NFIP Structural Variables

NFIP Structural Variables are key factors used to determine NFIP flood insurance premiums. These variables describe the physical characteristics of a building. They also include details like mitigation measures, claims history, and replacement cost value.

By accurately documenting these variables, agents help ensure premiums reflect the building’s true flood risk, while providing clients with tailored coverage options. These variables are a cornerstone of the NFIP’s commitment to fair, risk-based pricing under Risk Rating 2.0.

Structural Variable	Explanation	FIM Page	Specific Fields
Building Occupancy	Defines the type of use and occupancy of the building, affecting policy form and coverage limits.	3-9	See NFIP Occupancy
Construction Type	Specifies the construction materials used for the building's first floor above ground level.	3-14	Frame, Masonry, Other (see below)
Foundation Type	Describes the type of foundation supporting the building, influencing elevation measurements.	3-15	See NFIP Foundations
First Floor Height	Indicates the height of the building's first floor above the adjacent grade.	3-21	See First Floor Height
Mitigation Discounts	Discounts for actions like elevating machinery and equipment or proper flood openings.	3-27	See NFIP Mitigation discounts
Floodproofing	Measures taken to floodproof a building for lower premiums, requiring certification.	3-31	See Floodproofing
Replacement Cost Value	Represents the value of replacing the building, based on square footage and materials.	3-32	See Building Replacement Cost Value
Claims History	Details the building's prior NFIP claims, including severe repetitive losses.	3-33	List of claims (see below)
Number of Detached Structures	The number of detached structures on the property, influencing policy coverage.	3-34	Exact number of detached structures on the property (see below)
Number of Elevators	Counts the elevators in the building, relevant for policy evaluation and rating.	3-34	Exact number of elevators (see below)
Number of Floors	Specifies the number of floors in the building, affecting coverage and risk assessment.	3-34	Total number of floors (see below)
Floor of Unit	Identifies the specific floor of a unit in a multi-story building.	3-34	Specific floor level (e.g., 1st, 2nd) (see below)
Primary Residence Status	Determines whether the insured building is a primary residence, impacting premiums.	3-35	See Primary Residence

Construction Type

Construction Type helps determine flood insurance rates. It identifies the primary construction material used for the building's first floor above ground level. This information is essential for accurate rating and understanding flood risk.

The NFIP categorizes construction types into three main categories:

1. Frame: Buildings constructed with wood or metal frame walls. This category also includes structures with exterior brick or masonry veneer attached to a frame.
2. Masonry: Buildings with walls made entirely of masonry materials, such as solid brick or concrete blocks, for the first full floor above ground level.
3. Other: Includes buildings that do not fit neatly into the Frame or Masonry categories. For example, a structure with "knee walls" combining masonry and frame materials.

Why It Matters

• Risk Assessment: Construction type impacts how a building withstands flood forces, affecting its overall risk profile.
• Premium Calculation: Accurate identification of construction type ensures that flood insurance premiums align with the building's flood risk.
• Compliance: Proper reporting of construction type is critical for compliance with NFIP underwriting guidelines.

When completing the Flood Insurance Application Form, agents must select the correct construction type to ensure accurate quotes and avoid potential delays in policy issuance. The specific construction type is determined based on the materials used for the building's first floor above ground level, regardless of other materials used higher in the structure.

Claims History

Claims History provides a record of a property’s previous NFIP claims. This history is a critical factor in assessing risk and determining flood insurance premiums, but the agent is not required to track it. Instead, the NFIP manages this data.

The NFIP tracks claims history for two primary purposes:

1. Risk-Based Rating: Properties with a history of prior claims, especially repetitive losses, are considered higher risk and may incur higher premiums.
2. Identification of Severe Repetitive Loss (SRL) Properties: These are properties with multiple NFIP claims that meet specific thresholds. SRL properties are flagged for targeted mitigation efforts and may have additional premium considerations.

Key Details

• Prior NFIP Claims: The number of past claims filed against a property can directly impact premium rates under the NFIP’s risk-based rating methodology.
• Severe Repetitive Loss Properties: These are defined as properties with four or more separate claims payments exceeding $5,000 each or two or more claims payments where the cumulative amount exceeds the property’s value. Identifying such properties helps prioritize them for mitigation and flood risk reduction.

Why It Matters

• Accurate Premiums: A comprehensive claims history ensures that the flood risk associated with the property is accurately reflected in the premium.
• Mitigation Opportunities: Identifying properties with frequent claims can guide property owners toward mitigation strategies to reduce flood risk and potentially lower premiums.
• Compliance and Transparency: Accurate reporting of claims history supports compliance with NFIP regulations and fosters transparency in the underwriting process.

Detached Structures

Number of Detached Structures refers to the count of structures on the insured property that are detached from the primary building. Documenting this information adds context for adjusters at time of loss.

