[Federal Register Volume 64, Number 86 (Wednesday, May 5, 1999)]
[Proposed Rules]
[Pages 24256-24272]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10396]



[[Page 24255]]

_______________________________________________________________________

Part V





Federal Emergency Management Agency





_______________________________________________________________________



44 CFR Parts 59 and 61



National Flood Insurance Program (NFIP); Inspection of Insured 
Structures by Communities; Proposed Rule

  Federal Register / Vol. 64, No. 86 / Wednesday, May 5, 1999 / 
Proposed Rules  

[[Page 24256]]



FEDERAL EMERGENCY MANAGEMENT AGENCY

44 CFR Parts 59 and 61

RIN 3067-AC79


National Flood Insurance Program (NFIP); Inspection of Insured 
Structures by Communities

AGENCY: Federal Emergency Management Agency (FEMA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would establish an inspection procedure 
under the National Flood Insurance Program (NFIP) to help verify that 
structures in a community comply with the community's floodplain 
management ordinance and to ensure that property owners pay flood 
insurance premiums commensurate with their flood risk. The proposed 
inspection procedure would require owners of insured buildings to 
obtain an inspection from community floodplain management officials as 
a condition of renewing the Standard Flood Insurance Policy (SFIP) on 
the building. FEMA proposes to undertake the inspection procedure on a 
pilot project basis only in two communities, Monroe County, Florida and 
the incorporated Village of Islamorada located in Monroe County. We 
would make any decision to implement the inspection procedure in other 
NFIP participating communities outside of Monroe County, Florida only 
after completing the pilot inspection procedure within the selected 
communities and after an evaluation to determine the procedure's 
effectiveness.

DATES: Please send comments on or before July 6, 1999.

ADDRESSES: Please send your comments to the Rules Docket Clerk, Office 
of the General Counsel, Federal Emergency Management Agency, 500 C 
Street SW., room 840, Washington, DC 20472, (facsimile) 202-646-4536, 
or (email) [email protected].

FOR FURTHER INFORMATION CONTACT: Don Beaton, Federal Emergency 
Management Agency, Federal Insurance Administration, 202-646-3442, 
(facsimile) 202-646-4327 or Lois Forster, Federal Emergency Management 
Agency, Mitigation Directorate, 202-646-2720, (facsimile) 202-646-2577.

SUPPLEMENTARY INFORMATION:

Background

    Congress created the National Flood Insurance Program (NFIP) in 
1968 to provide Federally supported flood insurance coverage, which 
generally had not been available from private insurance companies. The 
program is based on an agreement between the Federal Government and 
each floodprone community that chooses to participate in the program. 
FEMA makes flood insurance coverage available to property owners 
provided that a community adopts and enforces floodplain management 
regulations that meet or exceed the minimum requirements of the NFIP 
set forth in part 60 of the NFIP Floodplain Management Regulations (44 
CFR part 60).
    Goal to reduce flood losses. A major goal of the NFIP is to reduce 
flood losses by implementing floodplain management regulations that 
protect new and substantially improved construction in floodprone areas 
from flood damages. Without community oversight of building activities 
and development in the floodplain, the best efforts of some to reduce 
flood losses could be undermined or destroyed by the careless building 
of others. Community enforcement of a floodplain management ordinance 
is critical in protecting a building from future flood damages, in 
reducing taxpayer funded disaster assistance, and also in keeping flood 
insurance rates affordable.
    We base the NFIP flood insurance rates for new construction on the 
degree of the flood risk reflected by the flood risk zone on the Flood 
Insurance Rate Map (FIRM) that we produce for the community. Flood 
insurance rates also take into account a number of other factors 
including the elevation of the lowest floor above or below the Base 
Flood Elevation (the elevation of the 100-year flood frequency), type 
of building, number of floors, and the existence of a basement or an 
enclosure.
    Inspection procedure. We intend to undertake the inspection 
procedure on a pilot project basis in Monroe County and the Village of 
Islamorada, Florida. The Village was formerly part of unincorporated 
Monroe County, and incorporated as a separate community in January 
1998. We would require that areas in Monroe County that incorporate and 
become a separate community on or after January 1, 1999 to participate 
in the inspection procedure as a condition of joining the NFIP. The 
purpose of the proposed inspection procedure is to provide an 
additional means for the pilot communities to identify whether post-
FIRM structures, i.e., those structures built after the effective date 
of the FIRM, are in compliance with the community's floodplain 
management ordinance. The proposed inspection procedure would also 
enable FEMA to verify that structures insured under the NFIP are 
properly rated. Post-FIRM construction is charged an actuarial rate 
that must fully reflect the risk of flooding. Because Post-FIRM 
construction is actuarially rated, buildings constructed in compliance 
with community floodplain management regulations pay flood insurance 
premiums based on rates that are in most cases significantly lower than 
rates charged for buildings built in violation of these requirements.
    We would make a decision whether to implement the inspection 
procedure in other NFIP participating communities outside of Monroe 
County, Florida only after the pilot inspection procedure is complete 
within the selected communities and we complete an evaluation to 
determine the procedure's effectiveness.

Selection of Communities To Participate in the Pilot Inspection 
Procedure

    We selected Monroe County and the Village of Islamorada, Florida 
for the proposed pilot inspection procedure due to unique circumstances 
in these communities and their willingness to participate in this 
procedure. The proposed inspection procedure would apply only to NFIP 
post-FIRM insured buildings in the Special Flood Hazard Areas (SFHAs) 
of Monroe County and the Village of Islamorada that are possible 
violations of the communities' floodplain management ordinance. Areas 
designated as SFHAs on the FIRMs are based on a flood that would have a 
one-percent chance of being equaled or exceeded in any given year (the 
100-year flood). One-percent annual chance floods are shown on the 
FIRMs as A Zones or V Zones.
    Susceptibility of the area to flooding. Monroe County, Florida is 
the southernmost county in the State of Florida and the continental 
United States and includes the islands of the Florida Keys. The Village 
of Islamorada is located in Monroe County, Florida and is a separate 
NFIP participating community. The entire portion of the County that is 
located on the mainland Florida peninsula, along with the islands 
located in Biscayne Bay and the northern part of Florida Bay, are a 
part of the Everglades National Park. Most of the development in Monroe 
County is located in the Florida Keys. Almost the entire County, 
including the Village of Islamorada, could be inundated by the base 
flood or 100-year flood (a flood having a one percent chance of being 
equaled or exceeded in any given year). We have identified velocity 
zones (V Zones), SFHAs associated with wave action, along the coastline 
of Monroe

[[Page 24257]]

County and the Village of Islamorada and designated the remaining 
portion of the SFHAs A Zones. Only portions of Key Largo, Cotton Key, 
and Upper Matecumbe Key have areas with ground elevations high enough 
to be outside of the SFHA.
    FEMA findings in Monroe County. In August 1995, we conducted a 
Community Assistance Visit (CAV) in Monroe County, Florida. At that 
time, the Village of Islamorada was not incorporated and was still part 
of Monroe County. The purpose of a CAV is to assess an NFIP community's 
floodplain management program and to provide whatever assistance the 
community needs to administer its floodplain management ordinance 
effectively when program deficiencies or violations are identified. One 
of the more serious problems that we identified through the 1995 CAV 
was the widespread use of the enclosed area below the lowest floor of 
elevated buildings for uses other than parking, access, or storage. 
CAVs that we conducted in 1982 and 1987 also identified the use of 
enclosed areas below elevated buildings as living space as a problem.
    NFIP floodplain management regulations. Under the NFIP Floodplain 
Management Regulations at 44 CFR 60.3, all new construction and 
substantial improvements of structures in A Zones on the community's 
FIRM that have fully enclosed areas below the lowest floor of an 
elevated building can only be used for parking, access, or storage. The 
enclosed area must be designed to include openings to equalize 
hydrostatic flood pressure on exterior walls by allowing for the 
automatic entry and exit of floodwaters [44 CFR 60.3(c)(5)]. In V 
Zones, new construction and substantial improvements must have the 
space below the lowest floor either free of obstruction or constructed 
with open wood lattice-work, insect screening, or non-supporting 
breakaway walls, intended to collapse under wind and water loads 
without causing collapse, displacement, or other structural damage to 
the elevated portion of the building or supporting foundation system. 
The area below the lowest floor of an elevated building in V Zones can 
only be used for parking, access, or storage.
    In addition, owners must build the area below the lowest floor of 
an elevated building using flood resistant materials and must use 
construction methods and practices that minimize flood damages. Owners 
must also build with electrical, heating, ventilation, plumbing, and 
air conditioning equipment and other service facilities that are 
designed or located so as to prevent water from entering or 
accumulating within the components during conditions of flooding.
    Flood damages potential. Allowing uses other than parking, access, 
or storage in the enclosed area below the Base Flood Elevation 
significantly increases the flood damage potential to the area below 
the lowest floor of the elevated building. Improperly constructed 
enclosure walls and utilities can tear away and damage the upper 
portions of the elevated building exposing the building to greater 
damage. Improperly constructed enclosures can also result in flood 
forces being transferred to the elevated portion of the building with 
the potential for catastrophic damage. If a flood disaster occurs, the 
impact will go beyond the building itself. If the ground level 
enclosure is finished with living spaces, there is an increased risk to 
lives. Residents who live in these ground level enclosures may not be 
fully aware of the flood risk. Along with significant flood damages to 
the building and the potential for loss of life, the community, the 
State, and the Federal Government will face costly outlays for flood 
fighting and rescue operations, response, and recovery as well as 
taxpayer funded disaster assistance.
    Limited flood insurance coverage. Because the area below the lowest 
floor of an elevated building has a greater exposure to flood waters, 
there is limited coverage in this area for elevated post-FIRM 
buildings, as provided for in the Standard Flood Insurance Policy 
(SFIP) under Article 6--Property Not Covered. This provision of the 
SFIP, effective since October 1, 1983, limits coverage for enclosures, 
including personal property contained therein. However, we provide 
coverage for enclosures below the elevated floors of elevated buildings 
for essential building elements, namely, sump pumps, well water tanks 
and pumps, oil tanks, furnaces, hot water heaters, clothes washers and 
dryers, freezers, air conditioners, heat pumps, electrical junction and 
circuit breaker boxes, elevators, natural gas tanks, pumps or tanks 
related to solar energy, cisterns, and stairways and staircases 
attached to the building. Also, foundation elements that support the 
building are insurable under the NFIP. We do not cover such items as 
finished enclosure walls, floors, ceilings, and personal property such 
as rugs, carpets, and furniture.
    In 1983, we limited the coverage for enclosed areas below elevated 
buildings and in basement areas due to the financial losses we 
experienced when we provided full coverage in these areas. In order to 
provide insurance coverage for the items that we exclude under the 
SFIP, we would have to charge significantly higher insurance rates, 
which would make flood insurance on the building and its contents 
unaffordable for many property owners.
    In spite of the limited coverage afforded for these enclosed areas, 
they affect the rating of the policy. As previously mentioned in 
``Flood damages potential'', flood forces can be transferred to the 
elevated portion of the building causing severe damages. This damage 
potential is recognized in the rates by adding rate loadings based on 
the size of the enclosure and whether the enclosure contains covered 
machinery or equipment. The proposed inspection procedure will ensure 
that the policyholders with buildings that have enclosures are paying 
premiums commensurate with their flood risk.
    Floodplain management criteria. The limitation of flood insurance 
coverage for the enclosed area of an elevated building is consistent 
with the NFIP floodplain management criteria. These criteria limit the 
use of the enclosed space to parking, access, and storage, require use 
of flood resistant materials, require openings in foundation walls in A 
Zones, require the area below the lowest floor of an elevated building 
in V Zones to be free of obstruction, and require that mechanical, 
electrical, and utility equipment be designed or located to prevent 
flood waters from entering or accumulating within the components. 
Buildings built in compliance with NFIP floodplain management criteria 
will have minimal damage potential to the building and its contents.
    Factors affecting compliance determinations. There are several 
factors that have limited Monroe County's ability to determine whether 
a building with an enclosure complies with the County's floodplain 
management ordinance. It is often difficult from the street to 
determine whether the enclosed area below an elevated building contains 
uses other than parking, access, or storage. Although the County can 
seek consent and approval of the owner to inspect their property, the 
community has had limited success in identifying violations using this 
method. The volume of possible violations is also a contributing factor 
in the community's ability to address this problem. Monroe County 
estimates that there are several thousand buildings with illegal 
enclosures below the lowest floor of an elevated building. Furthermore, 
a provision in Florida law exempts ``owner-occupied family

