace the property with 
material of like kind and quality within a reasonable time after the 
loss.

                       VIII. Liberalization Clause

    If we make a change that broadens your coverage under this edition 
of our policy, but does not require any additional premium, then that 
change will automatically apply to your insurance as of the date we 
implement the change, provided that this implementation date falls 
within 60 days before or during the policy term stated on the 
Declarations Page.

                          IX. What Law Governs

    This policy and all disputes arising from the handling of any claim 
under the policy are governed exclusively by the flood insurance 
regulations issued by FEMA, the National Flood Insurance Act of 1968, as 
amended (42 U.S.C. 4001, et seq.), and Federal common law.
    In Witness Whereof, we have signed this policy below and hereby 
enter into this Insurance Agreement.
                                                          Jo Ann Howard,
                        Administrator, Federal Insurance Administration.

[65 FR 60778, Oct. 12, 2000, as amended at 68 FR 9897, Mar. 3, 2003]

                        Appendix A(3) to Part 61

  Federal Emergency Management Agency Federal Insurance Administration

                     Standard Flood Insurance Policy

           RESIDENTIAL CONDOMINIUM BUILDING ASSOCIATION POLICY

                              I. Agreement

    Please read the policy carefully. The flood insurance provided is 
subject to limitations, restrictions, and exclusions.
    This policy covers only a residential condominium building in a 
regular program community. If the community reverts to emergency program 
status during the policy term and remains as an emergency program 
community at time of renewal, this policy cannot be renewed.
    The Federal Emergency Management Agency (FEMA) provides flood 
insurance under the terms of the National Flood Insurance Act of 1968 
and its Amendments, and Title 44 of the Code of Federal Regulations.
    We will pay you for direct physical loss by or from flood to your 
insured property if you:
    1. Have paid the correct premium;
    2. Comply with all terms and conditions of this policy; and
    3. Have furnished accurate information and statements.
    We have the right to review the information you give us at any time 
and to revise your policy based on our review.

                             II. Definitions

    A. In this policy, ``you'' and ``your'' refer to the insured(s) 
shown on the Declarations Page of this policy. Insured(s) includes: any 
mortgagee and loss payee named in the Application and Declarations Page, 
as well as any other mortgagee or loss payee determined to exist at the 
time of loss in the order of precedence. ``We,'' ``us,'' and ``our'' 
refer to the insurer.
    Some definitions are complex because they are provided as they 
appear in the law or regulations, or result from court cases. The 
precise definitions are intended to protect you.
    ``Flood'', as used in this flood insurance 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 properties (one of which is your property) from:
    a. Overflow of inland or tidal waters;
    b. Unusual and rapid accumulation or runoff of surface waters from 
any source;
    c. Mudflow.
    2. Collapse or subsidence of land along the shore of a lake or 
similar body of water as a result of erosion or undermining caused by

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waves or currents of water exceeding anticipated cyclical levels which 
result in a flood as defined in A.1.a above.
    B. The following are the other key definitions we use in this 
policy:
    1. Act. The National Flood Insurance Act of 1968 and any amendments 
to it.
    2. Actual Cash Value. The cost to replace an insured item of 
property at the time of loss, less the value of its physical 
depreciation.
    3. Application. The statement made and signed by you or your agent 
in applying for this policy. The application gives information we use to 
determine the eligibility of the risk, the kind of policy to be issued, 
and the correct premium payment. The application is part of this flood 
insurance policy. For us to issue you a policy, the correct premium 
payment must accompany the application.
    4. Base Flood. A flood having a one percent chance of being equaled 
or exceeded in any given year.
    5. Basement. Any area of the building, including any sunken room or 
sunken portion of a room, having its floor below ground level (subgrade) 
on all sides.
    6. Building.
    a. A structure with two or more outside rigid walls and a fully 
secured roof, that is affixed to a permanent site;
    b. A manufactured home (``a manufactured home,'' also known as a 
mobile home, is a structure: built on a permanent chassis, transported 
to its site in one or more sections, and affixed to a permanent 
foundation); or
    c. A travel trailer without wheels, built on a chassis and affixed 
to a permanent foundation, that is regulated under the community's 
floodplain management and building ordinances or laws.
    Building does not mean a gas or liquid storage tank or a 
recreational vehicle, park trailer or other similar vehicle, except as 
described in B.6.c., above.
    7. Cancellation. The ending of the insurance coverage provided by 
this policy before the expiration date.
    8. Condominium. That form of ownership of real property in which 
each unit owner has an undivided interest in common elements.
    9. Condominium Association. The entity, formed by the unit owners, 
responsible for the maintenance and operation of:
    a. Common elements owned in undivided shares by unit owners; and
    b. Other real property in which the unit owners have use rights; 
where membership in the entity is a required condition of unit 
ownership.
    10. Declarations Page. A computer-generated summary of information 
you provided in the application for insurance. The Declarations Page 
also describes the term of the policy, limits of coverage, and displays 
the premium and our name. The Declarations Page is a part of this flood 
insurance policy.
    11. Described Location. The location where the insured building or 
personal property is found. The described location is shown on the 
Declarations Page.
    12. Direct Physical Loss By or From Flood. Loss or damage to insured 
property, directly caused by a flood. There must be evidence of physical 
changes to the property.
    13. Elevated Building. A building that has no basement and that has 
its lowest elevated floor raised above ground level by foundation walls, 
shear walls, posts, piers, pilings, or columns.
    14. Emergency Program. The initial phase of a community's 
participation in the National Flood Insurance Program. During this 
phase, only limited amounts of insurance are available under the Act.
    15. Expense Constant. A flat charge you must pay on each new or 
renewal policy to defray the expenses of the Federal Government related 
to flood insurance.
    16. Federal Policy Fee. A flat charge you must pay on each new or 
renewal policy to defray certain administrative expenses incurred in 
carrying out the National Flood Insurance Program. This fee covers 
expenses not covered by the expense constant.
    17. Improvements. Fixtures, alterations, installations, or additions 
comprising a part of the residential condominium building, including 
improvements in the units.
    18. Mudflow. 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 not mudflows.
    19. National Flood Insurance Program (NFIP). The program of flood 
insurance coverage and floodplain management administered under the Act 
and applicable Federal regulations in Title 44 of the Code of Federal 
Regulations, Subchapter B.
    20. Policy. The entire written contract between you and us. It 
includes:
    a. This printed form;
    b. The application and Declarations Page;
    c. Any endorsement(s) that may be issued; and
    d. Any renewal certificate indicating that coverage has been 
instituted for a new policy and new policy term.
    Only one building, which you specifically described in the 
application, may be insured under this policy.
    21. Pollutants. Substances that include, but are not limited to, any 
solid, liquid, gaseous, or thermal irritant or contaminant, including 
smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. Waste 
includes, but is not limited to, materials to be recycled, 
reconditioned, or reclaimed.

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    22. Post-FIRM Building. A building for which construction or 
substantial improvement occurred after December 31, 1974, or on or after 
the effective date of an initial Flood Insurance Rate Map (FIRM), 
whichever is later.
    23. Probation Premium. A flat charge you must pay on each new or 
renewal policy issued covering property in a community that the NFIP has 
placed on probation under the provisions of 44 CFR 59.24.
    24. Regular Program. The final phase of a community's participation 
in the National Flood Insurance Program. In this phase, a Flood 
Insurance Rate Map is in effect and full limits of coverage are 
available under the Act.
    25. Residential Condominium Building. A building, owned and 
administered as a condominium, containing one or more family units and 
in which at least 75% of the floor area is residential.
    26. Special Flood Hazard Area. An area having special flood or 
mudflow, and/or flood-related erosion hazards, and shown on a Flood 
Hazard Boundary Map or Flood Insurance Rate Map as Zone A, AO, A1-A30, 
AE, A99, AH, AR, AR/A, AR/AE, AR/AH, AR/AO, AR/A1-A30, V1-V30, VE, or V.
    27. Unit. A single-family unit in a residential condominium 
building.
    28. Valued Policy. A policy in which the insured and the insurer 
agree on the value of the property insured, that value being payable in 
the event of a total loss. The Standard Flood Insurance Policy is not a 
valued policy.

