Presentation on theme: "Flood Insurance - Employee Training n American Bank and Trust n 2003."— Presentation transcript:
Flood Insurance - Employee Training n American Bank and Trust n 2003
Introduction n Foundation of the National Flood Insurance Reform Act of 1994
Topics of Discussion n Flood Insurance - Why should we care? n Definitions n What must we do to comply?
Flood Insurance - Why should we care? n Flooding is the #1 natural disaster that occurs each year n Flooding is an equal opportunity offender - it affects businesses and homes alike n Flooding disasters are expensive to everyone
Definitions n Participating Community u Any community that voluntarily elects to participate in the NFIP by adopting and enforcing floodplain management regulations that are consistent with the standards of the NFIP n Non-Participating Community u A community in which the sale of flood insurance is not authorized because the community chooses not to participate in the NFIP n Special Flood Hazard Area (SFHA) u Identifies an area on a flood map that has a 1-percent chance of being flooded in any given year (100-year floodplain). Over a 30- year period, the life of most mortgages, there is at least a 26- percent chance that this area will be flooded. (Any flood zone that begins with an A or V is subject to the 100-year flood). n Designated loan u A loan secured by a building or mobile home located or to be located in a Special Flood Hazard Area (SFHA) where flood insurance is available under the 1968 Act
8 Rules of Compliance n Flood insurance is mandatory for buildings in Special Flood Hazard Areas as identified by FEMA n Ensure that flood insurance coverage is maintained for the term of the loan n Flood zone determinations are required to establish whether a structure is located in a SFHA n Know the amount of flood insurance coverage to require n Notify borrowers in writing of the requirement to buy flood insurance for new and existing loans n Escrow flood insurance premiums n There is no waiting period for flood insurance to go into effect when it is purchased in connection with the making, increasing, renewing, or extending a loan n Notify the insurance company or agent when the lender or servicer of a loan changes
What must we do to comply? n Remember M.I.R.E. n Ensure adequate coverage! - (Sample form) n Monitor LOL coverage