[[Page 24258]]

residences'' from the administrative warrant inspection procedure 
provided under State law for identifying building-safety issues. Under 
Florida State law, entry by local officials into owner-occupied single 
family homes without consent of the owner requires a search warrant, 
which is extremely difficult to obtain. Consequently, the community has 
had little success in identifying possible violations so that it could 
then require actions to remedy the violations to the maximum extent 
possible.
    Monroe County agreement to participate. Given these circumstances, 
Monroe County indicated its interest in participating in the inspection 
procedure. In January 1997, a Monroe County Citizen's Task Force, which 
was appointed by the Monroe County Board of County Commissioners to 
address the issue of illegal enclosures below the lowest floor of an 
elevated building, recommended establishment of a procedure to require 
an inspection and a compliance report before the renewal of a flood 
insurance policy. On June 11, 1998, the Board of County Commissioners 
of Monroe County, Florida, passed a resolution that requested FEMA to 
establish an inspection procedure for the County as a means of 
verifying that insured buildings in the SFHA under the NFIP comply with 
the County's floodplain management ordinance.
    Village of Islamorada's agreement to participate. The Village of 
Islamorada incorporated as a separate community within Monroe County in 
January 1998 and became a participating NFIP community on October 1, 
1998. The Village of Islamorada encompasses four of the Florida Keys 
that would have been included as part of the inspection procedure in 
Monroe County. Because of possible illegal enclosures in the Village of 
Islamorada, the community indicated its interest in participating in 
the pilot inspection procedure in a letter dated September 24, 1998, in 
its application to join the NFIP.
    Continuing community responsibilities. Nothing that would be 
established through this proposed pilot inspection procedure would 
modify Monroe County or the Village of Islamorada's responsibility 
under the NFIP to enforce their floodplain management ordinance. That 
responsibility includes new construction and substantial improvements 
within the SFHAs pertaining to non-insured buildings or to insured 
buildings in which an inspection was not obtained by the policyholder. 
We intend that the proposed inspection procedure assist Monroe County 
and the Village of Islamorada materially in identifying and correcting 
violations. We do not intend that this procedure be a substitute or 
alternative for these communities to enforce provisions within their 
own laws or ordinances. When Monroe County and the Village of 
Islamorada identify violations, they would continue to have the 
responsibility to remedy the violations to the maximum extent possible 
for all buildings in the SFHA.
    Awareness program for interested people. We envision that we, 
Monroe County, and the Village of Islamorada will coordinate efforts to 
conduct an awareness program with property owners, mortgage lenders, 
real estate agents, insurance agents, appraisers, and local officials 
on this inspection procedure.
    We would make any decision to implement the inspection procedure in 
other NFIP participating communities outside of Monroe County, Florida 
only after completing the pilot inspection procedure within the 
selected communities and after an evaluation to determine how effective 
the procedure is in achieving NFIP building compliance. The evaluation 
would examine the level of effort required for the communities, 
insurance companies, and us to implement the procedure, how many non-
compliant structures are brought into compliance, and whether the 
procedure enabled us to determine whether structures insured under the 
NFIP are properly rated.

Description of the Pilot Inspection Procedure

    The proposed rule would establish a pilot inspection procedure that 
would be built around the flood insurance policy renewal process and 
would apply only to NFIP insured buildings in SFHAs in Monroe County 
and the Village of Islamorada. The proposed inspection procedure would 
require owners of insured buildings to obtain an inspection from local 
officials and submit an inspection report as a condition of renewing 
flood insurance on the building.
    Proposed Endorsement. Flood insurance policies with renewal 
effective dates on and after the implementation date of the pilot 
inspection procedure would contain the endorsement established in 
proposed Appendices (A)(4), (A)(5), and (A)(6) of 44 CFR part 61. The 
endorsement would provide that an inspection by the community may be 
required before a subsequent renewal of the flood insurance policy. 
Policies issued as new policies after the effective date for 
implementing the pilot inspection procedure would also contain the 
endorsement established in proposed Appendices (A)(4), (A)(5), and 
(A)(6). The proposed endorsement would amend all flood insurance 
policies (pre-FIRM and post-FIRM) on buildings in Monroe County and the 
Village of Islamorada, Florida. The proposed changes to the SFIP would 
revise the Voidance, Reduction or Reformation of the Coverage provision 
and the Policy Renewal provision. A notice describing the purpose of 
the inspection procedure would accompany the new endorsement to the 
SFIP regarding the inspection procedure.
    Procedure established under new section. Under a new section, 44 
CFR 59.30, the proposed rule would establish criteria for implementing 
a pilot inspection procedure in the selected community. Monroe County 
and the Village of Islamorada previously indicated their interest to 
participate in the inspection procedure. Based upon the communities' 
willingness to participate in the pilot inspection procedure, the 
Associate Director for Mitigation and the Federal Insurance 
Administrator would establish a starting date and termination date 
based on the recommendation of the FEMA Regional Director in 
consultation with Monroe County and the Village of Islamorada.
    Information we would provide. We would provide Monroe County and 
the Village of Islamorada a list of pre-FIRM and post-FIRM policies in 
SFHAs to use in implementing the inspection procedure before the 
effective date for implementing the pilot inspection procedure. We 
would also provide a list of any policies issued as new policies after 
the effective date for implementing the pilot inspection procedure to 
the appropriate community.
    Community reviews. The communities would agree to undertake a 
review of the pre-FIRM polices and provide a list of insured buildings 
in SFHAs to FEMA that were incorrectly identified as a pre-FIRM 
building because they were built or substantially improved on or after 
the effective date of the initial FIRM. We would provide the list of 
buildings that may be incorrectly rated as pre-FIRM to the insurers for 
possible rerating under the post-FIRM rating rules. The communities 
would also agree to undertake a review of all insured post-FIRM 
buildings in SFHAs, including those incorrectly identified as pre-FIRM, 
to determine whether the building is a possible violation of the 
community's floodplain management ordinance and provide this list to 
us. We would expect the community to identify possible violations of 
insured post-FIRM buildings in SFHAs from a visual street

[[Page 24259]]

inspection of the building, from tax records and other documents on 
file in the community pertaining to the property, and through other 
community procedures.
    We would also expect the communities to review the list of pre-FIRM 
and post-FIRM flood insurance policy information before the effective 
date established for implementing the inspection procedure.
    Coordination of timeframe for inspections. We would coordinate with 
each community to determine the appropriate timeframe to implement the 
inspection procedure to give each community adequate time to complete 
the inspections and undertake enforcement actions. Our determination 
would be based on the number of pre-FIRM and post-FIRM policies in each 
community's SFHAs and the number of potential inspections and 
enforcement actions the community may need to undertake.
    Public notice. Before the effective date for implementing the pilot 
inspection procedure, Monroe County and the Village of Islamorada would 
have to provide adequate public notice. This notice would take the form 
of an announcement in a prominent local newspaper and other community 
notices as appropriate. The Associate Director for Mitigation and the 
Federal Insurance Administrator would publish a notice in the Federal 
Register that an inspection procedure is to be undertaken on a pilot 
project basis. This notice would provide the reason and the starting 
date and the termination date for implementing the inspection 
procedure.
    Notice to policyholders. For those buildings identified by Monroe 
County and the Village of Islamorada as possible violations, the 
insurer would send a notice to policyholders approximately 6 months 
before the policy expiration date. This notice would state that the 
policyholder must obtain an inspection from the community and submit 
the results of the inspection as part of the renewal of the flood 
insurance policy by the end of the renewal grace period (30 days after 
date of the policy expiration). The insurer would send a reminder 
notice to the policyholder with the Renewal Notice about 45 to 60 days 
before the policy expires.
    Property inspection. The policyholder would be responsible for 
contacting the community to arrange for an inspection. The community 
would inspect the building to determine whether it complies with the 
community's floodplain management ordinance and document its findings 
in an inspection report. The community would provide two copies of the 
inspection report to the property owner. The community would use its 
copy of the inspection report to begin enforcement actions on a 
building identified as violating the community's floodplain management 
ordinance.
    Renewal of flood insurance after inspection. If the policyholder 
obtained a timely inspection and sent the community's inspection report 
and the renewal premium payment to the insurer by the end of the 
renewal grace period, the insurer would renew the flood insurance 
policy whether or not the building has been identified as a violation 
by the community. The insurer would review the flood insurance policy 
for rerating. If the building was not properly rated to reflect the 
building's risk of flooding, the policy would be rerated to reflect 
that risk.
    Community enforcement. If the community's inspection did not find a 
violation, the community would take no other action. However, if the 
community inspected the building and identified a violation under its 
floodplain management ordinance, the community would have to undertake 
an enforcement action to remedy the violation to the maximum extent 
possible. For each violation identified, the community would have to 
demonstrate to us that it is undertaking all possible actions to remedy 
the violation. If, after one year, the community demonstrated that it 
has taken all enforcement actions within its authority to remedy the 
violation to the maximum extent possible, including a notice to the 
property owner to remedy the violation and appropriate legal action, 
and the property owner had not corrected the violation, the community 
would submit a declaration of a violation and request a denial of flood 
insurance under 44 CFR 73, Implementation of Section 1316 of the 
National Flood Insurance Act of 1968.
    Failure to obtain a community inspection. If the policyholder did 
not obtain an inspection and submit an inspection report with the 
renewal payment by end of the renewal grace period (30 days after date 
of expiration), the flood insurance policy would not be renewed. We 
would establish a procedure for the insurer to send appropriate notices 
to the insured, to the agent, and to the mortgagee that the flood 
insurance policy expired and cannot be re-issued without the community 
inspection report. All flood insurance policies that were not renewed 
under the inspection procedure would be identified on a list of 
ineligible properties for the sale of flood insurance that would be 
sent to insurers that write and service NFIP flood insurance policies. 
Flood insurance policies sold on buildings ineligible in accordance 
with the proposed inspection procedure would be void in accordance with 
the proposed SFIP endorsement. If a property owner subsequently 
obtained an inspection from the community and an inspection report was 
submitted with the premium payment at the time the property owner 
applies for a flood insurance policy, a new policy would be issued on 
the building.

National Environmental Policy Act

    We are currently reviewing this proposed rule under the 
requirements of 44 CFR 10, Environmental Considerations, and under the 
mandates of the National Environmental Policy Act. We will make a 
determination whether we need an environmental assessment or 
environmental impact statement before we publish the final rule.

Executive Order 12898, Environmental Justice

    We are also reviewing this proposed rule under E.O. 12898, 
Environmental Justice, and will make appropriate determinations before 
publishing the final rule.

Executive Order 12866, Regulatory Planning and Review

    We are submitting this proposed rule to the Office of Management 
Budget for review under sec. 2(f) of E.O. 12866 of September 30, 1993, 
58 FR 51735. We will make a determination whether this is a significant 
regulatory action before we publish the final rule.

Paperwork Reduction Act

    We have submitted the information collection requirements in this 
proposed rule to the Office of Management and Budget (OMB) for approval 
under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. We prepared 
an Information Collection Request (ICR) and you may obtain a copy from 
Muriel Anderson by mail at FEMA, 500 C Street, SW., room 316, 
Washington, DC 20472, by email at [email protected], or by 
calling (202) 646-2625. Highlights of the ICR follow.
    Purpose of the proposed rule. The proposed rule would establish an 
inspection procedure in Monroe County and the Village of Islamorada 
that would be built around the flood insurance policy renewal process. 
The purpose of the inspection procedure and need for the community 
inspection report is:

[[Page 24260]]

     To help the communities of Monroe County and the Village 
of Islamorada, Florida, verify and document that post-FIRM structures 
in their communities comply with the community's floodplain management 
ordinance; and
     To ensure that property owners pay flood insurance 
premiums commensurate with their flood risk due to their increased 
exposure to flood damages.
    The requirement that a community inspect a building as a condition 
of renewing the flood insurance policy on the building would only apply 
to NFIP insured buildings in Special Flood Hazard Areas that the 
communities identify as possible violations. The Special Flood Hazard 
Areas (SFHA) is an area that is based on a flood that would have a 1-
percent chance of being equaled or exceeded in any given year, often 
referred to as the 100-year flood.
    Estimated number of inspections. We expect a total of 2,000 to 
4,000 respondents (policyholders) to obtain an inspection from their 
respective communities. This is the total estimated number of insured 
buildings that are possible violations of the community's floodplain 
management ordinance in both Monroe County and the Village of 
Islamorada. We estimate that Monroe County will inspect 500-700 insured 
buildings per year and the Village of Islamorada will inspect 200-400 
insured buildings per year.
    Previous OMB approval. The flood insurance renewal notice and flood 
insurance application have previously been approved by OMB (OMB 3067-
0022).

                           Numbers and Types of Responses, Frequency, and Burden Hours
----------------------------------------------------------------------------------------------------------------
                                                 Frequency                                               Total
     Number of respondents/type of response          of                    Burden hours                  burden
                                                  response                                               hours
----------------------------------------------------------------------------------------------------------------
4,000 policyholders to receive & read a notice           1  15 minutes (total for both notices)......      1,000
 that an inspection is required in order for
 the flood insurance policy to be renewed.
 These 4,000 policyholders will also receive a
 reminder notice about 45-60 days before the
 policy expires.
4,000 policyholders contact respective                   1  1-2.5 hours**............................     10,000
 community to arrange for an inspection of the
 property. Local official inspects the property
 with the policyholder or his/her designee.
 (Note: in any given year we expect several
 hundred policyholders to receive the notice
 and contact their community.) Compliant
 buildings should take less time to inspection
 compared to an insured building that is non-
 compliant.
4,000 policyholders submit a copy of the                 1  8 minutes................................        533
 inspection report with the renewal premium
 payment.
800 estimated no.of respondents that did not             1  8 minutes................................        107
 obtain an inspection. These respondents will
 be sent a notice at time of policy expiration
 that their flood insurance policy expired.
 (FEMA estimates that less than 20% of the
 4,000 respondents will not obtain an
 inspection and as a result their flood
 insurance policy will not be renewed.)
----------------------------------------------------------------------------------------------------------------
  * Total number of Burden Hours to implement the inspection procedure over a multi-year period: 11,640 hours.
  Annual (one-time) total burden hours for each policyholder is approximately: 3 hours.
  Total annual burden for approximately 500-700 inspections per year in Monroe County: 2,100 hours.
  Total annual burden for approximately 200-400 inspections per year in the Village of Islamorada: 1,200 hours.
----------------------------------------------------------------------------------------------------------------
* We estimate that 2,000-4,000 buildings will need to be inspected over a several-year period. On an annual
  basis, we estimate that the communities will inspect 700-1,100 buildings each year.
** We estimate that the amount of time to contact the community to arrange for the inspection and for the
  policyholder or his/her designee to be available to let the community official into the building to conduct
  the inspection will range from 1 hour to 2.5 hours.