                          III. Property Covered

                    A. Coverage A--Building Property

    We insure against direct physical loss by or from flood to:
    1. The residential condominium building described on the 
Declarations Page at the described location, including all units within 
the building and the improvements within the units.
    2. We also insure such building property for a period of 45 days at 
another location, as set forth in III.C.2.b., Property Removed to 
Safety.
    3. Additions and extensions attached to and in contact with the 
building by means of a rigid exterior wall, a solid load-bearing 
interior wall, a stairway, an elevated walkway, or a roof. At your 
option, additions and extensions connected by any of these methods may 
be separately insured. Additions and extensions attached to and in 
contact with the building by means of a common interior wall that is not 
a solid load-bearing wall are always considered part of the building and 
cannot be separately insured.
    4. The following fixtures, machinery and equipment, including its 
units, which are covered under Coverage A only:
    a. Awnings and canopies;
    b. Blinds;
    c. Carpet permanently installed over unfinished flooring;
    d. Central air conditioners;
    e. Elevator equipment;
    f. Fire extinguishing apparatus;
    g. Fire sprinkler systems;
    h. Walk-in freezers;
    i. Furnaces;
    j. Light fixtures;
    k. Outdoor antennas and aerials fastened to buildings;
    l. Permanently installed cupboards, bookcases, paneling, and 
wallpaper;
    m. Pumps and machinery for operating pumps;
    n. Ventilating equipment;
    o. Wall mirrors, permanently installed; and
    p. In the units within the building, installed:
    (1) Built-in dishwashers;
    (2) Built-in microwave ovens;
    (3) Garbage disposal units;
    (4) Hot water heaters, including solar water heaters;
    (5) Kitchen cabinets;
    (6) Plumbing fixtures;
    (7) Radiators;
    (8) Ranges;
    (9) Refrigerators; and
    (10) Stoves.
    5. Materials and supplies to be used for construction, alteration or 
repair of the insured building while the materials and supplies are 
stored in a fully enclosed building at the described location or on an 
adjacent property.
    6. A building under construction, alteration or repair at the 
described location.
    a. If the structure is not yet walled or roofed as described in the 
definition for building (see II.B.6.a.), then coverage applies:
    (1) Only while such work is in progress; or
    (2) If such work is halted, only for a period of up to 90 continuous 
days thereafter.
    b. However, coverage does not apply until the building is walled and 
roofed if the lowest floor, including the basement floor, of a non-
elevated building or the lowest elevated floor of an elevated building 
is:
    (1) Below the base flood elevation in Zones AH, AE, A1-30, AR, AR/
AE, AR/AH, AR/A1-30, AR/A, AR/AO; or
    (2) Below the base flood elevation adjusted to include the effect of 
wave action in Zones VE or V1-30.
    The lowest floor levels are based on the bottom of the lowest 
horizontal structural member of the floor in Zones VE or V1-V30 and the 
top of the floor in Zones AH, AE, A1-A30, AR, AR/AE, AR/AH, AR/A1-A30, 
AR/A, AR/AO.
    7. A manufactured home or a travel trailer as described in the 
Definitions Section (See II.B.b. and c.).

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    If the manufactured home is in a special flood hazard area, it must 
be anchored in the following manner at the time of the loss:
    a. By over-the-top or frame ties to ground anchors; or
    b. In accordance with the manufacturer's specifications; or
    c. In compliance with the community's floodplain management 
requirements unless it has been continuously insured by the NFIP at the 
same described location since September 30, 1982.
    8. Items of property in a building enclosure below the lowest 
elevated floor of an elevated post-FIRM building located in zones A1-
A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1-A30, V1-V30, or VE, or in a 
basement, regardless of the zone. Coverage is limited to the following:
    a. Any of the following items, if installed in their functioning 
locations and, if necessary for operation, connected to a power source:
    (1) Central air conditioners;
    (2) Cisterns and the water in them;
    (3) Drywall for walls and ceilings in a basement and the cost of 
labor to nail it, unfinished and unfloated and not taped, to the 
framing;
    (4) Electrical junction and circuit breaker boxes;
    (5) Electrical outlets and switches;
    (6) Elevators, dumbwaiters, and related equipment, except for 
related equipment installed below the base flood elevation after 
September 30, 1987;
    (7) Fuel tanks and the fuel in them;
    (8) Furnaces and hot water heaters;
    (9) Heat pumps;
    (10) Nonflammable insulation in a basement;
    (11) Pumps and tanks used in solar energy systems;
    (12) Stairways and staircases attached to the building, not 
separated from it by elevated walkways;
    (13) Sump pumps;
    (14) Water softeners and the chemicals in them, water filters and 
faucets installed as an integral part of the plumbing system;
    (15) Well water tanks and pumps;
    (16) Required utility connections for any item in this list; and
    (17) Footings, foundations, posts, pilings, piers, or other 
foundation walls and anchorage systems required to support a building.
    b. Clean-up.

                    B. Coverage B--Personal Property

    1. If you have purchased personal property coverage, we insure, 
subject to B.2. and B.3. below, against direct physical loss by or from 
flood to personal property that is inside the fully enclosed insured 
building and is:
    a. Owned by the unit owners of the condominium association in 
common, meaning property in which each unit owner has an undivided 
ownership interest; or
    b. Owned solely by the condominium association and used exclusively 
in the conduct of the business affairs of the condominium association.
    We also insure such personal property for 45 days while stored at a 
temporary location, as set forth in III.C.2.b., Property Removed to 
Safety.
    2. Coverage for personal property includes the following property, 
subject to B.1. above, which is covered under Coverage B only:
    a. Air conditioning units--portable or window type;
    b. Carpet, not permanently installed, over unfinished flooring;
    c. Carpets over finished flooring;
    d. Clothes washers and dryers;
    e. ``Cook-out'' grills;
    f. Food freezers, other than walk-in, and the food in any freezer;
    g. Outdoor equipment and furniture stored inside the insured 
building;
    h. Ovens and the like; and
    i. Portable microwave ovens and portable dishwashers.
    3. Coverage for items of property in a building enclosure below the 
lowest elevated floor of an elevated post-FIRM building located in zones 
A1-A30, AE, AH, AR, AR/A, AR/AE, AR/AH, AR/A1-A30, V1-V30, or VE, or in 
a basement, regardless of the zone, is limited to the following items, 
if installed in their functioning locations and, if necessary for 
operation, connected to a power source:
    a. Air conditioning units--portable or window type;
    b. Clothes washers and dryers; and
    c. Food freezers, other than walk-in, and food in any freezer.
    4. Special Limits. We will pay no more than $2,500 for any one loss 
to one or more of the following kinds of personal property:
    a. Artwork, photographs, collectibles, or memorabilia, including but 
not limited to, porcelain or other figures, and sports cards;
    b. Rare books or autographed items;
    c. Jewelry, watches, precious and semi-precious stones, or articles 
of gold, silver, or platinum;
    d. Furs or any article containing fur which represents its principal 
value.
    5. We will pay only for the functional value of antiques.

                     C. Coverage C--Other Coverages

    1. Debris Removal
    a. We will pay the expense to remove non-owned debris that is on or 
in insured property and debris of insured property anywhere.
    b. If you or a member of your household perform the removal work, 
the value of your work will be based on the Federal minimum wage.

