The peril of flood is excluded from virtually all policies providing property coverage. The National Flood Insurance Program is a government sponsored program which provides subsidized flood insurance to property owners in qualified or flood prone areas. This program is currently administered by the Federal Insurance Administration (FIA), which is part of the Federal Emergency Management Agency (FEMA). Flood insurance policies are issued by the government and private insurers in a partnership between the federal government and the private insurance industry. The purpose of the program is to make flood coverage available to the owners of property in flood prone locales.

Cities, towns and counties generally submit a request to the FIA for consideration to be included in the program. Only those persons in an area prone to floods and designated as such by the NFIP may purchase flood coverage. The federal government has designated various areas as those located in a “flood plain” or “flood zone”. During the initial thirty days that flood insurance is available to a new community, policies written will become effective immediately upon issuance. A policy issued after the initial thirty day period will become effective after an additional 7 day waiting period, once the application is presented to the NFIP.

There are two programs provided by the National Flood Insurance Program (NFIP): Emergency Program Goes into effect as soon as a community has met its land use control requirements stipulated by the federal law. Rates are subsidized by the federal government under the Emergency Program, and the following are the only limits offered: • Building Single Family - $35,000 Other residential - $100,000 Non-residential - $100,000 • Contents (per unit) All residential - $10,000 All non-residential - $100,000

Regular Program Becomes effective once a flood insurance rate map is prepared that divides the community into specific zones to determine the probability of flooding in each area and the community agrees to adopt more stringent flood control and land use measures. Rates are no longer subsidized and the following limits are offered: • Building Single Family - $250,000 Other residential - $250,000 Other Non-residential - $500,000 • Contents (per unit) All residential - $100,000 Other non-residential - $500,000

The policy also covers removal and debris removal. Property removed is covered at its new location for up to 30 days on a named peril basis. Debris removal is covered but only for the cost incurred to remove the covered property. This would not include trees, shrubbery and any other materials that “washed up” on the insured premises. The insuring agreement of the flood policy provides coverage for the peril of a direct physical loss by or from flood. The actual definition of a flood as it actually appears in the policy is as follows: “A general and temporary condition of partial or complete inundation of normally dry land area resulting from overflow of inland or tidal waters or the unusual and rapid accumulation or run off of surface

waters from any source. Flood may also include mudslide, mudflow, surface runoff flood related erosion of shorelines or lake overflow that are caused by the accumulation of water on or under ground.” The description “general condition” means that the flood must be a condition of that geographical area. The policy does not cover water damage coming from the insured's own property. In addition, the policy will not cover damage caused by: a broken or stopped up sewer; a faulty sump pump; earthquake damage; landslide damage; or accumulation of water on an insured's property due to the formation of the land.

As with any property policy, flood insurance has a deductible. It is separately applied to building and contents under the flood insurance policy. There are two minimum deductibles available for the NFIP policy. If the exposure is considered by the NFIP to be low risk, the standard deductible is $500. If the exposure is considered high risk, the standard deductible is $750. Higher deductibles are available in order to reduce premium. These deductibles range from $1,000 to $5,000 (in increments of $1,000).

The following are excluded from coverage: • Trees, shrubs, plants and lawns • Reduction in land value • Fences • Outdoor swimming pools • Walks, driveways and paved surfaces • Underground structures (i.e. wells) • building components located below the lowest elevated floor • Equipment outside a foundation wall (i.e. air conditioner) • Money and securities • Animals, birds and fish (including livestock) • Aircraft • Automobiles • Trailers • Watercraft

Mobile Home Insurance (MH) Mobile homes may be insured with the same type of protection that is included in a homeowners’ policy. This coverage, however, is modified by several unique provisions. In general, a MH policy will provide property and liability protection in a similar fashion to that found in a homeowners’ policy form except that the exposure (the mobile home) is different. To be eligible for mobile home coverage, the mobile home must be designed for portability and year-round living and must be at least 10 feet by 40 feet. This restriction eliminates a small camper or trailer being insured as a "home." The mobile home must also be made up of a frame and wheels. Mobile homes which are

permanently attached to a foundation may only be covered in certain situations. Coverage A provides protection for the mobile home described in the declarations. Structures not attached to the mobile home are generally not covered. Coverage is also provided for personal property and additional living expense. $500 of coverage is provided for removal when it is endangered by a covered peril. Transportation Endorsement This endorsement covers damage caused by collision, upset, stranding or sinking while the mobile home is being moved to a new location. Once the move begins, the policy will cover these perils for up to 30 days while in transit.