    Community fees for permits and inspections. Communities generally 
charge a fee for permits and inspections as part of their 
administration of their zoning ordinance, building code, and floodplain 
management ordinance. We estimate that the cost per policyholder will 
range between $35 to $50.00 for each inspection, and that there may be 
expenses of about $15 per policyholder for telephone calls and 
arranging for someone to be available when the local officials inspect 
the building, for an estimated average cost of $65.00 per policyholder.
    Total annual cost burden to respondents. For approximately 700 to 
1,100 inspections per year, the total annual cost burden to respondents 
is estimated to range between $45,500 and $71,500. This information 
collection places no greater burden on small business or other small 
entities than that required of any other policyholder in Monroe County 
and the Village of Islamorada.
    Community inspection report critical to effective implementation. 
The community inspection report is critical to the effective 
implementation of the proposed inspection procedure. Without the 
inspection procedure, the Village of Islamorada and Monroe County would 
continue to have limited ability to inspect properties for illegal 
enclosures that violate their floodplain management ordinance. Allowing 
uses other than parking of vehicles, building access, or storage in the 
enclosed area below the Base Flood Elevation significantly increases 
the flood damage potential to the building, and there is an increased 
risk to lives.
    Premium rates commensurate with flood risk. The increase in flood 
damage potential to the building must be recognized in the rates by 
adding rate loadings based on the size of the enclosure. Collection of 
information from the policyholder in this inspection procedure will 
help ensure that policyholders are paying premiums commensurate with 
their flood risk.
    Consultation with the communities; use of existing inspection 
documents. We consulted with Monroe County and Village of Islamorada 
officials on the type of existing building inspection reports they 
currently use to implement their floodplain management ordinance and we 
determined that the current community inspection documents could be 
used for purposes of implementing the inspection procedure and for 
purposes of determining whether the building needs to be rerated.
    Starting and ending dates; coordination. After we publish the final 
rule on the inspections, we will work closely with local officials from 
Monroe County and the Village of Islamorada to establish a start and 
end dates for the inspections. We will also coordinate and provide 
assistance to local officials from both communities in preparation of 
and during implementation of the inspection procedure. We anticipate

[[Page 24261]]

that the County and Village will apply the inspection procedure over a 
several-year period.
    Confidentiality. Confidentiality is provided under the Privacy Act. 
The information collection will not be disclosed outside the Federal 
Emergency Management Agency except to the servicing office, acting as 
the government's fiscal agent, to the policyholders insurer, any 
mortgagee named on the policy, and to other routine users.
    Request for your comments. We ask for your comments on our need for 
this information, the accuracy of our burden estimates, and any methods 
you can suggest for minimizing the burden on respondents, including 
automated collection techniques. Please send comments on the 
Information Collection Request to the Information Collection Officer, 
FEMA, 500 C Street, SW., room 316, Washington, DC 20472, and to the 
Office of Information and Regulatory Affairs, Office of Management and 
Budget, 725--17th Street, NW., Washington, DC 20503, marked 
``Attention: Desk Officer for FEMA.'' Please include the ICR number in 
your correspondence. Since OMB must make a decision about the ICR 
between 30 and 60 days after May 5, 1999, OMB should receive your 
comments by June 4, 1999 to assure that your comments will have full 
effect. We will respond in the final rule to any OMB or public comments 
on the information collection requirements contained in this proposed 
rule.

Executive Order 12612, Federalism

    This proposed rule involves no policies that have federalism 
implications under Executive Order 12612, Federalism, dated October 26, 
1987.

Executive Order 12778, Civil Justice Reform

    This proposed rule meets the applicable standards of subsections 
2(a) and 2(b)(2) of Executive Order 12778.

List of Subjects in 44 CFR Part 59 and Part 61

    Flood insurance, reporting, and recordkeeping requirements.

    Accordingly, we propose to amend 44 CFR Parts 59 and 61 as follows:

PART 59--GENERAL PROVISIONS

    The authority citation for Part 59 is revised to read as follows:

    Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of 
1978, 43 FR 41943, 3 CFR, 1978 Comp., p. 329; E.O. 12127 of Mar. 31, 
1979, 44 FR 19367, 3 CFR, 1979 Comp., p. 376.

    2. Part 59 is amended by adding a new subpart C consisting of 
Sec. 59.30 to read as follows:

Subpart C--Pilot Inspection Program


Sec. 59.30  A Pilot Inspection Procedure

    (a) Purpose. This section sets forth the criteria for implementing 
a pilot inspection procedure in Monroe County and the Village of 
Islamorada, Florida. These criteria will also be used to implement the 
pilot inspection procedure in any area within Monroe County, Florida 
that incorporates on or after January 1, 1999 and is eligible for the 
sale of flood insurance. The purpose of this inspection procedure is to 
provide the communities participating in the pilot inspection procedure 
with an additional means to identify whether structures built in 
Special Flood Hazard Areas (SFHAs) after the date of the effective 
Flood Insurance Rate Map (FIRM) comply with the community's floodplain 
management regulations. The pilot inspection procedure will also assist 
us, FEMA, in verifying that structures insured under the National Flood 
Insurance Program's Standard Flood Insurance Policy are properly rated.
    (b) Procedures and requirements for implementation. Each community 
must establish procedures and requirements for implementing the pilot 
inspection procedure consistent with the criteria established in this 
section.
    (c) Inspection Procedure.
    (1) The Associate Director for Mitigation and the Federal Insurance 
Administrator will establish the starting date and the termination date 
for implementing the pilot inspection procedure upon the recommendation 
of the Regional Director, who will consult with each community.
    (2) Before the starting date of the inspection procedure, each 
community must publish a notice in a prominent local newspaper and 
publish other notices as appropriate. The Associate Director for 
Mitigation and the Federal Insurance Administrator will publish a 
notice in the Federal Register that the community will undertake an 
inspection procedure. Published notices will include the purpose for 
implementing the inspection procedure and the effective period of time 
that the inspection procedure will cover.
    (3) The communities participating in the pilot inspection procedure 
must review a list of all pre-FIRM and post-FIRM flood insurance 
policies in SFHA to confirm that the start of construction or 
substantial improvement of insured pre-FIRM buildings occurred on or 
before December 31, 1974, and identify possible violations of insured 
post-FIRM buildings. The community will provide to FEMA a list of 
insured buildings incorrectly rated as pre-FIRM and a list of insured 
post-FIRM buildings that the community identifies as possible 
violations.
    (4) In the communities that undertake the pilot inspection 
procedure, all new and renewed flood insurance policies that become 
effective on and after the date that we and the community establish for 
the start of the inspection procedure will contain an endorsement to 
the Standard Flood Insurance Policy that an inspection may be necessary 
before a subsequent policy renewal [see Part 61 Appendices A(4), (5), 
and (6)].
    (5) For a building identified as a possible violation under 
paragraph (3) of this subsection, the insurer will send a notice to the 
policyholder that an inspection is necessary in order to renew the 
policy and that the policyholder must submit a community inspection 
report as part of the policy renewal process, which includes the 
payment of the premium. The insurer will send this notice about 6 
months before the Standard Flood Insurance Policy expires.
    (6) If a policyholder receives a notice under paragraph (C)(5) of 
this section that an inspection is necessary in order to renew the 
Standard Flood Insurance Policy the following applies:
    (i) If the policyholder obtains an inspection from the community 
and the policyholder sends the community inspection report to the 
insurer as part of the renewal process, which includes the payment of 
the premium, the insurer will renew the policy and will verify the 
flood insurance rate, or
    (ii) If the policyholder does not obtain and submit a community 
inspection report the insurer will not renew the policy.
    (7) For insured post-FIRM buildings that the community inspects and 
determines to violate the community's floodplain management 
regulations, the community must demonstrate to FEMA that the community 
is undertaking measures to remedy the violation to the maximum extent 
possible. Nothing in this section modifies the community's 
responsibility under the NFIP to enforce adequately floodplain 
management regulations that meet the minimum requirements in Sec. 60.3 
for all new construction and substantial improvements within the 
community's SFHAs. The community's responsibility also includes the 
insured buildings where the policyholder did not obtain an inspection 
report, and non-insured buildings that this procedure does not cover.

[[Page 24262]]

    (d) Restoration of flood insurance coverage. Insurers will not 
provide new flood insurance on any building if a property owner does 
not obtain a community inspection report or if the property owner 
obtains a community inspection report but does not submit the report 
with the renewal premium payment. Flood insurance policies sold on a 
building ineligible in accordance with paragraph (c)(6)(ii) are void 
under the Standard Flood Insurance Policy inspection endorsements [44 
CFR Part 61, Appendices (A)(4), (A)(5), and (A)(6)]. When the property 
owner applies for a flood insurance policy and submits a completed 
community inspection report by the community with an application and 
renewal premium payment, the insurer will issue a flood insurance 
policy.
    3. We amend Part 61 by adding Appendix A(4) to Part 61 as follows:

Appendix A (4) to Part 61

Federal Emergency Management Agency, Federal Insurance Administration

Standard Flood Insurance Policy Endorsement to Dwelling Form

[Issued Pursuant to the National Flood Insurance Act of 1968, or Any 
Acts Amendatory Thereof (Hereinafter Called the Act), and Applicable 
Federal Regulations in Title 44 of the Code of Federal Regulations, 
Subchapter B. The provisions of this endorsement replace the 
provisions of Article 9 of the Standard Flood Insurance Policy, 
Dwelling Form, only in applicable policies in Monroe County and the 
Village of Islamorada, Florida].

Article 9--General Conditions and Provisions

    A. Pair and Set Clause: If you lose an article that is part of a 
pair or set, we will have the option of paying you an amount equal 
to the cost of replacing the lost article, less depreciation, or an 
amount that represents the fair proportion of the total value of the 
pair or set that the lost article bears to the pair or set.
    B. Concealment, Fraud: We will not cover you under this policy, 
which will be void, nor can this policy be renewed or any new flood 
insurance coverage be issued to you if:
    1. You have sworn falsely, or willfully concealed or 
misrepresented any material fact; or
    2. You have done any fraudulent act concerning this insurance 
(see paragraph F.1.d. below); or
    3. You have willfully concealed or misrepresented any fact on a 
``Recertification Questionnaire,'' that causes us to issue a policy 
to you based on a premium amount that is less than the premium 
amount that would have been payable by you were it not for the 
misstatement of fact (see paragraph G. below).
    C. Other Insurance. If a loss covered by this policy is also 
covered by other insurance whether collectible or not, except 
insurance in the name of the Condominium Association issued pursuant 
to the Act, we will pay only the proportion of the loss that the 
limit of liability that applies under this policy bears to the total 
amount of insurance covering the loss.
    If there is other insurance in the name of the Condominium 
Association covering the same property covered by this policy, this 
insurance will be excess over the other insurance.
    D. Amendments, Waivers, Assignment: This policy cannot be 
amended 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 can constitute a waiver of any 
of our rights. Except in the case of 1. a contents only policy, and 
2. a policy issued to cover a building in the course of 
construction, assignment of this policy, in writing, is allowed upon 
transfer of title.
    E. Cancellation of Policy By You: You may cancel this policy at 
any time but a refund of premium money will only be made to you 
when:
    1. You cancel because you have transferred ownership of the 
described building or unit to someone else. In this case, we will 
refund to you, once we receive your written request for cancellation 
(signed by you), the excess of premiums paid by you that apply to 
the unused portion of the policy's term, pro rata but with retention 
of the expense constant and the Federal policy fee.
    2. You cancel a policy having a term of 3 years, on an 
anniversary date, and the reason for the cancellation is:
    a. A policy of flood insurance has been obtained or is being 
obtained in substitution for this policy and we have received a 
written concurrence in the cancellation from any mortgagee of which 
we have actual notice; or
    b. You have extinguished the insured mortgage debt and are no 
longer required by the mortgagee to maintain the coverage.
    Refund of any premium, under this subparagraph 2., will be pro 
rata but with retention of the expense constant and the Federal 
policy fee.
    3. You cancel because we have determined that your property is 
not, in fact, in a special hazard area; and you were required to 
purchase flood insurance coverage by a private lender or Federal 
agency pursuant to the Act; and the lender or Federal agency no 
longer requires the retention by you of the coverage. In this event, 
if no claims have been paid or are pending, your premium payments 
will be refunded to you in full, according to our applicable 
regulations.
    F. Voidance, Reduction or Reformation of the Coverage By Us:
    1. Voidance: This policy will be void and of no legal force and 
effect in the event that any one of the following conditions occurs:
    a. The property listed on the application is not eligible for 
coverage, in which case the policy is void from its inception;
    b. The community in which the property is located was not 
participating in the National Flood Insurance Program on the 
policy's inception date and did not qualify as a participating 
community during the policy's term and before the occurrence of any 
loss for which you may receive compensation under the policy;
    c. If, during the term of the policy, the participation in the 
National Flood Insurance Program of the community in which your 
property is located ceases, in which case the policy will be deemed 
void effective at the end of the last day of the policy year in 
which such cessation occurred and will not be renewed.
    If the voided policy included 3 policy years in a contract term 
of 3 years, you will be entitled to a pro rata refund of any premium 
applicable to the remainder of the policy's term;
    d. If you or your agent have:
    (1) Sworn falsely, or
    (2) Fraudulently or willfully concealed or misrepresented any 
material fact including facts relevant to the rating of this policy 
in the application for coverage, or upon any renewal of coverage, or 
in connection with the submission of any claim brought under the 
policy, in which case this entire policy will be void as of the date 
the wrongful act was committed or from its inception if this policy 
is a renewal policy and the wrongful act occurred in connection with 
an application for or renewal or endorsement of a policy issued to 
you in a prior year and affects the rating of or premium amount 
received for this policy. Refunds of premiums, if any, will be 
subject to offsets for our administrative expenses (including the 
payment of agent's commissions for any voided policy year) in 
connection with the issuance of the policy;
    e. The premium you submit is less than the minimum set forth in 
44 CFR 61.10 in connection with any application for a new policy or 
policy renewal, in which case the policy is void from its inception 
date.
    f. You have not submitted a community inspection report, cited 
in ``G. Policy Renewal'' below that was required in a notice sent to 
you in conjunction with the community inspection procedure 
established under National Flood Insurance Program Regulations (44 
CFR 59.30).
    2. Reduction of Coverage Limits or Reformation: If the premium 
payment received by us is not sufficient (whether evident or not) to 
purchase the amount of coverage requested by an application, 
renewal, endorsement, or other form and paragraph F.1.d. does not 
apply, then the policy will be deemed to provide only such coverage 
as can be purchased for the entire term of the policy, for the 
amount of premium received, subject to increasing the amount of 
coverage pursuant to 44 CFR 61.11; provided, however:
    a. If the insufficient premium is discovered by us before a loss 
and we can determine the amount of insufficient premium from 
information in our possession at the time of our discovery of the 
insufficient premium, we will give a notice of additional premium 
due, and if you remit and we receive the additional premium required 
to purchase the limits of coverage for each kind of coverage as was 
initially requested by you within 30 days from the date we give you 
written notice of additional premium due, the policy will be 
reformed, from its inception date, or, in the case of an 
endorsement, from the effective date of the endorsement, to provide 
flood insurance coverage in the amount of coverage initially 
requested.