[[Page 289]]

    c. This coverage does not increase the Coverage A or Coverage B 
limit of liability.
    2. Loss Avoidance Measures
    a. Sandbags, Supplies, and Labor
    (1) We will pay up to $1,000 for the costs you incur to protect the 
insured building from a flood or imminent danger of flood, for the 
following:
    (a) Your reasonable expenses to buy:
    (i) Sandbags, including sand to fill them;
    (ii) Fill for temporary levees;
    (iii) Pumps; and
    (iv) Plastic sheeting and lumber used in connection with these 
items; and
    (b) The value of work, at the Federal minimum wage, that you 
perform.
    (2) This coverage for Sandbags, Supplies, and Labor applies only if 
damage to insured property by or from flood is imminent and the threat 
of flood damage is apparent enough to lead a person of common prudence 
to anticipate flood damage. One of the following must also occur:
    (a) A general and temporary condition of flooding in the area near 
the described location must occur, even if the flood does not reach the 
insured building; or
    (b) A legally authorized official must issue an evacuation order or 
other civil order for the community in which the insured building is 
located calling for measures to preserve life and property from the 
peril of flood. This coverage does not increase the Coverage A or 
Coverage B limit of liability.
    b. Property Removed to Safety
    (1) We will pay up to $1,000 for the reasonable expenses you incur 
to move insured property to a place other than the described location 
that contains the property in order to protect it from flood or the 
imminent danger of flood.
    Reasonable expenses include the value of work, at the Federal 
minimum wage, that you perform.
    (2) If you move insured property to a location other than the 
described location that contains the property, in order to protect it 
from flood or the imminent danger of flood, we will cover such property 
while at that location for a period of 45 consecutive days from the date 
you begin to move it there. The personal property that is moved must be 
placed in a fully enclosed building, or otherwise reasonably protected 
from the elements.
    Any property removed, including a moveable home described in II.6.b. 
and c., must be placed above ground level or outside of the special 
flood hazard area.
    This coverage does not increase the Coverage A or Coverage B limit 
of liability.

               D. Coverage D--Increased Cost of Compliance

    1. General.
    This policy pays you to comply with a State or local floodplain 
management law or ordinance affecting repair or reconstruction of a 
structure suffering flood damage. Compliance activities eligible for 
payment are: elevation, floodproofing, relocation, or demolition (or any 
combination of these activities) of your structure. Eligible 
floodproofing activities are limited to:
    a. Non-residential structures.
    b. Residential structures with basements that satisfy FEMA's 
standards published in the Code of Federal Regulations [44 CFR 60.6 (b) 
or (c)].
    2. Limit of Liability.
    We will pay you up to $30,000 under this Coverage D--Increased Cost 
of Compliance, which only applies to policies with building coverage 
(Coverage A). Our payment of claims under Coverage D is in addition to 
the amount of coverage which you selected on the application and which 
appears on the Declarations Page. But the maximum you can collect under 
this policy for both Coverage A--Building Property and Coverage D--
Increased Cost of Compliance cannot exceed the maximum permitted under 
the Act. We do not charge a separate deductible for a claim under 
Coverage D.
    3. Eligibility.
    a. A structure covered under Coverage A--Building Property 
sustaining a loss caused by a flood as defined by this policy must:
    (1) Be a ``repetitive loss structure.'' A ``repetitive loss 
structure'' is one that meets the following conditions:
    (a) The structure is covered by a contract of flood insurance issued 
under the NFIP.
    (b) The structure has suffered flood damage on 2 occasions during a 
10-year period which ends on the date of the second loss.
    (c) The cost to repair the flood damage, on average, equaled or 
exceeded 25% of the market value of the structure at the time of each 
flood loss.
    (d) In addition to the current claim, the NFIP must have paid the 
previous qualifying claim, and the State or community must have a 
cumulative, substantial damage provision or repetitive loss provision in 
its floodplain management law or ordinance being enforced against the 
structure; or
    (2) Be a structure that has had flood damage in which the cost to 
repair equals or exceeds 50% of the market value of the structure at the 
time of the flood. The State or community must have a substantial damage 
provision in its floodplain management law or ordinance being enforced 
against the structure.
    b. This Coverage D pays you to comply with State or local floodplain 
management laws or ordinances that meet the minimum standards of the 
National Flood Insurance Program found in the Code of Federal 
Regulations at 44 CFR 60.3. We pay for compliance activities that exceed 
those standards under these conditions:
    (1) 3.a.(1) above.

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    (2) Elevation or floodproofing in any risk zone to preliminary or 
advisory base flood elevations provided by FEMA which the State or local 
government has adopted and is enforcing for flood-damaged structures in 
such areas. (This includes compliance activities in B, C, X, or D zones 
which are being changed to zones with base flood elevations. This also 
includes compliance activities in zones where base flood elevations are 
being increased, and a flood-damaged structure must comply with the 
higher advisory base flood elevation.) Increased Cost of Compliance 
coverage does not apply to situations in B, C, X, or D zones where the 
community has derived its own elevations and is enforcing elevation or 
floodproofing requirements for flood-damaged structures to elevations 
derived solely by the community.
    (3) Elevation or floodproofing above the base flood elevation to 
meet State or local ``freeboard'' requirements, i.e., that a structure 
must be elevated above the base flood elevation.
    c. Under the minimum NFIP criteria at 44 CFR 60.3(b)(4), States and 
communities must require the elevation or floodproofing of structures in 
unnumbered A zones to the base flood elevation where elevation data is 
obtained from a Federal, State, or other source. Such compliance 
activities are also eligible for Coverage D.
    d. This coverage will also pay for the incremental cost, after 
demolition or relocation, of elevating or floodproofing a structure 
during its rebuilding at the same or another site to meet State or local 
floodplain management laws or ordinances, subject to Exclusion 
D.5.g.below relating to improvements.
    e. This coverage will also pay to bring a flood-damaged structure 
into compliance with State or local floodplain management laws or 
ordinances even if the structure had received a variance before the 
present loss from the applicable floodplain management requirements.
    4. Conditions.
    a. When a structure covered under Coverage A--Building Property 
sustains a loss caused by a flood, our payment for the loss under this 
Coverage D will be for the increased cost to elevate, floodproof, 
relocate, or demolish (or any combination of these activities) caused by 
the enforcement of current State or local floodplain management 
ordinances or laws. Our payment for eligible demolition activities will 
be for the cost to demolish and clear the site of the building debris or 
a portion thereof caused by the enforcement of current State or local 
floodplain management ordinances or laws. Eligible activities for the 
cost of clearing the site will include those necessary to discontinue 
utility service to the site and ensure proper abandonment of on-site 
utilities.
    b. When the building is repaired or rebuilt, it must be intended for 
the same occupancy as the present building unless otherwise required by 
current floodplain management ordinances or laws.
    5. Exclusions.
    Under this Coverage D--Increased Cost of Compliance, we will not pay 
for:
    a. The cost to comply with any floodplain management law or 
ordinance in communities participating in the Emergency Program.
    b. The cost associated with enforcement of any ordinance or law that 
requires any insured or others to test for, monitor, clean up, remove, 
contain, treat, detoxify or neutralize, or in any way respond to, or 
assess the effects of pollutants.
    c. The loss in value to any insured building or other structure due 
to the requirements of any ordinance or law.
    d. The loss in residual value of the undamaged portion of a building 
demolished as a consequence of enforcement of any State or local 
floodplain management law or ordinance.
    e. Any Increased Cost of Compliance under this Coverage D:
    (1) Until the building is elevated, floodproofed, demolished, or 
relocated on the same or to another premises; and
    (2) Unless the building is elevated, floodproofed, demolished, or 
relocated as soon as reasonably possible after the loss, not to exceed 
two years.
    f. Any code upgrade requirements, e.g., plumbing or electrical 
wiring, not specifically related to the State or local floodplain 
management law or ordinance.
    g. Any compliance activities needed to bring additions or 
improvements made after the loss occurred into compliance with State or 
local floodplain management laws or ordinances.
    h. Loss due to any ordinance or law that you were required to comply 
with before the current loss.
    i. Any rebuilding activity to standards that do not meet the NFIP's 
minimum requirements. This includes any situation where the insured has 
received from the State or community a variance in connection with the 
current flood loss to rebuild the property to an elevation below the 
base flood elevation.
    j. Increased Cost of Compliance for a garage or carport.
    k. Any structure insured under an NFIP Group Flood Insurance Policy.
    l. Assessments made by a condominium association on individual 
condominium unit owners to pay increased costs of repairing commonly 
owned buildings after a flood in compliance with State or local 
floodplain management ordinances or laws.
    6. Other Provisions.