• Definition: A detached structure is a building that is physically separated from the main insured building. Examples include detached garages, sheds, guest houses, or barns.
• Coverage: Detached structures are not automatically covered under the primary building’s flood insurance policy. To obtain coverage, property owners must:
  • Purchase a separate flood insurance policy for the detached structure.
  • Include the structure on the application form, providing specific details such as location and use.

Why It Matters

• Compliance with NFIP Rules: The NFIP requires clear documentation of detached structures, especially if separate policies are issued.
• Customizable Coverage: Policyholders can opt to insure detached structures for building coverage, contents coverage, or both, depending on their specific needs.

Agent Responsibilities

• Ask the Right Questions: During the application process, ask clients if there are any additional buildings or structures on their property. Clarify whether these structures need coverage.
• Educate Policyholders: Explain that detached structures are not automatically included in the primary policy and may require separate coverage. Highlight the importance of insuring valuable or high-risk structures individually.

Number of Elevators

Number of Elevators is used to evaluate the presence and type of elevators in a building. Elevators can impact flood risk and rating, as they involve mechanical components that may be vulnerable to flood damage. Proper identification and documentation of elevators are critical for accurate underwriting.

What Counts as an Elevator?

For NFIP purposes, elevators are defined as mechanical lift systems designed to transport people or goods vertically within a building. The following are considered elevators:

• Passenger Elevators: Traditional elevators used to transport individuals between floors in residential or commercial buildings.
• Freight Elevators: Heavy-duty elevators used to move goods or equipment in warehouses, factories, or similar structures.
• Dumbwaiters: Small-scale elevators used to transport items like food or laundry, typically between floors in a building.

What Is Not Considered an Elevator?

The following items are not considered elevators for NFIP rating purposes:

• Escalators: Moving staircases designed for transporting people between floors.
• Stair Lifts: Chair or platform lifts attached to staircases, typically used in residential settings for individuals with mobility issues.
• Non-Motorized Lifts: Manually operated lifts, such as those found in some industrial or agricultural settings.
• Hoists and Cranes: Mechanical systems for lifting heavy objects, typically used in construction or industrial facilities

Number of Floors

Number of Floors identifies the total number of floors in a building above ground level. This variable plays an important role in determining flood insurance premiums, as the number of floors affects the building's flood risk and coverage needs.

Key Changes

Under the NFIP’s Risk Rating 2.0, implemented in October 2021, the definition of a “floor” changed to improve accuracy and reflect true flood risk. Previously, basements and enclosures were counted as floors. This practice has been discontinued under Risk Rating 2.0. Now, only the floors above ground level are included in the count, simplifying the rating process and ensuring that premiums align more closely with actual risk.

What Is Counted as a Floor?

For NFIP purposes, the following are counted as floors:

• Ground-Level Floor: The first habitable floor above the ground.
• Additional Stories: Any additional habitable floors above the ground-level floor.
• Attics Converted to Living Spaces: An attic that has been finished and is being used as a living area.

What Is Not Counted as a Floor?

The following are not counted as floors:

• Basements: Defined as any area of a building with a floor below ground level on all sides.
• Enclosures: Areas below an elevated building that are enclosed by walls, such as garages or storage rooms.
• Crawlspaces: Sub-grade or partially enclosed spaces used for access or storage beneath the first elevated floor.

Agent Responsibilities

• Verify Floor Count: During the application or renewal process, confirm the total number of habitable floors above ground level.
• Educate Clients: Explain the changes under Risk Rating 2.0 and reassure clients that excluding basements and enclosures does not reduce their coverage—it simply improves risk assessment accuracy.
• Collect Documentation: Obtain photos or diagrams if there is uncertainty about what qualifies as a floor, particularly for properties with unique designs or converted spaces.

Floor of Unit

Floor of Unit is used exclusively for unit policies. This variable identifies the specific floor within a building where the insured unit is located. It is an important factor in determining flood insurance premiums, as the unit's elevation relative to flood risk can significantly impact rates.

Key Details

• Applies to Unit Policies Only: The Floor of Unit variable is relevant only when insuring individual units within multi-unit buildings, such as condominiums or apartment complexes.
• Impact on Rates: Units located on higher floors generally have lower premiums, as they are less susceptible to flood damage compared to units on lower floors or near the ground level.
• Documentation: The Application Form must specify the exact floor where the insured unit is located (e.g., 1st floor, 3rd floor, etc.) to ensure accurate rating.

Agent Responsibilities

• Confirm Unit Location: During the application process, verify the floor number of the insured unit with the policyholder.
• Explain Rate Impacts: Inform clients that higher floors typically result in lower premiums, making this an important consideration for unit policies.
• Ensure Proper Documentation: Clearly note the floor of the unit on the Application Form to avoid misrating or delays in policy issuance.

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