[[Page 24263]]

    b. If the insufficient premium is discovered by us at the time 
of a loss under the policy, we will give a notice of premium due, 
and if you remit and we receive the additional premium required to 
purchase (for the current policy term and the previous policy term, 
if then insured) the limits of coverage for each kind of coverage as 
was initially requested by you within 30 days from the date we give 
you written notice of additional premium due, the policy will be 
reformed, from its inception date, or, in the case of an 
endorsement, from the effective date of the endorsement, to provide 
flood insurance coverage in the amount of coverage initially 
requested.
    c. Under subparagraphs a. and b. as to any mortgagee or trustee 
named in the policy, we will give a notice of additional premium due 
and the right of reformation will continue in force for the benefit 
only of the mortgagee or trustee, up to the amount of your 
indebtedness, for 30 days after written notice to the mortgagee or 
trustee.
    G. Policy Renewal: The term of this policy begins on its 
inception date and ends on its expiration date, as shown on the 
declarations page that is attached to the policy. We are under no 
obligation to:
    1. Send you any renewal notice or other notice that your policy 
term is coming to an end and the receipt of any such notice by you 
will not be deemed to be a waiver of this provision on our part.
    2. Assure that policy changes reflected in endorsements 
submitted by you during the policy term and accepted by us are 
included in any renewal notice or new policy that we send to you. 
Policy changes includes the addition of any increases in the amounts 
of coverage.
    This policy will not be renewed and the coverage provided by it 
will not continue into any successive policy term unless the renewal 
premium payment, and when applicable, the community inspection 
report referred to below, is received by us at the office of the 
National Flood Insurance Program within 30 days of the expiration 
date of this policy, subject to Article 9, paragraph F. above. If 
the renewal premium payment, and when applicable, the community 
inspection report referred to below, is mailed by certified mail to 
the National Flood Insurance Program before the expiration date, it 
will be deemed to have been received within the required 30 days. 
The coverage provided by the renewal policy is in effect for any 
loss occurring during the 30-day period even if the loss occurs 
before the renewal premium payment, and when applicable, the 
community inspection report referred to below, is received within 
the required 30 days. In all other cases, this policy will end as of 
the expiration date of the last policy term for which the premium 
payment, and when applicable, the community inspection report 
referred to below, was timely received at the office of the National 
Flood Insurance Program and, in that event, we will not be obligated 
to provide you with any cancellation, termination, policy lapse, or 
policy renewal notice.
    In connection with the renewal of this policy, you may be 
requested during the policy term to recertify, on a Recertification 
Questionnaire we will provide you, the rating information used to 
rate your most recent application for or renewal of insurance.
    Your community has been approved by the Federal Emergency 
Management Agency to participate in a special inspection procedure 
set forth in National Flood Insurance Regulations (44 CFR 59.30) 
that requires the submission of a community inspection report 
completed by local officials as one condition for policy renewal. As 
a property owner in such a community, you may be required to submit 
such an inspection report by a community official certifying whether 
your insured property is in compliance with the community's 
floodplain management ordinance. You will be notified in writing of 
this requirement approximately 6 months before your renewal date and 
again at the time your renewal bill is sent.
    Notwithstanding your responsibility to submit the appropriate 
renewal premium in sufficient time to permit its receipt by us 
before the expiration of the policy being renewed, we have 
established a business procedure for mailing renewal notices to 
assist Insureds in meeting their responsibility. Regarding our 
business procedure, evidence of the placing of any such notices into 
the U.S. Postal Service, addressed to you at the address appearing 
on your most recent application or other appropriate form (received 
by the National Flood Insurance Program before the mailing of the 
renewal notice by us), does, in all respects for purposes of the 
National Flood Insurance Program, presumptively establish delivery 
to you for all purposes irrespective of whether you actually 
received the notice.
    However, if we determine that, through any circumstances, any 
renewal notice was not placed into the U.S. Postal Service, or, if 
placed, was prepared or addressed in a manner that we determine 
could preclude the likelihood of its being actually and timely 
received by you before the due date for the renewal premium, the 
following procedures will be followed:
    If you or your agent notified us, not later than 1 year after 
the date on which the payment of the renewal was due, of a 
nonreceipt of a renewal notice before the due date for the renewal 
premium, which we determine was attributable to the above 
circumstance, 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.
    If the renewal payment requested by reason of the second bill is 
not received by the revised due date, no renewal will occur and the 
policy will remain as an expired policy as of the expiration date 
prescribed on the policy.
    H. Conditions Suspending or Restricting Insurance: Unless 
otherwise provided in writing added hereto, we will not be liable 
for loss occurring while the hazard is increased by any means within 
your control or knowledge.
    I. Alterations and Repairs: You may, at any time and at your own 
expense, make alterations, additions and repairs to the insured 
property, and complete structures in the course of construction.
    J. Requirements in Case of Loss: Should a flood loss occur to 
your insured property, you must:
    1. Notify us in writing as soon as practicable;
    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; and
    3. Within 60 days after the loss, send us a proof of loss, which 
is your statement as to the amount you are claiming under the policy 
signed and sworn to by you and furnishing us with the following 
information:
    a. The date and time of the loss;
    b. A brief explanation of how the loss happened;
    c. Your interest in the property damaged (for example, 
``owner'') and the interest, if any, of others in the damaged 
property;
    d. The actual cash value or replacement cost, whichever is 
appropriate, of each damaged item of insured property and the amount 
of damages sustained;
    e. Names of mortgagees or anyone else having a lien, charge or 
claim against the insured property;
    f. Details as to any other contracts of insurance covering the 
property, whether valid or not;
    g. Details of any changes in ownership, use, occupancy, location 
or possession of the insured property since the policy was issued;
    h. Details as to who occupied any insured building at the time 
of loss and for what purpose; and
    i. The amount you claim is due under this policy to cover the 
loss, including statements concerning:
    (1) The limits of coverage stated in the policy; and
    (2) The cost to repair or replace the damaged property 
(whichever costs less).
    4. Cooperate with our adjuster or representative in the 
investigation of the claim;
    5. Document the loss with all bills, receipts, and related 
documents for the amount being claimed;
    6. 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 to 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.
    In completing the proof of loss, you must use your own judgment 
concerning the amount of loss and the justification for that amount.
    The adjuster is not authorized to approve or disapprove claims 
or tell you whether your claim will be approved by us.
    7. We may, at our option, waive the requirement for the 
completion and filing of a proof of loss in certain cases, in which 
event you will be required to sign and, at our option, swear to an 
adjuster's report of the loss that includes information about your 
loss and the damages sustained, which is needed by us in order to 
adjust your claim.
    8. Any false statements made in the course of presenting a claim 
under this policy may be punishable by fine or imprisonment under 
the applicable Federal Laws.

[[Page 24264]]

    K. Our Options After a Loss: Options we may, in our sole 
discretion, exercise after loss include the following:
    1. Evidence of Loss: If we specifically request it, in writing, 
you may be required to furnish us with a complete inventory of the 
destroyed, damaged and undamaged property, including details as to 
quantities, costs, actual cash values or replacement cost (whichever 
is appropriate), amounts of loss claimed, and any written plans and 
specifications for repair of the damaged property that you can make 
reasonably available to us.
    2. Examination Under Oath and Access to Insured Property 
Ownership Records and Condominium Documents: We may require you to:
    a. Show us, or our designee, the damaged property, to be 
examined under oath by our designee and to sign any transcripts of 
such examinations; and
    b. At such reasonable times and places as we may designate, 
permit us to examine and make extracts and copies of any policies of 
property insurance insuring you against loss; and the deed 
establishing your ownership of the insured real property; and the 
condominium documents including the Declarations of the condominium, 
its Articles of Association or Incorporation, Bylaws, rules and 
regulations, and other condominium documents if you are a unit owner 
in a condominium building; and all books of accounts, bills, 
invoices and other vouchers, or certified copies thereof if the 
originals are lost, pertaining to the damaged property.
    3. Options to Replace: We may take all or any part of the 
damaged property at the agreed or appraised value and, also, repair, 
rebuild or replace the property destroyed or damaged with other of 
like kind and quality within a reasonable time, on giving you notice 
of our intention to do so within 30 days after the receipt of the 
proof of loss herein required under paragraph J.3. above.
    4. Adjustment Options: We may adjust loss to any insured 
property of others with the owners of such property or with you for 
their account. Any such insurance under this policy will not inure 
directly or indirectly to the benefit of any carrier or other bailee 
for hire.
    L. When Loss Payable: Loss is payable within 60 days after you 
file 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 ascertainment of the loss is made 
either by agreement between us and you expressed in writing or by 
the filing with us of an award as provided in paragraph N. below.
    If we reject your proof of loss in whole or in part, you may 
accept such denial of your claim, or exercise your rights under this 
policy, or file an amended proof of loss as long as it is filed 
within 60 days of the date of the loss or any extension of time 
allowed by the Administrator.
    M. Abandonment: You may not abandon damaged or undamaged insured 
property to us. However, we may permit you to keep damaged, insured 
property (``salvage'') 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.
    N. Appraisal: If at any time after a loss, we are unable to 
agree with you as to the actual cash value or, if applicable, 
replacement cost of the damaged property so as to determine the 
amount of loss to be paid to you, then, on the written demand of 
either one of us, each of us will select a competent and 
disinterested appraiser and notify the other of the appraiser 
selected within 20 days of such demand. The appraisers will first 
select a competent and disinterested umpire; and failing, after 15 
days, to agree upon such umpire, then, on your request or our 
request, such umpire will be selected by a judge of a court of 
record in the State in which the insured property is located. The 
appraisers will then appraise the loss, stating separately 
replacement cost, actual cash value and loss to each item; and, 
failing to agree, will submit their differences, only, to the 
umpire. An award in writing, so itemized, of any two (appraisers or 
appraiser and umpire) when filed with us will determine the amount 
of actual cash value and loss or, should this policy's replacement 
cost provisions apply, the amount of replacement cost and loss. Each 
appraiser will be paid by the party selecting him or her and the 
expenses of appraisal and umpire will be paid by both of us equally.
    O. Loss Clause: If we pay you for damage to property sustained 
in a flood loss, you are still eligible, during the term of the 
policy, to collect for a subsequent loss due to another flood. Of 
course, all loss arising out of a single, continuous flood of long 
duration will be adjusted as one flood loss.
    P. Mortgage Clause: (Applicable to building coverage only and 
effective only when the policy is made payable to a mortgagee or 
trustee named in the application and declarations page attached to 
this policy or of whom we have actual notice before the payment of 
loss proceeds under this policy).
    Loss, if any, under this policy, will be payable to the aforesaid 
as mortgagee or trustee as interest may appear under all present or 
future mortgages upon the property described in which the aforesaid may 
have an interest as mortgagee or trustee, in order of precedence of 
said mortgages, and this insurance, as to the interest of the mortgagee 
or trustee only therein, will not be invalidated by any act or neglect 
of the mortgagor or owner of the described property, nor by any 
foreclosure or other proceedings or notice of sale relating to the 
property, nor by any change in the title or ownership of the property, 
nor by the occupation of the premises for purposes more hazardous than 
are permitted by this policy; provided, that in case the mortgagor or 
owner will neglect to pay any premium due under this policy, the 
mortgagee or trustee will, on demand, pay the same.
    Provided, also, that the mortgagee or trustee will notify us of any 
change of ownership or occupancy or increase of hazard that will come 
to the knowledge of said mortgagee or trustee and, unless permitted by 
this policy, it will be noted thereon and the mortgagee or trustee 
will, on demand, pay the premium for such increased hazard for the term 
of the use thereof; otherwise, this policy will be null and void.
    If we cancel this policy, it will continue in force for the benefit 
only of the mortgagee or trustee for 30 days after written notice to 
the mortgagee or trustee of such cancellation and will then cease, and 
we will have the right, on like notice, to cancel this agreement.
    Whenever we will pay the mortgagee or trustee any sum for loss 
under this policy and will claim that, as to the mortgagor or owner, no 
liability therefor existed, we will, to the extent of such payment, be 
thereupon legally subrogated to all the rights of the party to whom 
such payment will be made, under all securities held as collateral to 
the mortgage debt, or may, at our option, pay to the mortgagee or 
trustee the whole principal due or to grow due on the mortgage with 
interest, and will thereupon receive a full assignment and transfer of 
the mortgage and of all such other securities; but no subrogation will 
impair the right of the mortgagee or trustee to recover the full amount 
of said mortgagee's or trustee's claim.
    Q. Mortgagee Obligations: If you fail to render proof of loss, the 
named mortgagee or trustee, upon notice, will render proof of loss in 
the form herein specified within 60 days thereafter and will be subject 
to the provisions of this policy relating to appraisal and time of 
payment and of bringing suit.
    R. Conditions for Filing a Lawsuit: 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 12 months from the date we mailed you notice that we have denied 
your claim, or part of your 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.
    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