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    a. Increased Cost of Compliance coverage will not be included in the 
calculation to determine whether coverage meets the coinsurance 
requirement for replacement cost coverage under VIII. General 
Conditions, V. Loss Settlement.
    b. All other conditions and provisions of this policy apply.

                        IV. Property Not Covered

    We do not cover any of the following:
    1. Personal property not inside the fully enclosed building;
    2. A building, and personal property in it, located entirely in, on, 
or over water or seaward of mean high tide, if constructed or 
substantially improved after September 30, 1982;
    3. Open structures, including a building used as a boathouse or any 
structure or building into which boats are floated, and personal 
property located in, on, or over water;
    4. Recreational vehicles other than travel trailers described in the 
Definitions Section (see II.B.6.c.) whether affixed to a permanent 
foundation or on wheels;
    5. Self-propelled vehicles or machines, including their parts and 
equipment.
    However, we do cover self-propelled vehicles or machines, provided 
they are not licensed for use on public roads and are:
    a. Used mainly to service the described location, or
    b. Designed and used to assist handicapped persons, while the 
vehicles or machines are inside a building at the described location;
    6. Land, land values, lawns, trees, shrubs, plants, growing crops, 
or animals;
    7. Accounts, bills, coins, currency, deeds, evidences of debt, 
medals, money, scrip, stored value cards, postage stamps, securities, 
bullion, manuscripts, or other valuable papers;
    8. Underground structures and equipment, including wells, septic 
tanks, and septic systems;
    9. Those portions of walks, walkways, decks, driveways, patios, and 
other surfaces, all whether protected by a roof or not, located outside 
the perimeter, exterior walls of the insured building;
    10. Containers, including related equipment, such as, but not 
limited to, tanks containing gases or liquids;
    11. Buildings and all their contents if more than 49% of the actual 
cash value of the building is below ground, unless the lowest level is 
at or above the base flood elevation and is below ground by reason of 
earth having been used as insulation material in conjunction with energy 
efficient building techniques;
    12. Fences, retaining walls, seawalls, bulkheads, wharves, piers, 
bridges, and docks;
    13. Aircraft or watercraft, or their furnishings and equipment;
    14. Hot tubs and spas that are not bathroom fixtures, and swimming 
pools, and their equipment such as, but not limited to, heaters, 
filters, pumps, and pipes, wherever located;
    15. Property not eligible for flood insurance pursuant to the 
provisions of the Coastal Barrier Resources Act and the Coastal Barrier 
Improvements Act of 1990 and amendments to these Acts;
    16. Personal property used in connection with any incidental 
commercial occupancy or use of the building.

                              V. Exclusions

    A. We only pay for direct physical loss by or from flood, which 
means that we do not pay you for:
    1. Loss of revenue or profits;
    2. Loss of access to the insured property or described location;
    3. Loss of use of the insured property or described location;
    4. Loss from interruption of business or production;
    5. Any additional living expenses incurred while the insured 
building is being repaired or is unable to be occupied for any reason;
    6. The cost of complying with any ordinance or law requiring or 
regulating the construction, demolition, remodeling, renovation, or 
repair of property, including removal of any resulting debris. This 
exclusion does not apply to any eligible activities that we describe in 
Coverage D--Increased Cost of Compliance; or
    7. Any other economic loss.
    B. We do not insure a loss directly or indirectly caused by a flood 
that is already in progress at the time and date:
    1. The policy term begins; or
    2. Coverage is added at your request.
    C. We do not insure for loss to property caused directly by earth 
movement even if the earth movement is caused by flood. Some examples of 
earth movement that we do not cover are:
    1. Earthquake;
    2. Landslide;
    3. Land subsidence;
    4. Sinkholes;
    5. Destabilization or movement of land that results from 
accumulation of water in subsurface land areas; or
    6. Gradual erosion.
    We do, however, pay for losses from mudflow and land subsidence as a 
result of erosion that are specifically covered under our definition of 
flood (see II.A.1.c. and II.A.2.).
    D. We do not insure for direct physical loss caused directly or 
indirectly by:
    1. The pressure or weight of ice;
    2. Freezing or thawing;
    3. Rain, snow, sleet, hail, or water spray;
    4. Water, moisture, mildew, or mold damage that results primarily 
from any condition:

[[Page 292]]

    a. Substantially confined to the insured building; or
    b. That is within your control including, but not limited to:
    (1) Design, structural, or mechanical defects;
    (2) Failures, stoppages, or breakage of water or sewer lines, 
drains, pumps, fixtures, or equipment; or
    (3) Failure to inspect and maintain the property after a flood 
recedes;
    5. Water or water-borne material that:
    a. Backs up through sewers or drains;
    b. Discharges or overflows from a sump, sump pump, or related 
equipment; or
    c. Seeps or leaks on or through insured property;
unless there is a flood in the area and the flood is the proximate cause 
of the sewer, drain, or sump pump discharge or overflow, or the seepage 
of water;
    6. The pressure or weight of water unless there is a flood in the 
area and the flood is the proximate cause of the damage from the 
pressure or weight of water.
    7. Power, heating, or cooling failure unless the failure results 
from direct physical loss by or from flood to power, heating or cooling 
equipment situated on the described location;
    8. Theft, fire, explosion, wind, or windstorm;
    9. Anything you or your agents do or conspire to do to cause loss by 
flood deliberately; or
    10. Alteration of the insured property that significantly increases 
the risk of flooding.
    E. We do not insure for loss to any building or personal property 
located on land leased from the Federal Government, arising from or 
incident to the flooding of the land by the Federal Government, where 
the lease expressly holds the Federal Government harmless under flood 
insurance issued under any Federal Government program.
    F. We do not pay for the testing for or monitoring of pollutants 
unless required by law or ordinance.

                             VI. Deductibles

    A. When a loss is covered under this policy, we will pay only that 
part of the loss that exceeds the applicable deductible amount, subject 
to the limit of insurance that applies. The deductible amount is shown 
on the Declarations Page.
    However, when a building under construction, alteration, or repair 
does not have at least two rigid exterior walls and a fully secured roof 
at the time of loss, your deductible amount will be two times the 
deductible that would otherwise apply to a completed building.
    B. In each loss from flood, separate deductibles apply to the 
building and personal property insured by this policy.
    C. No deductible applies to:
    1. III.C.2. Loss Avoidance Measures; or
    2. III.D. Increased Cost of Compliance.

                            VII. Coinsurance

    A. This Coinsurance Section applies only to coverage on the 
building.
    B. We will impose a penalty on loss payment unless the amount of 
insurance applicable to the damaged building is:
    1. At least 80% of its replacement cost; or
    2. The maximum amount of insurance available for that building under 
the NFIP, whichever is less.
    C. If the actual amount of insurance on the building is less than 
the required amount in accordance with the terms of VII. B. above, then 
loss payment is determined as follows (subject to all other relevant 
conditions in this policy, including those pertaining to valuation, 
adjustment, settlement, and payment of loss):
    1. Divide the actual amount of insurance carried on the building by 
the required amount of insurance.
    2. Multiply the amount of loss, before application of the 
deductible, by the figure determined in C.1. above.
    3. Subtract the deductible from the figure determined in C.2. above.
    We will pay the amount determined in C.3. above, or the amount of 
insurance carried, whichever is less. The amount of insurance carried, 
if in excess of the applicable maximum amount of insurance available 
under the NFIP, is reduced accordingly.

                                Examples

                Example 1 (Inadequate Insurance)

Replacement value of the building--$250,000
Required amount of insurance--$200,000
 (80% of replacement value of $250,000)
Actual amount of insurance carried--$180,000
Amount of the loss--$150,000
Deductible--$500
Step 1:180,000 / 200,000 = .90
 (90% of what should be carried.)
Step 2: 150,000 x .90 = 135,000
Step 3: 135,000 - 500 = 134,500

    We will pay no more than $134,500. The remaining $15,500 is not 
covered due to the coinsurance penalty ($15,000) and application of the 
deductible ($500).