Watercraft Property coverage may be obtained to protect against damage by covered perils to an insured's boat or yacht. A homeowners’ policy provides only limited protection for watercraft. Therefore, boat owners need more comprehensive protection for greater exposures. Liability incurred as a result of the operation or ownership of watercraft is generally excluded by homeowners’ policies. Boat owner policies cover: • Inboard or inboard/outboard boats of over 50 horsepower owned by or rented to an insured. • Any boat powered by an outboard motor(s) in excess of 25 horsepower. • Sailboat that is 26 feet in length or more which is owned by or rented to the insured.

A Boat Owners Policy is a package type policy providing property insurance for the insured's boat and liability protection if the insured is legally liable for bodily injury or property damage to others arising out of its operation, maintenance or use (although liability for small crafts may be endorsed to a homeowners’ policy). Property losses are settled on an ACV basis subject to a deductible. Coverage is provided on an all-risk basis generally. Someone who owns a sailboat that is longer than 26 feet without inboard power may secure coverage under this policy.

Earth Movement (Earthquake) Coverage for this peril may be added to some property insurance policies by endorsement. This endorsement generally modifies the earth movement exclusion of most property insurance forms. Coverage is provided for loss to insured property resulting from earthquake or volcanic eruption (does not cover flood or tidal waves generated by these perils). Damage to land is also not covered. Losses will be subject to a deductible. Most property policies now provide coverage for volcanic eruption under the earth movement peril. With regard to most personal lines policy forms, any volcanic eruptions within 72 hour period will be considered a single occurrence.

Comprehensive Personal Liability (CPL) A dwelling fire policy provides protection against covered losses as a result of fire, lightning, extended coverages and several other perils. There is no coverage under a property insurance policy for an insured's legal responsibility for bodily injury (BI) or property damage (PD) to others arising out of personal activities. Therefore, this exposure may be insured if a person purchases a Comprehensive Personal Liability (CPL) policy. This type of personal liability policy is included as Section II of a homeowners’ policy. Under the CPL policy, as in the homeowners’ Section II coverage, the named insured includes: the named insured in the declarations;

any family or relatives living in the household; any other person under age 21 who is in the care of any of the aforementioned insureds. According to a CPL policy, the insured location is: 1. The residence premises 2. Vacant land other than farmland owned by the insured 3. Individual or family burial or cemetery plots 4. Any premises acquired by the insured during the policy period if used for nonbusiness purposes -OR- 5. Any part of a premises not owned by any insured where any insured is temporarily residing

Umbrella and Excess Liability Everyone is subject to liability claims of catastrophic proportions. Wealthy individuals can be targets of larger than normal legal suits. Liability protection may be secured by umbrella or excess liability policies to cover these potential losses. Excess Liability is designed to provide excess limits of coverage above the limits of applicable underlying coverage. This type of policy does not provide broader protection than is provided by the underlying policy. It provides a greater coverage limit only.

An umbrella liability policy may be purchased for business or personal reasons. An umbrella liability policy provides the excess liability coverage feature of higher limits, but it also provides broader protection not provided by the primary policy. Specific limits of underlying liability must be purchased before insurers allow an insured to purchase umbrella coverage. Note: Umbrella policies are characterized by a deductible, unlike most forms of liability insurance.

Inland Marine Insurance This type of property insurance was developed many years ago to provide protection for goods or products being transported from place to place. As this type of insurance evolved, the National Association of Insurance Commissioner's (NAIC) proposed a "Nationwide Definition" with regard to marine insurance protection. This definition recognized the following classes of property as those eligible to be covered by marine insurance: • Imports • Exports • Domestic shipments (railroads, ships, autos, barges)