[[Page 24265]]

must pay us back first before you may keep any of that money.
    T. Continuous Lake Flooding: Where the insured building has been 
inundated by rising lake waters continuously for 90 days or more and it 
appears reasonably certain that a continuation of this flooding will 
result in damage, reimbursable under this policy, to the insured 
building equal to or greater than the building policy limits plus the 
deductible(s) 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:
    1. To make no further claim under this policy;
    2. Not to seek renewal of this policy; and
    3. Not to apply for any flood insurance under the Act for 
property at the property location of the insured building.
    If the policy term ends before the insured building has been 
flooded continuously for 90 days, the provisions of this paragraph T. 
still apply so long as the first building damage reimbursable under 
this policy from the continuous flooding occurred before the end of the 
policy term.
    U. Duplicate Policies Not Allowed: Property may not be insured 
under more than one policy issued under the Act. When we find that 
duplicate policies are in effect, we will by written notice give you 
the option of choosing which policy is to remain in effect under the 
following procedures:
    1. If you choose to keep in effect the policy with the earlier 
effective date, we will by the same written notice give you an 
opportunity to add the coverage limits of the later policy to those of 
the earlier policy, as of the effective date of the later policy.
    2. If you choose to keep in effect the policy with the later 
effective date, we will by the same written notice give you the 
opportunity to add the coverage limits of the earlier policy to those 
of the later policy, 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 statutorily permissible limits 
of coverage under the Act or your insurable interests, whichever is 
less.
    We will make a refund to you, according to applicable National 
Flood Insurance Program rules, of the premium for the policy not being 
kept in effect. For purposes of this paragraph U., the term ``effective 
date'' means the date coverage that has been in effect without any 
lapse was first placed in effect.
    In addition to the provisions of this paragraph U. for increasing 
policy limits, the usual procedures for increasing policy limits, by 
mid-term endorsement or at renewal time, with the appropriate waiting 
period, are applicable to the policy you choose to keep in effect.

    3. We amend Part 61 by adding Appendix A(5) to Part 61 as follows:

Appendix A(5) to Part 61

Federal Emergency Management Agency, Federal Insurance Administration

Standard Flood Insurance Policy Endorsement to General Property Form

[Issued Pursuant to the National Flood Insurance Act of 1968, or Any 
Acts Amendatory Thereof (Hereinafter Called the Act), and Applicable 
Federal Regulations in Title 44 of the Code of Federal Regulations, 
Subchapter B. The provisions of this endorsement replace the 
provisions of Article 8 of the Standard Flood Insurance Policy, 
General Property Form, only in applicable policies in Monroe County 
and the Village of Islamorada, Florida].

Article 8--General Conditions and Provisions

    A. Pair and Set Clause: If there is loss of an article that is part 
of a pair or set, the measure of loss will be a reasonable and fair 
proportion of the total value of the pair or set, giving consideration 
to the importance of said article, but such loss will not be construed 
to mean total loss of the pair or set.
    B. Concealment, Fraud: This policy will be void, nor can this 
policy be renewed or any new flood insurance coverage be issued to the 
Insured if any person insured under Article 1, paragraph A., whether 
before or after a loss, has:
    1. Sworn falsely, or willfully concealed or misrepresented any 
material fact; or
    2. Done any fraudulent act concerning this insurance (See 
paragraph E.1.d. below); or
    3. Willfully concealed or misrepresented any fact on a 
``Recertification Questionnaire,'' which causes the Insurer to issue 
a policy based on a premium amount that is less than the premium 
amount that would have been payable were it not for the misstatement 
of fact (see paragraph F. below).
    C. Other Insurance: If a loss covered by this policy is also 
covered by other insurance, whether collectible or not, the Insurer 
will pay only the proportion of the loss that the limit of liability 
that applies under this policy bears to the total amount of 
insurance covering the loss, provided, if at the time of loss, there 
is other insurance made available under the Act, in the name of a 
unit owner that provides coverage for the same loss covered by this 
policy, this policy's coverage will be primary and not contributing 
with such other insurance.
    D. Amendments and Waivers, Assignment: This Standard Flood 
Insurance Policy cannot be amended nor can any of its provisions be 
waived without the express written consent of the Federal Insurance 
Administrator. No action the Insurer takes under the terms of this 
policy can constitute a waiver of any of its rights. Except in the 
case of 1. a contents only policy and 2. a policy issued to cover a 
building in the course of construction, assignment of this policy, 
in writing, is allowed upon transfer of title.
    E. Voidance, Reduction or Reformation of the Coverage: 1. 
Voidance: This policy will be void and of no legal force and effect 
if any one of the following conditions occurs:
    a. The property listed on the application is not eligible for 
coverage, in which case the policy is void from its inception;
    b. The community in which the property is located was not 
participating in the National Flood Insurance Program on the 
policy's inception date and did not qualify as a participating 
community during the policy's term and before the occurrence of any 
loss;
    c. If, during the term of the policy, the participation in the 
National Flood Insurance Program of the community in which the 
property is located ceases, in which case the policy will be deemed 
void effective at the end of the last day of the policy year in 
which such cessation occurred and will not be renewed.
    If the voided policy included 3 policy years in a contract term 
of 3 years, the Insured will be entitled to a pro-rata refund of any 
premium applicable to the remainder of the policy's term;
    d. If any Insured or its agent has:
    (1) Sworn falsely; or
    (2) Fraudulently or willfully concealed or misrepresented any 
material fact including facts relevant to the rating of this policy 
in the application for coverage, or upon any renewal of coverage, or 
in connection with the submission of any claim brought under the 
policy, in which case this entire policy will be void as of the date 
the wrongful act was committed or from its inception if this policy 
is a renewal policy and the wrongful act occurred in connection with 
an application for or renewal or endorsement of a policy issued to 
the Insured in a prior year and affects the rating of or premium 
amount received for this policy. Refunds of premiums, if any, will 
be subject to offsets for the Insurer's administrative expenses 
(including the payment of agent's commissions for any voided policy 
year) in connection with the issuance of the policy;
    e. The premium submitted is less than the minimum set forth in 
 44 CFR 61.10 in connection with any application for a 
new policy or policy renewal, in which case the Policy is void from 
its inception date.
    f. The insured has not submitted a community inspection report, 
cited in ``F. policy Renewal'' below and required in any notice that 
may have been sent to the Insured previously in conjunction with the 
community inspection procedure established under National Flood 
Insurance Program Regulations (44 CFR 59.30).
    2. Reduction of Coverage Limits or Reformation: If the premium 
payment is not sufficient (whether evident or not) to purchase the 
amount of coverage requested

[[Page 24266]]

by an application, renewal, endorsement, or other form and paragraph 
E.1.d. does not apply, then the policy will be deemed to provide 
only such coverage as can be purchased for the entire term of the 
policy, for the amount of premium received, subject to increasing 
the amount of coverage pursuant to 44 CFR 61.11; provided, however:
    a. If the insufficient premium is discovered by the Insurer 
prior to a loss and the Insurer can determine the amount of 
insufficient premium from information in its possession at the time 
of its discovery of the insufficient premium, the Insurer will give 
a notice of additional premium due, and if the Insured remits and 
the Insurer receives the additional premium required to purchase the 
limits of coverage for each kind of coverage as was initially 
requested by the Insured within 30 days from the date the Insurer 
gives the Insured written notice of additional premium due, the 
policy will be reformed, from its inception date, or, in the case of 
an endorsement, from the effective date of the endorsement, to 
provide flood insurance coverage in the amount of coverage initially 
requested.
    b. If the insufficient premium is discovered by the Insurer at 
the time of a loss under the policy, the Insurer will give a notice 
of premium due, and if the Insured remits and the Insurer receives 
the additional premium required to purchase (for the current policy 
term and the previous policy term, if then insured) the limits of 
coverage for each kind of coverage as was initially requested by the 
Insured within 30 days from the date the Insurer gives the Insured 
written notice of additional premium due, the policy will be 
reformed, from its inception date, or, in the case of an 
endorsement, from the effective date of the endorsement, to provide 
flood insurance coverage in the amount of coverage initially 
requested.
    c. Under subparagraphs a. and b. as to any mortgagee or trustee 
named in the policy, the Insurer will give a notice of additional 
premium due and the right of reformation will continue in force for 
the benefit only of the mortgagee or trustee, up to the amount of 
the Insured's indebtedness, for 30 days after written notice to the 
mortgagee or trustee.
    F. Policy Renewal: The term of this policy begins on its 
inception date and ends on its expiration date, as shown on the 
declarations page that is attached to the policy. The Insurer is 
under no obligation to:
    1. Send the Insured any renewal notice or other notice that the 
policy term is coming to an end and the receipt of any such notice 
by the Insured will not be deemed to be a waiver of this provision 
on the Insurer's part.
    2. Assure that policy changes reflected in endorsements 
submitted during the policy term are included in any renewal notice 
or new policy sent to the Insured. Policy changes includes the 
addition of any increases in the amounts of coverage.
    This policy will not be renewed and the coverage provided by it 
will not continue into any successive policy term unless the renewal 
premium payment, and when applicable, the community inspection 
report referred to below, is received by the Insurer at the office 
of the National Flood Insurance Program within 30 days of the 
expiration date of this policy, subject to paragraph E. above. If 
the renewal premium payment, and when applicable, the community 
inspection report referred to below, is mailed by certified mail to 
the Insurer before the expiration date, it will be deemed to have 
been received within the required 30 days. The coverage provided by 
the renewal policy is in effect for any loss occurring during the 
30-day period even if the loss occurs before the renewal premium 
payment, and when applicable, the community inspection report 
referred to below, is received within the required 30 days. In all 
other cases, this policy will terminate as of the expiration date, 
of the last policy term for which the premium payment, and when 
applicable, the community inspection report referred to below, was 
timely received and, in that event, the Insurer will not be 
obligated to provide the Insured with any cancellation, termination, 
policy lapse, or policy renewal notice.
    In connection with the renewal of this policy, the Insured may 
be requested during the policy term to recertify, on a 
Recertification Questionnaire the Insurer will provide, the rating 
information used to rate the most recent application for or renewal 
of insurance.
    The community in which the insured property is located has been 
approved by the Federal Emergency Management Agency to participate 
in a special inspection procedure set forth in National Flood 
Insurance Program Regulations (44 CFR 59.30) that requires the 
submission of a community inspection report completed by local 
officials as one condition for policy renewal. The Insured may be 
required to submit such an inspection report completed by a 
community official to certify whether the insured property is in 
compliance with the community's floodplain management ordinance. The 
Insured will be notified in writing of this requirement 
approximately 6 months before the renewal date and again at the time 
the renewal bill is sent.
    Notwithstanding the Insured's responsibility to submit the 
appropriate renewal premium in sufficient time to permit its receipt 
by the Insurer before the expiration of the policy being renewed, 
the Insurer has established a business procedure for mailing renewal 
notices to assist Insureds in meeting their responsibility. 
Regarding the business procedure, evidence of the placing of any 
such notices into the U.S. Postal Service, addressed to the Insured 
at the address appearing on its most recent application or other 
appropriate form (received by the Insurer before the mailing of the 
renewal notice), does, in all respects, for purposes of the National 
Flood Insurance Program, presumptively establish delivery to the 
Insured for all purposes irrespective of whether the Insured 
actually received the notice.
    However, if the Insurer determines that, through any 
circumstances, any renewal notice was not placed into the U.S. 
Postal Service, or, if placed, was prepared or addressed in a manner 
that the Insurer determines could preclude the likelihood of its 
being actually and timely received by the Insured before the due 
date for the renewal premium, the following procedures will be 
followed:
    If the Insured or its agent notified the Insurer, not later than 
1 year after the date on which the payment of the renewal premium 
was due, of a nonreceipt of a renewal notice before the due date for 
the renewal premium, which the Insurer determines was attributable 
to the above circumstance, the Insurer will mail a second bill 
providing a revised due date, which will be 30 days after the date 
on which the bill is mailed.
    If the renewal payment requested by reason of the second bill is 
not received by the revised due date, no renewal will occur and the 
policy will remain as an expired policy as of the expiration date 
prescribed on the policy.
    G. Conditions Suspending or Restricting Insurance: Unless 
otherwise provided in writing added hereto, the Insurer will not be 
liable for loss occurring while the hazard is increased by any means 
within the control or knowledge of the Insured.
    H. Liberalization clause: If during the period that insurance is 
in force under this policy or within 45 days before the inception 
date thereof, should the Insurer have adopted under the Act, any 
forms, endorsements, rules or regulations by which this policy could 
be extended or broadened, without additional premium charge, by 
endorsement or substitution of form, then, such extended or 
broadened insurance will inure to the benefit of the Insured as 
though such endorsement or substitution of form had been made. Any 
broadening or extension of this policy to the Insured's benefit will 
only apply to losses occurring on or after the effective date of the 
adoption of any forms, endorsements, rules or regulations affecting 
this policy.
    I. Alterations and Repairs: The Insured may, at the Insured's 
own expense, make alterations, additions and repairs, and complete 
structures in the course of construction.
    J. Cancellation of Policy by Insured: The Insured may cancel 
this policy at any time but a refund of premium money will only be 
made when:
    1. Except with respect to a condominium building or a building 
that has a condominium form of ownership, the Insured cancels 
because the Insured has transferred ownership of the insured 
property to someone else. In this case, the Insurer will refund to 
the Insured, once the Insurer receives the Insured's written request 
for cancellation (signed by the Insured) the excess of premiums paid 
by the Insured that apply to the unused portion of the policy's 
term, pro rata but with retention of the expense constant and the 
Federal policy fee.
    2. The Insured cancels a policy having a term of 3 years, on an 
anniversary date, and the reason for the cancellation is that:
    a. A policy of flood insurance has been obtained or is being 
obtained in substitution for this policy and the Insurer has 
received a written concurrence in the cancellation from any 
mortgagee of which the Insurer has actual notice, or
    b. The Insured has extinguished the insured mortgage debt and is 
no longer