                 Example 2 (Adequate Insurance)

Replacement value of the building--$500,000
Required amount of insurance--$400,000
 (80% of replacement value of $500,000)
Actual amount of insurance carried--$400,000
Amount of the loss--$200,000
Deductible--$500

    In this example there is no coinsurance penalty, because the actual 
amount of insurance carried meets the required amount. We will pay no 
more than $199,500 ($200,000 amount of loss minus the $500 deductible).

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    D. In calculating the full replacement cost of a building:
    1. The replacement cost value of any covered building property will 
be included;
    2. The replacement cost value of any building property not covered 
under this policy will not be included; and
    3. Only the replacement cost value of improvements installed by the 
condominium association will be included.

                        VIII. General Conditions

    A. Pair and Set Clause.
    In case of loss to an article that is part of a pair or set, we will 
have the option of paying you:
    1. An amount equal to the cost of replacing the lost, damaged, or 
destroyed article, less depreciation; or
    2. An amount which represents the fair proportion of the total value 
of the pair or set that the lost, damaged, or destroyed article bears to 
the pair or set.
    B. Concealment or Fraud and Policy Voidance.
    1. With respect to all insureds under this policy, this policy:
    a. Is void,
    b. Has no legal force or effect,
    c. Cannot be renewed, and
    d. Cannot be replaced by a new NFIP policy, if, before or after a 
loss, you or any other insured or your agent have at any time:
    (1) Intentionally concealed or misrepresented any material fact or 
circumstance,
    (2) Engaged in fraudulent conduct, or
    (3) Made false statements,
relating to this policy or any other NFIP insurance.
    2. This policy will be void as of the date the wrongful acts 
described in B.1. above were committed.
    3. Fines, civil penalties, and imprisonment under applicable Federal 
laws may also apply to the acts of fraud or concealment described above.
    4. This policy is also void for reasons other than fraud, 
misrepresentation, or wrongful act. This policy is void from its 
inception and has no legal force under the following conditions:
    a. If the property is located in a community that was not 
participating in the NFIP on the policy's inception date and did not 
join or re-enter the program during the policy term and before the loss 
occurred; or
    b. If the property listed on the application is not otherwise 
eligible for coverage under the NFIP.
    C. Other Insurance.
    1. If a loss covered by this policy is also covered by other 
insurance that includes flood coverage not issued under the Act, we will 
not pay more than the amount of insurance that you are entitled to for 
lost, damaged or destroyed property insured under this policy subject to 
the following:
    a. We will pay only the proportion of the loss that the amount of 
insurance that applies under this policy bears to the total amount of 
insurance covering the loss, unless C.1.b. or c. immediately below 
applies.
    b. If the other policy has a provision stating that it is excess 
insurance, this policy will be primary.
    c. This policy will be primary (but subject to its own deductible) 
up to the deductible in the other flood policy (except another policy as 
described in C.1.b. above). When the other deductible amount is reached, 
this policy will participate in the same proportion that the amount of 
insurance under this policy bears to the total amount of both policies, 
for the remainder of the loss.
    2. If there is a flood insurance policy in the name of a unit owner 
that covers the same loss as this policy, then this policy will be 
primary.
    D. Amendments, Waivers, Assignment.
    This policy cannot be changed nor can any of its provisions be 
waived without the express written consent of the Federal Insurance 
Administrator. No action that we take under the terms of this policy 
constitutes a waiver of any of our rights. You may assign this policy in 
writing when you transfer title of your property to someone else except 
under these conditions:
    1. When this policy covers only personal property; or
    2. When this policy covers a structure during the course of 
construction.
    E. Cancellation of Policy by You.
    1. You may cancel this policy in accordance with the applicable 
rules and regulations of the NFIP.
    2. If you cancel this policy, you may be entitled to a full or 
partial refund of premium also under the applicable rules and 
regulations of the NFIP.
    F. Non-Renewal of the Policy by Us.
    Your policy will not be renewed:
    1. If the community where your covered property is located stops 
participating in the NFIP, or
    2. Your building has been declared ineligible under section 1316 of 
the Act.
    G. Reduction and Reformation of Coverage.
    1. If the premium we received from you was not enough to buy the 
kind and amount of coverage you requested, we will provide only the 
amount of coverage that can be purchased for the premium payment we 
received.
    2. The policy can be reformed to increase the amount of coverage 
resulting from the reduction described in G.1. above the amount that you 
requested as follows:
    a. Discovery of Insufficient Premium or Incomplete Rating 
Information Before a Loss.
    (1) If we discover before you have a flood loss that your premium 
payment was not

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enough to buy the requested amount of coverage, we will send you and any 
mortgagee or trustee known to us a bill for the required additional 
premium for the current policy term (or that portion of the current 
policy term following any endorsement changing the amount of coverage). 
If you or the mortgagee or trustee pay the additional premium within 30 
days from the date of our bill, we will reform the policy to increase 
the amount of coverage to the originally requested amount effective to 
the beginning of the current policy term (or subsequent date of any 
endorsement changing the amount of coverage).
    (2) If we determine before you have a flood loss that the rating 
information we have is incomplete and prevents us from calculating the 
additional premium, we will ask you to send the required information. 
You must submit the information within 60 days of our request. Once we 
determine the amount of additional premium for the current policy term, 
we will follow the procedure in G.2.a.(1) above.
    (3) If we do not receive the additional premium (or additional 
information) by the date it is due, the amount of coverage can only be 
increased by endorsement subject to any appropriate waiting period.
    b. Discovery of Insufficient Premium or Incomplete Rating 
Information After a Loss.
    (1) If we discover after you have a flood loss that your premium 
payment was not enough to buy the requested amount of coverage, we will 
send you and any mortgagee or trustee known to us a bill for the 
required additional premium for the current and the prior policy terms. 
If you or the mortgagee or trustee pay the additional premium within 30 
days of the date of our bill, we will reform the policy to increase the 
amount of coverage to the originally requested amount effective to the 
beginning of the prior policy term.
    (2) If we discover after you have a flood loss that the rating 
information we have is incomplete and prevents us from calculating the 
additional premium, we will ask you to send the required information. 
You must submit the information before your claim can be paid. Once we 
determine the amount of additional premium for the current and prior 
policy terms, we will follow the procedure in G.2.b.(1) above.
    (3) If we do not receive the additional premium by the date it is 
due, your flood insurance claim will be settled based on the reduced 
amount of coverage. The amount of coverage can only be increased by 
endorsement subject to any appropriate waiting period.
    3. However, if we find that you or your agent intentionally did not 
tell us, or falsified, any important fact or circumstance or did 
anything fraudulent relating to this insurance, the provisions of 
Condition B. Concealment or Fraud and Policy Voidance above apply.
    H. Policy Renewal.
    1. This policy will expire at 12:01 a.m. on the last day of the 
policy term.
    2. We must receive the payment of the appropriate renewal premium 
within 30 days of the expiration date.
    3. If we find, however, that we did not place your renewal notice 
into the U.S. Postal Service, or if we did mail it, we made a mistake, 
e.g., we used an incorrect, incomplete, or illegible address, which 
delayed its delivery to you before the due date for the renewal premium, 
then we will follow these procedures:
    a. If you or your agent notified us, not later than one year after 
the date on which the payment of the renewal premium was due, of 
nonreceipt of a renewal notice before the due date for the renewal 
premium, and we determine that the circumstances in the preceding 
paragraph apply, we will mail a second bill providing a revised due 
date, which will be 30 days after the date on which the bill is mailed.
    b. If we do not receive the premium requested in the second bill by 
the revised due date, then we will not renew the policy. In that case, 
the policy will remain as an expired policy as of the expiration date 
shown on the Declarations Page.
    4. In connection with the renewal of this policy, we may ask you 
during the policy term to re-certify, on a Recertification Questionnaire 
that we will provide you, the rating information used to rate your most 
recent application for or renewal of insurance.
    I. Conditions Suspending or Restricting Insurance.
    We are not liable for loss that occurs while there is a hazard that 
is increased by any means within your control or knowledge.
    J. Requirements in Case of Loss.
    In case of a flood loss to insured property, you must:
    1. Give prompt written notice to us;
    2. As soon as reasonably possible, separate the damaged and 
undamaged property, putting it in the best possible order so that we may 
examine it;
    3. Prepare an inventory of damaged personal property showing the 
quantity, description, actual cash value, and amount of loss. Attach all 
bills, receipts and related documents;
    4. Within 60 days after the loss, send us a proof of loss, which is 
your statement of the amount you are claiming under the policy signed 
and sworn to by you, and which furnishes us with the following 
information:
    a. The date and time of loss;
    b. A brief explanation of how the loss happened;
    c. Your interest (for example, ``owner'') and the interest, if any, 
of others in the damaged property;

