NFIP Additions and Extensions

The National Flood Insurance Program (NFIP) allows property owners to customize their flood insurance coverage through its Additions and Extensions Rule. This rule provides flexibility for insuring structures connected to a primary building, ensuring that each part of a property is properly covered without unnecessary overlap. However, misunderstanding this rule often leads to confusion, especially regarding its impact on rating and coverage options.

What Are Additions and Extensions?

Additions and extensions refer to structures physically attached to the main insured building. They may be connected by:

• A rigid exterior wall
• A solid load-bearing interior wall
• A stairway
• An elevated walkway
• A roof

Examples of additions and extensions include extra wings on a building, attached garages, or enclosed walkways connecting two parts of a structure.

How the Rule Works

Property owners have the choice of how to insure these connected structures:

1. Include Additions and Extensions Under the Main Building’s Policy:
   • This option combines coverage, making it simpler to manage a single policy for the entire property.
   • All structures connected by the methods listed above are treated as part of the primary building.
2. Insure Additions and Extensions Separately:
   • At the policyholder's request, additions and extensions can have their own flood insurance policies.
   • A separate policy requires its own Application Form, which must:
     • Describe the specific structure being insured.
     • Include rating information specific to the addition or extension.
     • Specify the requested building and/or contents coverage.
   • The main building’s policy must reference the policy number or quote number of any separately insured additions or extensions.

Advantages

Agents should emphasize to policyholders that using the Additions and Extensions Rule to separate coverage is not less beneficial and often provides strategic advantages, including:

• Tailored Coverage: Policyholders can choose different levels of coverage for each structure, which may better align with their needs and risk tolerance.
• Simplified Claims: In the event of a flood loss, having separate policies can streamline claims processes, particularly when damages are confined to a specific structure.
• Accurate Rating: Separate policies allow for precise rating calculations for each addition or extension, ensuring that premiums reflect the unique risk characteristics of each structure.

Considerations

Agents play a critical role in helping policyholders understand the flexibility and benefits of the Additions and Extensions Rule. Here are a few tips:

1. Clarify Options: When discussing coverage with clients, explain that they can choose between a single policy for all connected structures or separate policies for each.
2. Highlight Policy Requirements: Ensure that any Application Forms for separate policies include all necessary details about the structure and coverage requested.
3. Avoid Misconceptions: Reassure policyholders that separating coverage does not negatively affect their rating. In fact, it can provide more tailored protection and better align premiums with risk.

This page contains information about the NFIP. Find more NFIP Resources.