[[Page 24267]]

required by the mortgagee to maintain the coverage. Refund of any 
premium, under this subparagraph 2., will be pro rata but with 
retention of the expense constant and the Federal policy fee.
    3. The Insured cancels because the Insurer has determined that 
the property is not, in fact, in a special hazard area; and the 
Insured was required to purchase flood insurance coverage by a 
private lender or Federal agency pursuant to Public Law 93-234, 
section 102 and the lender or agency no longer requires the 
retention of the coverage. In this event, if no claims have been 
paid or are pending, the premium payments will be refunded in full, 
according to applicable National Flood Insurance Program 
regulations.
    K. Loss Clause: Payment of any loss under this policy will not 
reduce the amount of insurance applicable to any other loss during 
the policy term that arises out of a separate occurrence of the 
peril insured against hereunder; provided, that all loss arising out 
of a continuous or protracted occurrence will be deemed to 
constitute loss arising out of a single occurrence.
    L. Mortgage Clause: (Applicable to building coverage only and 
effective only when the policy is made payable to a mortgagee or 
trustee named in the application and declarations page attached to 
this policy or of whom the Insurer has actual notice before the 
payment of loss proceeds under this policy.)
    Loss, if any, under this policy, will be payable to the 
aforesaid as mortgagee or trustee as interest may appear under all 
present or future mortgages upon the property described in which the 
aforesaid may have an interest as mortgagee or trustee, in order of 
precedence of said mortgages, and this insurance, as to the interest 
of the mortgagee or trustee only therein, will not be invalidated:
    1. By any act or neglect of the mortgagor or owner of the 
described property; nor
    2. By any foreclosure or other proceedings or notice of sale 
relating to the property; nor
    3. By any change in the title or ownership of the property; nor
    4. By the occupation of the premises for purposes more hazardous 
than are permitted by this policy, provided, That in case the 
mortgagor or owner will neglect to pay any premium due under this 
policy, the mortgagee or trustee will, on demand, pay the same.
    Provided, also, that the mortgagee or trustee will notify the 
Insurer of any change of ownership or occupancy of the building or 
increase of hazard that will come to the knowledge of said mortgagee 
or trustee and, unless permitted by this policy, it will be noted 
thereon and the mortgagee or trustee will, on demand, pay the 
premium for such increased hazard for the term of the use thereof; 
otherwise, this policy will be null and void.
    If this policy is cancelled by the Insurer, it will continue in 
force for the benefit of the mortgagee or trustee for 30 days after 
written notice to the mortgagee or trustee of such cancellation and 
will then cease.
    Whenever the Insurer will pay the mortgagee or trustee any sum 
for loss under this policy and will claim that, as to the mortgagor 
or owner, no liability therefor existed, the Insurer will, to the 
extent of such payment, be thereupon legally subrogated to all the 
rights of the party to whom such payment will be made, under all 
securities held as collateral to the mortgage debt, or may, at its 
option, pay to the mortgagee or trustee the whole principal due or 
to grow due on the mortgage with interest, and will thereupon 
receive a full assignment and transfer of the mortgage and of all 
such other securities, but no subrogation will impair the right of 
the mortgagee or trustee to recover the full amount of said 
mortgagee's or trustee's claim.
    M. Mortgagee Obligations: If the Insured fails to render proof 
of loss, the named mortgagee or trustee, upon notice, will render 
proof of loss in the form herein specified within 60 days thereafter 
and will be subject to the provisions of this policy relating to 
appraisal and time of payment and of bringing suit.
    N. Loss Payable Clause (Applicable to contents items only): 
Loss, if any, will be adjusted with the Insured and will be payable 
to the Insured and loss payee as their interests may appear.
    O. Requirements in Case of Loss: Should a flood loss occur to 
the insured property, the Insured must:
    1. Notify the Insurer in writing as soon as practicable;
    2. As soon as reasonably possible, separate the damaged and 
undamaged property, putting it in the best possible order so that 
the Insurer may examine it; and
    3. Within 60 days after the loss, send the Insurer a proof of 
loss, which is the Insured's statement as to the amount it is 
claiming under the policy signed and sworn to by the Insured and 
furnishing the following information:
    a. The date and time of the loss;
    b. A brief explanation of how the loss happened;
    c. The Insured's interest in the property damaged (for example, 
``owner'') and the interests, if any, of others in the damaged 
property;
    d. The actual cash value of each damaged item of insured 
property and the amount of damages sustained;
    e. The names of mortgagees or anyone else having a lien, charge 
or claim against the insured property;
    f. Details as to any other contracts of insurance covering the 
property, whether valid or not;
    g. Details of any changes in ownership, use, occupancy, location 
or possession of the insured property since the policy was issued;
    h. Details as to who occupied any insured building at the time 
of loss and for what purpose; and
    i. The amount the Insured claims is due under this policy to 
cover the loss, including statements concerning:
    (1) The limits of coverage stated in the policy; and
    (2) The cost to repair or replace the damaged property 
(whichever costs less).
    4. Cooperate with the Insurer's adjuster or representative in 
the investigation of the claim;
    5. Document the loss with all bills, receipts, and related 
documents for the amount being claimed;
    6. The insurance adjuster whom the Insurer hires to investigate 
the claim may furnish the Insured with a proof of loss form, and she 
or he may help the Insured to complete it. However, this is a matter 
of courtesy only, and the Insured must still send the Insurer a 
proof of loss within 60 days after the loss even if the adjuster 
does not furnish the form or help the Insured complete it. In 
completing the proof of loss, the Insured must use its own judgment 
concerning the amount of loss and the justification for the amount.
    The adjuster is not authorized to approve or disapprove claims 
or to tell the Insured whether the claim will be approved by the 
Insurer.
    7. The Insurer may, at its option, waive the requirement for the 
completion and filing of a proof of loss in certain cases, in which 
event the Insured will be required to sign and, at the Insurer's 
option, swear to an adjuster's report of the loss that includes 
information about the loss and the damages needed by the Insurer in 
order to adjust the claim.
    8. Any false statements made in the course of presenting a claim 
under this policy may be punishable by fine or imprisonment under 
the applicable Federal laws.
    P. Options After a Loss: Options the Insurer may, in its sole 
discretion, exercise after loss include the following:
    1. Evidence of Loss: If the Insurer specifically requests it, in 
writing, the Insured may be required to furnish a complete inventory 
of the destroyed, damaged and undamaged property, including details 
as to quantities, costs, actual cash values, amount of loss claims, 
and any written plans and specifications for repair of the damaged 
property that can reasonably be made available to the Insurer.
    2. Examination Under Oath and Access to the Condominium 
Association's Articles of Association or Incorporation, Property 
Insurance Policies, and Other Condominium Documents: The Insurer may 
require the Insured to:
    a. Show the Insurer, or its designee, the damaged property;
    b. Be examined under oath by the Insurer or its designee;
    c. Sign any transcripts of such examinations; and
    d. At such reasonable times and places as the Insurer may 
designate, permit the Insurer to examine and make extracts and 
copies of any condominium documents, including the Articles of 
Association or Incorporation, Bylaws, rules and regulations, 
Declarations of the condominium, property insurance policies, and 
other condominium documents; and all books of accounts, bills, 
invoices and vouchers, or certified copies thereof if the originals 
are lost, pertaining to the damaged property.
    3. Options to Repair or Replace: The Insurer may take all or any 
part of the damaged property at the agreed or appraised value and, 
also, repair, rebuild or replace the property destroyed or damaged 
with other of like kind and quality within a reasonable

[[Page 24268]]

time, on giving the Insured notice of the Insurer's intention to do 
so within 30 days after the receipt of the proof of loss herein 
required under paragraph O. above.
    4. Adjustment Options: The Insurer may adjust loss to any 
insured property of others with the owners of such property or with 
the Insured for their account. Any such insurance under this policy 
will not inure directly or indirectly to the benefit of any carrier 
or other bailee for hire.
    Q. When Loss Payable: Loss is payable within 60 days after the 
Insured files its proof of loss (or within 90 days after the 
insurance adjuster files an adjuster's report signed and sworn to by 
the Insured in lieu of a proof of loss) and ascertainment of the 
loss is made either by agreement between the Insured and the Insurer 
in writing or by the filing with the Insurer of an award as provided 
in paragraph S. below.
    If the Insurer rejects the Insured's proof of loss in whole or 
in part, the Insured may accept such denial of its claim, or 
exercise its rights under this policy, or file an amended proof of 
loss as long as it is filed within 60 days of the date of the loss 
or any extension of time allowed by the Administrator.
    R. Abandonment: The Insured may not abandon damaged or undamaged 
insured property to the Insurer.
    However, the Insurer may permit the Insured to keep damaged, 
insured property (``salvage'') after a loss and reduce the amount of 
the loss proceeds payable to the Insured under the policy by the 
value of the salvage.
    S. Appraisal: In case the Insured and the Insurer will fail to 
agree as to the actual cash value of the amount of loss, then:
    1. On the written demand of either the Insurer or the Insured, 
each will select a competent and disinterested appraiser and notify 
the other of the appraiser selected within 20 days of such demand.
    2. The appraisers will first select a competent and 
disinterested umpire and failing, after 15 days, to agree upon such 
umpire, then on the Insurer's request or the Insured's request, such 
umpire will be selected by a judge of a court of record in the State 
in which the insured property is located.
    3. The appraisers will then appraise the loss, stating 
separately actual cash value and loss to each item; and, failing to 
agree, will submit their differences, only, to the umpire.
    4. An award in writing, so itemized, of any two (appraisers or 
appraiser and umpire) when filed with the Insurer will determine the 
amount of actual cash value and loss.
    5. Each appraiser will be paid by the party selecting him or her 
and the expenses of appraisal and umpire will be paid by both 
parties equally.
    T. Action Against the Insurer: No suit or action on this policy 
for the recovery of any claim will be sustainable in any court of 
law or equity unless all the requirements of this policy will have 
been complied with, and unless commenced within 12 months next after 
the date of mailing of notice of disallowance or partial 
disallowance of the claim. An action on such claim against the 
Insurer must be instituted, without regard to the amount in 
controversy, in the United States District Court for the district in 
which the property will have been situated.
    U. Subrogation: If of any payment under this policy, the Insurer 
will be subrogated to all the Insured's rights of recovery therefor 
against any party, and the Insurer may require from the Insured an 
assignment of all rights of recovery against any party for loss to 
the extent that payment therefor is made by the Insurer. The Insured 
will do nothing after loss to prejudice such rights; however, this 
insurance will not be invalidated should the Insured waive in 
writing prior to a loss any or all rights of recovery against any 
party for loss occurring to the described property.
    V. Continuous Lake Flooding: Where the insured building has been 
inundated by rising lake waters continuously for 90 days or more and 
it appears reasonably certain that a continuation of this flooding 
will result in damage, reimbursable under this policy, to the 
insured building equal to or greater than the building policy limits 
plus the deductible(s) or the maximum payable under the policy for 
any one building loss, the Insurer will pay the Insured the lesser 
of these two amounts without waiting for the further damage to occur 
if the Insured signs a release agreeing to:
    1. Make no further claim under this policy; and
    2. Not seek renewal of this policy; and
    3. Not apply for any flood insurance under the Act for property 
at the property location of the insured building.
    If the policy term ends before the insured building has been 
flooded continuously for 90 days, the provisions of this paragraph 
V. still apply so long as the first building damage reimbursable 
under this policy from the continuous flooding occurred before the 
end of the policy term.
    W. Duplicate Policies Not Allowed: Property may not be insured 
under more than one policy issued under the Act. When the Insurer 
finds that duplicate policies are in effect, the Insurer will by 
written notice give the Insured the option of choosing which policy 
is to remain in effect, under the following procedures:
    1. If the Insured chooses to keep in effect the policy with the 
earlier effective date, the Insurer will by the same written notice 
give the Insured an opportunity to add the coverage limits of the 
later policy to those of the earlier policy, as of the effective 
date of the later policy.
    2. If the Insured chooses to keep in effect the policy with the 
later effective date, the Insurer will by the same written notice 
give the Insured the opportunity to add the coverage limits of the 
earlier policy to those of the later policy, as of the effective 
date of the later policy.
    In either case, the Insured 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 
statutorily permissible limits of coverage under the Act or the 
Insured's insurable interest, whichever is less.
    The Insurer will make a refund to the Insured, according to 
applicable National Flood Insurance Program rules, of the premium 
for the policy not being kept in effect.
    For purposes of this paragraph W., the term effective date means 
the date coverage that has been in effect without any lapse was 
first placed in effect. In addition to the provisions of this 
paragraph W. for increasing policy limits, the usual procedures for 
increasing limits by mid-term endorsement or at renewal time, with 
the appropriate waiting period, are applicable to the policy the 
Insured chooses to keep in effect.