[[Page 295]]

    d. Details of any other insurance that may cover the loss;
    e. Changes in title or occupancy of the insured property during the 
term of the policy;
    f. Specifications of damaged insured buildings and detailed repair 
estimates;
    g. Names of mortgagees or anyone else having a lien, charge, or 
claim against the insured property;
    h. Details about who occupied any insured building at the time of 
loss and for what purpose; and
    i. The inventory of damaged personal property described in J.3. 
above.
    5. In completing the proof of loss, you must use your own judgment 
concerning the amount of loss and justify that amount.
    6. You must cooperate with the adjuster or representative in the 
investigation of the claim.
    7. The insurance adjuster whom we hire to investigate your claim may 
furnish you with a proof of loss form, and she or he may help you 
complete it. However, this is a matter of courtesy only, and you must 
still send us a proof of loss within sixty days after the loss even if 
the adjuster does not furnish the form or help you complete it.
    8. We have not authorized the adjuster to approve or disapprove 
claims or to tell you whether we will approve your claim.
    9. At our option, we may accept the adjuster's report of the loss 
instead of your proof of loss. The adjuster's report will include 
information about your loss and the damages you sustained. You must sign 
the adjuster's report. At our option, we may require you to swear to the 
report.
    K. Our Options After a Loss.
    Options that we may, in our sole discretion, exercise after loss 
include the following:
    1. At such reasonable times and places that we may designate, you 
must:
    a. Show us or our representative the damaged property;
    b. Submit to examination under oath, while not in the presence of 
another insured, and sign the same; and
    c. Permit us to examine and make extracts and copies of:
    (1) Any policies of property insurance insuring you against loss and 
the deed establishing your ownership of the insured real property;
    (2) Condominium association documents including the Declarations of 
the condominium, its Articles of Association or Incorporation, Bylaws, 
and rules and regulations; and
    (3) All books of accounts, bills, invoices and other vouchers, or 
certified copies pertaining to the damaged property if the originals are 
lost.
    2. We may request, in writing, that you furnish us with a complete 
inventory of the lost, damaged, or destroyed property, including:
    a. Quantities and costs;
    b. Actual cash values or replacement cost (whichever is 
appropriate);
    c. Amounts of loss claimed;
    d. Any written plans and specifications for repair of the damaged 
property that you can make reasonably available to us; and
    e. Evidence that prior flood damage has been repaired.
    3. If we give you written notice within 30 days after we receive 
your signed, sworn proof of loss, we may:
    a. Repair, rebuild, or replace any part of the lost, damaged, or 
destroyed property with material or property of like kind and quality or 
its functional equivalent; and
    b. Take all or any part of the damaged property at the value we 
agree upon or its appraised value.
    L. No Benefit to Bailee.
    No person or organization, other than you, having custody of covered 
property will benefit from this insurance.
    M. Loss Payment.
    1. We will adjust all losses with you. We will pay you unless some 
other person or entity is named in the policy or is legally entitled to 
receive payment. Loss will be payable 60 days after we receive your 
proof of loss (or within 90 days after the insurance adjuster files an 
adjuster's report signed and sworn to by you in lieu of a proof of loss) 
and:
    a. We reach an agreement with you;
    b. There is an entry of a final judgment; or
    c. There is a filing of an appraisal award with us, as provided in 
VIII. P.
    2. If we reject your proof of loss in whole or in part you may:
    a. Accept such denial of your claim;
    b. Exercise your rights under this policy; or
    c. File an amended proof of loss as long as it is filed within 60 
days of the date of the loss.
    N. Abandonment.
    You may not abandon damaged or undamaged insured property to us.
    O. Salvage.
    We may permit you to keep damaged insured property after a loss, and 
we will reduce the amount of the loss proceeds payable to you under the 
policy by the value of the salvage.
    P. Appraisal.
    If you and we fail to agree on the actual cash value or, if 
applicable, replacement cost of the damaged property so as to determine 
the amount of loss, then either may demand an appraisal of the loss. In 
this event, you and we will each choose a competent and impartial 
appraiser within 20 days after receiving a written request from the 
other. The two appraisers will choose an umpire. If they cannot agree 
upon an umpire within 15 days, you or we may request that the choice be

[[Page 296]]

made by a judge of a court of record in the state where the insured 
property is located. The appraisers will separately state the actual 
cash value, the replacement cost, and the amount of loss to each item. 
If the appraisers submit a written report of an agreement to us, the 
amount agreed upon will be the amount of loss. If they fail to agree, 
they will submit their differences to the umpire. A decision agreed to 
by any two will set the amount of actual cash value and loss, or if it 
applies, the replacement cost and loss.
    Each party will:
    1. Pay its own appraiser; and
    2. Bear the other expenses of the appraisal and umpire equally.
    Q. Mortgage Clause.
    The word ``mortgagee'' includes trustee.
    Any loss payable under Coverage A--Building will be paid to any 
mortgagee of whom we have actual notice, as well as any other mortgagee 
or loss payee determined to exist at the time of loss, and you, as 
interests appear. If more than one mortgagee is named, the order of 
payment will be the same as the order of precedence of the mortgages.
    If we deny your claim, that denial will not apply to a valid claim 
of the mortgagee, if the mortgagee:
    1. Notifies us of any change in the ownership or occupancy, or 
substantial change in risk, of which the mortgagee is aware;
    2. Pays any premium due under this policy on demand if you have 
neglected to pay the premium; and
    3. Submits a signed, sworn proof of loss within 60 days after 
receiving notice from us of your failure to do so.
    All of the terms of this policy apply to the mortgagee.
    The mortgagee has the right to receive loss payment even if the 
mortgagee has started foreclosure or similar action on the building.
    If we decide to cancel or not renew this policy, it will continue in 
effect for the benefit of the mortgagee only for 30 days after we notify 
the mortgagee of the cancellation or non-renewal.
    If we pay the mortgagee for any loss and deny payment to you, we are 
subrogated to all the rights of the mortgagee granted under the mortgage 
on the property. Subrogation will not impair the right of the mortgagee 
to recover the full amount of the mortgagee's claim.
    R. Suit Against Us.
    You may not sue us to recover money under this policy unless you 
have complied with all the requirements of the policy. If you do sue, 
you must start the suit within one year of the date of the written 
denial of all or part of the claim and you must file the suit in the 
United States District Court of the district in which the insured 
property was located at the time of loss. This requirement applies to 
any claim that you may have under this policy and to any dispute that 
you may have arising out of the handling of any claim under the policy.
    S. Subrogation.
    Whenever we make a payment for a loss under this policy, we are 
subrogated to your right to recover for that loss from any other person. 
That means that your right to recover for a loss that was partly or 
totally caused by someone else is automatically transferred to us, to 
the extent that we have paid you for the loss. We may require you to 
acknowledge this transfer in writing. After the loss, you may not give 
up our right to recover this money or do anything that would prevent us 
from recovering it. If you make any claim against any person who caused 
your loss and recover any money, you must pay us back first before you 
may keep any of that money.
    T. Continuous Lake Flooding.
    1. If an insured building has been flooded by rising lake waters 
continuously for 90 days or more and it appears reasonably certain that 
a continuation of this flooding will result in a covered loss to the 
insured building equal to or greater than the building policy limits 
plus the deductible or the maximum payable under the policy for any one 
building loss, we will pay you the lesser of these two amounts without 
waiting for the further damage to occur if you sign a release agreeing:
    a. To make no further claim under this policy;
    b. Not to seek renewal of this policy;
    c. Not to apply for any flood insurance under the Act for property 
at the described location; and
    d. Not to seek a premium refund for current or prior terms.
    If the policy term ends before the insured building has been flooded 
continuously for 90 days, the provisions of this paragraph T.1. will 
apply as long as the insured building suffers a covered loss before the 
policy term ends.
    2. If your insured building is subject to continuous lake flooding 
from a closed basin lake, you may elect to file a claim under either 
paragraph T.1. above or this paragraph T.2. (A ``closed basin lake'' is 
a natural lake from which water leaves primarily through evaporation and 
whose surface area now exceeds or has exceeded one square mile at any 
time in the recorded past. Most of the nation's closed basin lakes are 
in the western half of the United States where annual evaporation 
exceeds annual precipitation and where lake levels and surface areas are 
subject to considerable fluctuation due to wide variations in the 
climate. These lakes may overtop their basins on rare occasions.) Under 
this paragraph T.2, we will pay your claim as if the building is a total 
loss even though it has not been continuously inundated for 90 days, 
subject to the following conditions:

