“Flood Insurance” - Employee Training

American Bank and Trust

2003

Introduction

Foundation of the National Flood Insurance Reform Act of 1994

Topics of Discussion

Flood Insurance - “Why should we care?”

Definitions “What must we do to

comply?”

Flood Insurance - “Why should we care?”

Flooding is the #1 natural disaster that occurs each year

Flooding is an equal opportunity offender - it affects businesses and homes alike

Flooding disasters are expensive to everyone

Definitions Participating Community

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

Non-Participating Community A community in which the sale of flood insurance is not

authorized because the community chooses not to participate in the NFIP

Special Flood Hazard Area (SFHA) 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).

Designated loan 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 Flood insurance is mandatory for buildings in Special Flood Hazard Areas as

identified by FEMA Ensure that flood insurance coverage is maintained for the term of the loan Flood zone determinations are required to establish whether a structure is

located in a SFHA Know the amount of flood insurance coverage to require Notify borrowers in writing of the requirement to buy flood insurance for new

and existing loans Escrow flood insurance premiums 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

Notify the insurance company or agent when the lender or servicer of a loan changes

“What must we do to comply?” Remember “M.I.R.E.” Ensure adequate

coverage! - (Sample form)

Monitor LOL coverage