    5. We amend Part 61 by adding Appendix A(6) as follows:

Appendix A(6) to Part 61

Federal Emergency Management Agency, Federal Insurance Administration

Standard Flood Insurance Policy Endorsement to Residential Condominium 
Building Association Policy

    [Issued Pursuant to the National Flood Insurance Act of 1968, or 
Any Acts Amendatory Thereof (Hereinafter Called the Act), and 
Applicable Federal Regulations in Title 44 of the Code of Federal 
Regulations, Subchapter B. The provisions of this endorsement 
replace the provisions of Article 10 of the Standard Flood Insurance 
Policy, Residential Condominium Building Association Policy, only in 
applicable policies in Monroe County and the Village of Islamorada, 
Florida].

Article 10--General Conditions and Provisions

    A. Pair and Set Clause: If there is loss of an article that is 
part of a pair or set, the measure of loss will be a reasonable and 
fair proportion of the total value of the pair or set, giving 
consideration to the importance of said article, but such loss will 
not be construed to mean total loss of the pair or set.
    B. Concealment, Fraud: This policy will be void, nor can this 
policy be renewed or any new flood insurance coverage be issued to 
the Insured if any person insured under Article 1, paragraph A., 
whether before or after a loss, has:
    1. Sworn falsely, or willfully concealed or misrepresented any 
material fact; or
    2. Done any fraudulent act concerning this insurance (see 
paragraph E.1.d. below); or
    3. Willfully concealed or misrepresented any fact on a 
``Recertification Questionnaire,'' which causes the Insurer to issue 
a policy based on a premium amount that is less than the premium 
amount that would have been payable were it not for the misstatement 
of fact (see paragraph F. below).
    C. Other Insurance: If a loss covered by this policy is also 
covered by other insurance, whether collectible or not, the Insurer 
will pay only the proportion of the loss that the limit of liability 
that applies under this policy bears to the total amount of 
insurance covering the loss, provided, if at the time of loss, there 
is other insurance made available under the Act, in the name of a 
unit owner that provides coverage for the same loss covered by this 
policy, this policy's coverage will be primary and not contributing 
with such other insurance.
    D. Amendments and Waivers, Assignment: This Standard Flood 
Insurance Policy cannot be amended nor can any of its provisions be 
waived without the express written consent

[[Page 24269]]

of the Federal Insurance Administrator. No action the Insurer takes 
under the terms of this policy can constitute a waiver of any of its 
rights. Except in the case of 1. a contents only policy and 2. a 
policy issued to cover a building in the course of construction, 
assignment of this policy, in writing, is allowed upon transfer of 
title.
    E. Voidance, Reduction or Reformation of the Coverage:
    1. Voidance: This policy will be void and of no legal force and 
effect if any one of the following conditions occurs:
    a. The property listed on the application is not eligible for 
coverage, in which case the policy is void from its inception;
    b. The community in which the property is located was not 
participating in the National Flood Insurance Program on the 
policy's inception date and did not qualify as a participating 
community during the policy's term and before the occurrence of any 
loss;
    c. If, during the term of the policy, the participation in the 
National Flood Insurance Program of the community in which the 
property is located ceases, in which case the policy will be deemed 
void effective at the end of the last day of the policy year in 
which such cessation occurred and will not be renewed.
    If the voided policy included 3 policy years in a contract term 
of 3 years, the Insured will be entitled to a pro-rata refund of any 
premium applicable to the remainder of the policy's term;
    d. If any Insured or its agent has:
    (1) Sworn falsely; or
    (2) Fraudulently or willfully concealed or misrepresented any 
material fact including facts relevant to the rating of this policy 
in the application for coverage, or upon any renewal of coverage, or 
in connection with the submission of any claim brought under the 
policy, in which case this entire policy will be void as of the date 
the wrongful act was committed or from its inception if this policy 
is a renewal policy and the wrongful act occurred in connection with 
an application for or renewal or endorsement of a policy issued to 
the Insured in a prior year and affects the rating of or premium 
amount received for this policy. Refunds of premiums, if any, will 
be subject to offsets for the Insurer's administrative expenses 
(including the payment of agent's commissions for any voided policy 
year) in connection with the issuance of the policy;
    e. The premium submitted is less than the minimum set forth in 
44 CFR 61.10 in connection with any application for a new policy or 
policy renewal, in which case the policy is void from its inception 
date.
    f. The Insured has not submitted a community inspection report, 
cited in ``F. Policy Renewal'' below that was required in a notice 
sent to the Insured previously in conjunction with the community 
inspection procedure established under National Flood Insurance 
Program Regulations (44 CFR 59.30).
    2. Reduction of Coverage Limits or Reformation: If the premium 
payment is not sufficient (whether evident or not) to purchase the 
amount of coverage requested by an application, renewal, 
endorsement, or other form and paragraph E.1.d. does not apply, then 
the policy will be deemed to provide only such coverage as can be 
purchased for the entire term of the policy, for the amount of 
premium received, subject to increasing the amount of coverage 
pursuant to 44 CFR 61.11; provided, however:
    a. If the insufficient premium is discovered by the Insurer 
before a loss and the Insurer can determine the amount of 
insufficient premium from information in its possession at the time 
of its discovery of the insufficient premium, the Insurer will give 
a notice of additional premium due, and if the Insured remits and 
the Insurer receives the additional premium required to purchase the 
limits of coverage for each kind of coverage as was initially 
requested by the Insured within 30 days from the date the Insurer 
gives the Insured written notice of additional premium due, the 
policy will be reformed, from its inception date, or, in the case of 
an endorsement, from the effective date of the endorsement, to 
provide flood insurance coverage in the amount of coverage initially 
requested.
    b. If the insufficient premium is discovered by the Insurer at 
the time of a loss under the policy, the Insurer will give a notice 
of premium due, and if the Insured remits and the Insurer receives 
the additional premium required to purchase (for the current policy 
term and the previous policy term, if then insured) the limits of 
coverage for each kind of coverage as was initially requested by the 
Insured within 30 days from the date the Insurer gives the Insured 
written notice of additional premium due, the policy will be 
reformed, from its inception date, or, in the case of an 
endorsement, from the effective date of the endorsement, to provide 
flood insurance coverage in the amount of coverage initially 
requested.
    c. Under subparagraphs a. and b. as to any mortgagee or trustee 
named in the policy, the Insurer will give a notice of additional 
premium due and the right of reformation will continue in force for 
the benefit only of the mortgagee or trustee, up to the amount of 
the Insured's indebtedness, for 30 days after written notice to the 
mortgagee or trustee.
    F. Policy Renewal: The term of this policy begins on its 
inception date and ends on its expiration date, as shown on the 
declarations page that is attached to the policy. The Insurer is 
under no obligation to:
    1. Send the Insured any renewal notice or other notice that the 
policy term is coming to an end and the receipt of any such notice 
by the Insured will not be deemed to be a waiver of this provision 
on the Insurer's part.
    2. Assure that policy changes reflected in endorsements 
submitted during the Policy term are included in any renewal notice 
or new policy sent to the Insured. policy changes includes the 
addition of any increases in the amounts of coverage.
    This policy will not be renewed and the coverage provided by it 
will not continue into any successive policy term unless the renewal 
premium payment, and when applicable, the community inspection 
report referred to below, is received by the Insurer at the office 
of the National Flood Insurance Program within 30 days of the 
expiration date of this policy, subject to paragraph E. above. If 
the renewal premium payment, and when applicable, the community 
inspection report referred to below, is mailed by certified mail to 
the Insurer before the expiration date, it will be deemed to have 
been received within the required 30 days. The coverage provided by 
the renewal policy is in effect for any loss occurring during the 
30-day period even if the loss occurs before the renewal premium 
payment, and when applicable, the community inspection report 
referred to below, is received within the required 30 days. In all 
other cases, this policy will terminate as of the expiration date, 
of the last policy term for which the premium payment, and when 
applicable, the community inspection report referred to below, was 
timely received and, in that event, the Insurer will not be 
obligated to provide the Insured with any cancellation, termination, 
policy lapse, or policy renewal notice.
    In connection with the renewal of this policy, the Insured may 
be requested during the policy term to recertify, on a 
Recertification Questionnaire the Insurer will provide, the rating 
information used to rate the most recent application for or renewal 
of insurance.
    The community in which the insured property is located has been 
approved by the Federal Emergency Management Agency to participate 
in a special inspection procedure set forth in National Flood 
Insurance Program Regulations (44 CFR 59.30) that requires the 
submission of a community inspection report completed by local 
officials as one condition for policy renewal. The Insured may be 
required to submit such an inspection report completed by a 
community official certifying whether the insured property is in 
compliance with the community's floodplain management ordinance. The 
Insured will be notified in writing of this requirement 
approximately 6 months before the renewal date and again at the time 
the renewal bill is sent.
    Notwithstanding the Insured's responsibility to submit the 
appropriate renewal premium in sufficient time to permit its receipt 
by the Insurer before the expiration of the policy being renewed, 
the Insurer has established a business procedure for mailing renewal 
notices to assist Insureds in meeting their responsibility. 
Regarding the business procedure, evidence of the placing of any 
such notices into the U.S. Postal Service, addressed to the Insured 
at the address appearing on its most recent application or other 
appropriate form (received by the Insurer before the mailing of the 
renewal notice), does, in all respects, for purposes of the National 
Flood Insurance Program, presumptively establish delivery to the 
Insured for all purposes irrespective of whether the Insured 
actually received the notice.
    However, if the Insurer determines that, through any 
circumstances, any renewal notice was not placed into the U.S. 
Postal Service, or, if placed, was prepared or addressed in a manner 
that the Insurer determines could preclude the likelihood of its 
being actually and timely received by the Insured before the due 
date for the renewal