[[Page 297]]

    a. Lake flood waters must damage or imminently threaten to damage 
your building.
    b. Before approval of your claim, you must:
    (1) Agree to a claim payment that reflects your buying back the 
salvage on a negotiated basis; and
    (2) Grant the conservation easement contained in FEMA's ``Policy 
Guidance for Closed Basin Lakes,'' to be recorded in the office of the 
local recorder of deeds. FEMA, in consultation with the community in 
which the property is located, will identify on a map an area or areas 
of special consideration (ASC) in which there is a potential for flood 
damage from continuous lake flooding. FEMA will give the community the 
agreed-upon map showing the ASC. This easement will only apply to that 
portion of the property in the ASC. It will allow certain agricultural 
and recreational uses of the land. The only structures that it will 
allow on any portion of the property within the ASC are certain simple 
agricultural and recreational structures. If any of these allowable 
structures are insurable buildings under the NFIP and are insured under 
the NFIP, they will not be eligible for the benefits of this paragraph 
T.2. If a U.S. Army Corps of Engineers certified flood control project 
or otherwise certified flood control project later protects the 
property, FEMA will, upon request, amend the ASC to remove areas 
protected by those projects. The restrictions of the easement will then 
no longer apply to any portion of the property removed from the ASC; and
    (3) Comply with paragraphs T.1.a. through T.1.d. above.
    c. Within 90 days of approval of your claim, you must move your 
building to a new location outside the ASC. FEMA will give you an 
additional 30 days to move if you show there is sufficient reason to 
extend the time.
    d. Before the final payment of your claim, you must acquire an 
elevation certificate and a floodplain development permit from the local 
floodplain administrator for the new location of your building.
    e. Before the approval of your claim, the community having 
jurisdiction over your building must:
    (1) Adopt a permanent land use ordinance, or a temporary moratorium 
for a period not to exceed 6 months to be followed immediately by a 
permanent land use ordinance, that is consistent with the provisions 
specified in the easement required in paragraph T.2.b. above;
    (2) Agree to declare and report any violations of this ordinance to 
FEMA so that under Sec. 1316 of the National Flood Insurance Act of 
1968, as amended, flood insurance to the building can be denied; and
    (3) Agree to maintain as deed-restricted, for purposes compatible 
with open space or agricultural or recreational use only, any affected 
property the community acquires an interest in. These deed restrictions 
must be consistent with the provisions of paragraph T.2.b. above, except 
that even if a certified project protects the property, the land use 
restrictions continue to apply if the property was acquired under the 
Hazard Mitigation Grant Program or the Flood Mitigation Assistance 
Program. If a non-profit land trust organization receives the property 
as a donation, that organization must maintain the property as deed-
restricted, consistent with the provisions of paragraph T.2.b. above.
    f. Before the approval of your claim, the affected State must take 
all action set forth in FEMA's ``Policy Guidance for Closed Basin 
Lakes.''
    g. You must have NFIP flood insurance coverage continuously in 
effect from a date established by FEMA until you file a claim under this 
paragraph T.2. If a subsequent owner buys NFIP insurance that goes into 
effect within 60 days of the date of transfer of title, any gap in 
coverage during that 60-day period will not be a violation of this 
continuous coverage requirement. For the purpose of honoring a claim 
under this paragraph T.2., we will not consider to be in effect any 
increased coverage that became effective after the date established by 
FEMA. The exception to this is any increased coverage in the amount 
suggested by your insurer as an inflation adjustment.
    h. This paragraph T.2. will be in effect for a community when the 
FEMA Regional Director for the affected region provides to the 
community, in writing, the following:
    (1) Confirmation that the community and the State are in compliance 
with the conditions in paragraphs T.2.e. and T.2.f. above, and
    (2) The date by which you must have flood insurance in effect.
    U. Duplicate Policies Not Allowed.
    1. We will not insure your property under more than one NFIP policy.
    If we find that the duplication was not knowingly created, we will 
give you written notice. The notice will advise you that you may choose 
one of several options under the following procedures:
    a. If you choose to keep in effect the policy with the earlier 
effective date, you may also choose to add the coverage limits of the 
later policy to the limits of the earlier policy. The change will become 
effective as of the effective date of the later policy.
    b. If you choose to keep in effect the policy with the later 
effective date, you may also choose to add the coverage limits of the 
earlier policy to the limits of the later policy. The change will be 
effective as of the effective date of the later policy.
    In either case, you must pay the pro rata premium for the increased 
coverage limits within 30 days of the written notice. In no event will 
the resulting coverage limits exceed the permissible limits of coverage 
under

[[Page 298]]

the Act or your insurable interest, whichever is less. We will make a 
refund to you, according to applicable NFIP rules, of the premium for 
the policy not being kept in effect.
    2. The insured's option under this condition U. Duplicate Policies 
Not Allowed to elect which NFIP policy to keep in effect does not apply 
when duplicates have been knowingly created. Losses occurring under such 
circumstances will be adjusted according to the terms and conditions of 
the earlier policy. The policy with the later effective date must be 
canceled.
    V. Loss Settlement.

                             1. Introduction

    This policy provides three methods of settling losses: Replacement 
Cost, Special Loss Settlement, and Actual Cash Value. Each method is 
used for a different type of property, as explained in a.-c. below.
    a. Replacement Cost Loss Settlement described in V.2. below applies 
to buildings other than manufactured homes or travel trailers.
    b. Special Loss Settlement described in V.3. below applies to a 
residential condominium building that is a travel trailer or a 
manufactured home.
    c. Actual Cash Value loss settlement applies to all other property 
covered under this policy, as outlined in V.4. below.

                   2. Replacement Cost Loss Settlement

    a. We will pay to repair or replace a damaged or destroyed building, 
after application of the deductible and without deduction for 
depreciation, but not more than the least of the following amounts:
    (1) The amount of insurance in this policy that applies to the 
building;
    (2) The replacement cost of that part of the building damaged, with 
materials of like kind and quality, and for like occupancy and use; or
    (3) The necessary amount actually spent to repair or replace the 
damaged part of the building for like occupancy and use.
    b. We will not be liable for any loss on a Replacement Cost Coverage 
basis unless and until actual repair or replacement of the damaged 
building or parts thereof, is completed.
    c. If a building is rebuilt at a location other than the described 
location, we will pay no more than it would have cost to repair or 
rebuild at the described location, subject to all other terms of 
Replacement Cost Loss Settlement.

                       3. Special Loss Settlement

    a. The following loss settlement conditions apply to a residential 
condominium building that is: (1) a manufactured home or travel trailer, 
as defined in II.B.6.b. and c., and (2) at least 16 feet wide when fully 
assembled and has at least 600 square feet within its perimeter walls 
when fully assembled.
    b. If such a building is totally destroyed or damaged to such an 
extent that, in our judgment, it is not economically feasible to repair, 
at least to its pre-damaged condition, we will, at our discretion, pay 
the least of the following amounts:
    (1) The lesser of the replacement cost of the manufactured home or 
travel trailer or 1.5 times the actual cash value; or
    (2) The Building Limit of liability shown on your Declarations Page.
    c. If such a manufactured home or travel trailer is partially 
damaged and, in our judgment, it is economically feasible to repair it 
to its pre-damaged condition, we will settle the loss according to the 
Replacement Cost Loss Settlement conditions in V.2. above.

                  4. Actual Cash Value Loss Settlement

    a. The types of property noted below are subject to actual cash 
value loss settlement:
    (1) Personal property;
    (2) Insured property abandoned after a loss and that remains as 
debris at the described location;
    (3) Outside antennas and aerials, awning, and other outdoor 
equipment;
    (4) Carpeting and pads;
    (5) Appliances; and
    (6) A manufactured home or mobile home or a travel trailer as 
defined in II.B.6.b. or c. that does not meet the conditions for special 
loss settlement in V.3. above.
    b. We will pay the least of the following amounts:
    (1) The applicable amount of insurance under this policy;
    (2) The actual cash value (as defined in II.B.2.); or
    (3) The amount it would cost to repair or replace the property with 
material of like kind and quality within a reasonable time after the 
loss.

                        IX. Liberalization Clause

    If we make a change that broadens your coverage under this edition 
of our policy, but does not require any additional premium, then that 
change will automatically apply to your insurance as of the date we 
implement the change, provided that this implementation date falls 
within 60 days before or during the policy term stated on the 
Declarations Page.

                           X. What Law Governs

    This policy and all disputes arising from the handling of any claim 
under the policy are governed exclusively by the flood insurance 
regulations issued by FEMA, the National Flood Insurance Act of 1968, as 
amended (42 U.S.C. 4001, et seq.), and Federal common law.

[[Page 299]]

    In Witness Whereof, we have signed this policy below and hereby 
enter into this Insurance Agreement.
                                                          Jo Ann Howard,
                        Administrator, Federal Insurance Administration.

[65 FR 60785, Oct. 12, 2000, as amended at 68 FR 9897, Mar. 3, 2003]

                        Appendix A(4) to Part 61

  Federal Emergency Management Agency, Federal Insurance Administration

      Standard Flood Insurance Policy Endorsement to Dwelling Form

    This endorsement replaces the provisions of VII.B.4 and VII.H.2, and 
also adds a new paragraph, VII.H.5. This endorsement applies in Monroe 
County and the Village of Islamorada, Florida, This endorsement also 
applies to communities within Monroe County, Florida that incorporate on 
or after January 1, 1999, agree to participate in the inspection 
procedure, and become eligible for the sale of flood insurance.
    VII.B.4. This policy is also void for reasons other than fraud, 
misrepresentation, or wrongful act. This policy is void from its 
inception and has no legal force under the following conditions:
    a. If the property is located in a community that was not 
participating in the NFIP on the policy's inception date and did not 
join or re-enter the program during the policy term and before the loss 
occurred.
    b. If you have not submitted a community inspection report, referred 
to in ``H. Policy Renewal'' below, that was required in a notice sent to 
you in conjunction with the community inspection procedure established 
under 44 CFR 59.30.
    c. If the property listed on the application is not otherwise 
eligible for coverage under the NFIP
    VII.H.2. We must receive the payment of the appropriate renewal 
premium and when applicable, the community inspection report referred to 
in H.5 below within 30 days of the expiration date.
    VII.H.5. Your community has been approved by the Federal Emergency 
Management Agency to participate in an inspection procedure set forth in 
National Flood Insurance Program Regulations (44 CFR 59.30). During the 
several years that this inspection procedure will be in place, you may 
be required to obtain and submit an inspection report from your 
community certifying whether or not your insured property is in 
compliance with the community's floodplain management ordinance before 
you can renew your policy. You will be notified in writing of this 
requirement approximately 6 months before a renewal date and again at 
the time your renewal bill is sent.

[65 FR 60793, Oct. 12, 2000, as amended at 67 FR 10634, Mar. 8, 2002]

                        Appendix A(5) to Part 61

  Federal Emergency Management Agency, Federal Insurance Administration

  Standard Flood Insurance Policy Endorsement to General Property Form

    This endorsement replaces the provisions of VII.B.4 and VII.H.2, and 
also adds a new paragraph, VII.H.5. This endorsement applies in Monroe 
County and the Village of Islamorada, Florida. This endorsement also 
applies to communities within Monroe County, Florida that incorporate on 
or after January 1, 1999, agree to participate in the inspection 
procedure, and become eligible for the sale of flood insurance.
    VII.B.4. This policy is also void for reasons other than fraud, 
misrepresentation, or wrongful act. This policy is void from its 
inception and has no legal force under the following conditions:
    a. If the property is located in a community that was not 
participating in the NFIP on the policy's inception date and did not 
join or re-enter the program during the policy term and before the loss 
occurred.
    b. If you have not submitted a community inspection report, referred 
to in ``H. Policy Renewal'' below, that was required in a notice sent to 
you in conjunction with the community inspection procedure established 
under 44 CFR 59.30.
    c. If the property listed on the application is not otherwise 
eligible for coverage under the NFIP
    VII.H.2. We must receive the payment of the appropriate renewal 
premium and when applicable, the community inspection report referred to 
in H.5 below within 30 days of the expiration date.
    VII.H.5. Your community has been approved by the Federal Emergency 
Management Agency to participate in an inspection procedure set forth in 
National Flood Insurance Program Regulations (44 CFR 59.30). During the 
several years that this inspection procedure will be in place, you may 
be required to obtain and submit an inspection report from your 
community certifying whether or not your insured property is in 
compliance with the community's floodplain management ordinance before 
you can renew your policy. You will be notified in writing of this 
requirement approximately 6 months before a renewal date and again at 
the time your renewal bill is sent.

[65 FR 60793, Oct. 12, 2000, as amended at 67 FR 10634, Mar. 8, 2002]

[[Page 300]]

                        Appendix A(6) to Part 61

  Federal Emergency Management Agency, Federal Insurance Administration

 Standard Flood Insurance Policy Endorsement to Residential Condominium 
                       Building Association Policy

    This endorsement replaces the provisions of VIII.B.4 and VIII.H.2, 
and also adds a new paragraph, VIII.H.5. This endorsement applies in 
Monroe County and the Village of Islamorada, Florida. This endorsement 
also applies to communities within Monroe County, Florida and 
incorporate on or after January 1, 1999, agree to participate in the 
inspection procedure, and become eligible for the sale of flood 
insurance.
    VIII.B.4. This policy is also void for reasons other than fraud, 
misrepresentation, or wrongful act. This policy is void from its 
inception and has no legal force under the following conditions:
    a. If the property is located in a community that was not 
participating in the NFIP on the policy's inception date and did not 
join or re-enter the program during the policy term and before the loss 
occurred.
    b. If you have not submitted a community inspection report, referred 
to in ``H. Policy Renewal'' below, that was required in a notice sent to 
you in conjunction with the community inspection procedure established 
under 44 CFR 59.30.
    c. If the property listed on the application is not otherwise 
eligible for coverage under the NFIP
    VIII.H.2. We must receive the payment of the appropriate renewal 
premium and when applicable, the community inspection report referred to 
in H.5 below within 30 days of the expiration date.
    VIII.H.5. Your community has been approved by the Federal Emergency 
Management Agency to participate in an inspection procedure set forth in 
National Flood Insurance Program Regulations (44 CFR 59.30). During the 
several years that this inspection procedure will be in place, you may 
be required to obtain and submit an inspection report from your 
community certifying whether or not your insured property is in 
compliance with the community's floodplain management ordinance before 
you can renew your policy. You will be notified in writing of this 
requirement approximately 6 months before a renewal date and again at 
the time your renewal bill is sent.

[65 FR 60794, Oct. 12, 2000, as amended at 67 FR 10634, Mar. 8, 2002]