[[Page 24270]]

premium, the following procedures will be followed:
    If the Insured or its agent notified the Insurer, not later than 
1 year after the date on which the payment of the renewal premium 
was due, of a nonreceipt of a renewal notice before the due date for 
the renewal premium, which the Insurer determines was attributable 
to the above circumstance, the Insurer will mail a second bill 
providing a revised due date, which will be 30 days after the date 
on which the bill is mailed.
    If we do not receive the renewal payment requested by reason of 
the second bill by the revised due date, no renewal will occur and 
the policy will remain as an expired policy as of the expiration 
date prescribed on the policy.
    G. Conditions Suspending or Restricting Insurance: Unless 
otherwise provided in writing added hereto, the Insurer will not be 
liable for loss occurring while the hazard is increased by any means 
within the control or knowledge of the Insured.
    H. Liberalization clause: If during the period that insurance is 
in force under this policy or within 45 days prior to the inception 
date thereof, should the Insurer have adopted under the Act, any 
forms, endorsements, rules or regulations by which this policy could 
be extended or broadened, without additional premium charge, by 
endorsement or substitution of form, then, such extended or 
broadened insurance will inure to the benefit of the Insured as 
though such endorsement or substitution of form had been made. Any 
broadening or extension of this policy to the Insured's benefit will 
only apply to losses occurring on or after the effective date of the 
adoption of any forms, endorsements, rules or regulations affecting 
this policy.
    I. Alterations and Repairs: The Insured may, at the Insured's 
own expense, make alterations, additions and repairs, and complete 
structures in the course of construction.
    J. Cancellation of Policy By Insured: The Insured may cancel 
this policy at any time but a refund of premium money will only be 
made when:
    1. The Insured cancels a policy having a term of 3 years, on an 
anniversary date, and the reason for the cancellation is that:
    a. A policy of flood insurance has been obtained or is being 
obtained in substitution for this policy and the Insurer has 
received a written concurrence in the cancellation from any 
mortgagee of which the Insurer has actual notice, or
    b. The Insured has extinguished the insured mortgage debt and is 
no longer required by the mortgagee to maintain the coverage. Refund 
of any premium, under this subparagraph 1., will be pro rata but 
with retention of the expense constant and the Federal policy fee.
    2. The Insured cancels because the Insurer has determined that 
the property is not, in fact, in a special hazard area; and the 
Insured was required to purchase flood insurance coverage by a 
private lender or Federal agency pursuant to Public Law 93-234, 
section 102 and the lender or agency no longer requires the 
retention of the coverage. In this event, if no claims have been 
paid or are pending, the premium payments will be refunded in full, 
according to applicable National Flood Insurance Program 
regulations.
    K. Loss Clause: Payment of any loss under this policy will not 
reduce the amount of insurance applicable to any other loss during 
the policy term that arises out of a separate occurrence of the 
peril insured against hereunder; provided, that all loss arising out 
of a continuous or protracted occurrence will be deemed to 
constitute loss arising out of a single occurrence.
    L. Mortgage Clause: (Applicable to building coverage only and 
effective only when the policy is made payable to a mortgagee or 
trustee named in the application and declarations page attached to 
this policy or of whom the Insurer has actual notice prior to the 
payment of loss proceeds under this policy.)
    Loss, if any, under this policy, will be payable to the 
aforesaid as mortgagee or trustee as interest may appear under all 
present or future mortgages upon the property described in which the 
aforesaid may have an interest as mortgagee or trustee, in order of 
precedence of said mortgages, and this insurance, as to the interest 
of the mortgagee or trustee only therein, will not be invalidated:
    1. By any act or neglect of the mortgagor or owner of the 
described property; nor
    2. By any foreclosure or other proceedings or notice of sale 
relating to the property; nor
    3. By any change in the title or ownership of the property; nor
    4. By the occupation of the premises for purposes more hazardous 
than are permitted by this policy, provided, that it in case the 
mortgagor or owner will neglect to pay any premium due under this 
policy, the mortgagee or trustee will, on demand, pay the same.
    Provided, also, that the mortgagee or trustee will notify the 
Insurer of any change of ownership or occupancy of the building or 
increase of hazard that will come to the knowledge of said mortgagee 
or trustee and, unless permitted by this policy, it will be noted 
thereon and the mortgagee or trustee will, on demand, pay the 
premium for such increased hazard for the term of the use thereof; 
otherwise, this policy will be null and void.
    If this policy is cancelled by the Insurer, it will continue in 
force for the benefit of the mortgagee or trustee for 30 days after 
written notice to the mortgagee or trustee of such cancellation and 
will then cease.
    Whenever the Insurer will pay the mortgagee or trustee any sum 
for loss under this policy and will claim that, as to the mortgagor 
or owner, no liability therefor existed, the Insurer will, to the 
extent of such payment, be thereupon legally subrogated to all the 
rights of the party to whom such payment will be made, under all 
securities held as collateral to the mortgage debt, or may, at its 
option, pay to the mortgagee or trustee the whole principal due or 
to grow due on the mortgage with interest, and will thereupon 
receive a full assignment and transfer of the mortgage and of all 
such other securities, but no subrogation will impair the right of 
the mortgagee or trustee to recover the full amount of said 
mortgagee's or trustee's claim.
    M. Mortgagee Obligations: If the Insured fails to render proof 
of loss, the named mortgagee or trustee, upon notice, will render 
proof of loss in the form herein specified within 60 days thereafter 
and will be subject to the provisions of this policy relating to 
appraisal and time of payment and of bringing suit.
    N. Loss Payable Clause (Applicable to contents items only): 
Loss, if any, will be adjusted with the Insured and will be payable 
to the Insured and loss payee as their interests may appear.
    O. Requirements in Case of Loss: Should a flood loss occur to 
the insured property, the Insured must:
    1. Notify the Insurer in writing as soon as practicable;
    2. As soon as reasonably possible, separate the damaged and 
undamaged property, putting it in the best possible order so that 
the Insurer may examine it; and
    3. Within 60 days after the loss, send the Insurer a proof of 
loss, which is the Insured's statement as to the amount it is 
claiming under the policy signed and sworn to by the Insured and 
furnishing the following information:
    a. The date and time of the loss;
    b. A brief explanation of how the loss happened;
    c. The Insured's interest in the property damaged (for example, 
``owner'') and the interests, if any, of others in the damaged 
property;
    d. The actual cash value or replacement cost, whichever is 
appropriate, of each damaged item of insured property and the amount 
of damages sustained;
    e. The names of mortgagees or anyone else having a lien, charge 
or claim against the insured property;
    f. Details as to any other contracts of insurance covering the 
property, whether valid or not;
    g. Details of any changes in ownership, use, occupancy, location 
or possession of the insured property since the policy was issued;
    h. Details as to who occupied any insured building at the time 
of loss and for what purpose; and
    i. The amount the Insured claims is due under this policy to 
cover the loss, including statements concerning:
    (1) The limits of coverage stated in the policy; and
    (2) The cost to repair or replace the damaged property 
(whichever costs less).
    4. Cooperate with the Insurer's adjuster or representative in 
the investigation of the claim;
    5. Document the loss with all bills, receipts, and related 
documents for the amount being claimed;
    6. The insurance adjuster whom the Insurer hires to investigate 
the claim may furnish the Insured with a proof of loss form, and she 
or he may help the Insured to complete it. However, this is a matter 
of courtesy only, and the Insured must still send the Insurer a 
proof of loss within 60 days after the loss even if the adjuster 
does not furnish the form or help the Insured

[[Page 24271]]

complete it. In completing the proof of loss, the Insured must use 
its own judgment concerning the amount of loss and the justification 
for the amount.
    The adjuster is not authorized to approve or disapprove claims 
or to tell the Insured whether the claim will be approved by the 
Insurer.
    7. The Insurer may, at its option, waive the requirement for the 
completion and filing of a proof of loss in certain cases, in which 
event the Insured will be required to sign and, at the Insurer's 
option, swear to an adjuster's report of the loss that includes 
information about the loss and the damages needed by the Insurer in 
order to adjust the claim.
    8. Any false statements made in the course of presenting a claim 
under this policy may be punishable by fine or imprisonment under 
the applicable Federal laws.
    P. Options After a Loss: Options the Insurer may, in its sole 
discretion, exercise after loss include the following:
    1. Evidence of Loss: If the Insurer specifically requests it, in 
writing, the Insured may be required to furnish a complete inventory 
of the destroyed, damaged and undamaged property, including details 
as to quantities, costs, actual cash values or replacement cost 
(whichever is appropriate), amount of loss claims, and any written 
plans and specifications for repair of the damaged property that can 
reasonably be made available to the Insurer.
    2. Examination Under Oath and Access to the Condominium 
Association's Articles of Association or Incorporation, Property 
Insurance Policies, and Other Condominium Documents: The Insurer may 
require the Insured to:
    a. Show the Insurer, or its designee, the damaged property;
    b. Be examined under oath by the Insurer or its designee;
    c. Sign any transcripts of such examinations; and
    d. At such reasonable times and places as the Insurer may 
designate, permit the Insurer to examine and make extracts and 
copies of any condominium documents, including the Articles of 
Association or Incorporation, Bylaws, rules and regulations, 
Declarations of the condominium, property insurance policies, and 
other condominium documents; and all books of accounts, bills, 
invoices and vouchers, or certified copies thereof if the originals 
are lost, pertaining to the damaged property.
    3. Options to Repair or Replace: The Insurer may take all or any 
part of the damaged property at the agreed or appraised value and, 
also, repair, rebuild or replace the property destroyed or damaged 
with other of like kind and quality within a reasonable time, on 
giving the Insured notice of the Insurer's intention to do so within 
30 days after the receipt of the proof of loss herein required under 
paragraph O. above.
    4. Adjustment Options: The Insurer may adjust loss to any 
insured property of others with the owners of such property or with 
the Insured for their account. Any such insurance under this policy 
will not inure directly or indirectly to the benefit of any carrier 
or other bailee for hire.
    Q. When Loss Payable: Loss is payable within 60 days after the 
Insured files its proof of loss (or within 90 days after the 
insurance adjuster files an adjuster's report signed and sworn to by 
the Insured in lieu of a proof of loss) and ascertainment of the 
loss is made either by agreement between the Insured and the Insurer 
in writing or by the filing with the Insurer of an award as provided 
in paragraph S. below.
    If the Insurer rejects the Insured's proof of loss in whole or 
in part, the Insured may accept such denial of its claim, or 
exercise its rights under this policy, or file an amended proof of 
loss as long as it is filed within 60 days of the date of the loss 
or any extension of time allowed by the Administrator.
    R. Abandonment: The Insured may not abandon damaged or undamaged 
insured property to the Insurer.
    However, the Insurer may permit the Insured to keep damaged, 
insured property (``salvage'') after a loss and reduce the amount of 
the loss proceeds payable to the Insured under the policy by the 
value of the salvage.
    S. Appraisal: If at any time after a loss, the Insurer is unable 
to agree with the Insured as to the actual cash value--or, if 
applicable, replacement cost--of the damaged property so as to 
determine the amount of loss to be paid to the Insured, then:
    1. On the written demand of either the Insurer or the Insured, 
each will select a competent and disinterested appraiser and notify 
the other of the appraiser selected within 20 days of such demand.
    2. The appraisers will first select a competent and 
disinterested umpire and failing, after 15 days, to agree upon such 
umpire, then on the Insurer's request or the Insured's request, such 
umpire will be selected by a judge of a court of record in the State 
in which the insured property is located.
    3. The appraisers will then appraise the loss, stating 
separately replacement cost, actual cash value and loss to each 
item; and, failing to agree, will submit their differences, only, to 
the umpire.
    4. An award in writing, so itemized, of any two (appraisers or 
appraiser and umpire) when filed with the Insurer will determine the 
amount of actual cash value and loss or, should this policy's 
replacement cost provisions apply, the amount of the replacement 
cost and loss.
    5. Each appraiser will be paid by the party selecting him or her 
and the expenses of appraisal and umpire will be paid by both 
parties equally.
    T. Action Against the Insurer: No suit or action on this policy 
for the recovery of any claim will be sustainable in any court of 
law or equity unless all the requirements of this policy will have 
been complied with, and unless commenced within 12 months next after 
the date of mailing of notice of disallowance or partial 
disallowance of the claim. An action on such claim against the 
Insurer must be instituted, without regard to the amount in 
controversy, in the United States District Court for the district in 
which the property will have been situated.
    U. Subrogation: If of any payment under this policy, the Insurer 
will be subrogated to all the Insured's rights of recovery therefor 
against any party, and the Insurer may require from the Insured an 
assignment of all rights of recovery against any party for loss to 
the extent that payment therefor is made by the Insurer. The Insured 
will do nothing after loss to prejudice such rights; however, this 
insurance will not be invalidated should the Insured waive in 
writing prior to a loss any or all rights of recovery against any 
party for loss occurring to the described property.
    V. Continuous Lake Flooding: Where the insured building has been 
inundated by rising lake waters continuously for 90 days or more and 
it appears reasonably certain that a continuation of this flooding 
will result in damage, reimbursable under this policy, to the 
insured building equal to or greater than the building policy limits 
plus the deductible(s) or the maximum payable under the policy for 
any one building loss, the Insurer will pay the Insured the lesser 
of these two amounts without waiting for the further damage to occur 
if the Insured signs a release agreeing to:
    1. Make no further claim under this policy; and
    2. Not seek renewal of this policy; and
    3. Not apply for any flood insurance under the Act for property 
at the property location of the insured building.
    If the policy term ends before the insured building has been 
flooded continuously for 90 days, the provisions of this paragraph 
V. still apply so long as the first building damage reimbursable 
under this policy from the continuous flooding occurred before the 
end of the policy term.
    W. Duplicate Policies Not Allowed: Property may not be insured 
under more than one policy issued under the Act. When the Insurer 
finds that duplicate policies are in effect, the Insurer will by 
written notice give the Insured the option of choosing which policy 
is to remain in effect, under the following procedures:
    1. If the Insured chooses to keep in effect the policy with the 
earlier effective date, the Insurer will by the same written notice 
give the Insured an opportunity to add the coverage limits of the 
later policy to those of the earlier policy, as of the effective 
date of the later policy.
    2. If the Insured chooses to keep in effect the policy with the 
later effective date, the Insurer will by the same written notice 
give the Insured the opportunity to add the coverage limits of the 
earlier policy of those of the later policy, as of the effective 
date of the later policy.
    In either case, the Insured 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 
statutorily permissible limits of coverage under the Act or the 
Insured's insurable interest, whichever is less.
    The Insurer will make a refund to the Insured, according to 
applicable National Flood Insurance Program rules, of the premium 
for the policy not being kept in effect.
    For purposes of this paragraph W., the term effective date means 
the date coverage that has been in effect without any lapse was 
first placed in effect. In addition to the provisions

[[Page 24272]]

of this paragraph W. for increasing policy limits, the usual 
procedures for increasing limits by mid-term endorsement or at 
renewal time, with the appropriate waiting period, are applicable to 
the policy the Insured chooses to keep in effect.

    Dated: April 8, 1999.
James L. Witt,
Director.
[FR Doc. 99-10396 Filed 5-4-99; 8:45 am]
BILLING CODE 6718-04-P