Proof of Flood Insurance in Conjunction with Coverage Written by TWIA (Pursuant to TAC §5.4902, §5.4904)
To be eligible for windstorm coverage with TWIA, some properties must also be covered by flood insurance. This requirement is spelled out in Texas Insurance Code Chapter 2210 and TWIA’s Plan of Operation in the Texas Administrative Code (28 TAC §5.4902, §5.4904).
TAC §5.4904(b) generally requires flood insurance if a structure is "constructed, altered, remodeled, or enlarged on or after September 1, 2009." 28 TAC §5.4904(a)(2) states "the terms constructed, altered, remodeled, and enlarged" refer to any building activity or action on a structure that would require the policyholder to obtain a certificate of compliance (WPI-8/WPI-8-C).
Structural Repair Exception
TAC §5.4904 specifically exempts the repair of a structure from the flood insurance requirement.
It is possible for the reconstruction or restoration of a damaged structure to require a certificate of compliance (WPI-8/WPI-8-C), but still be considered a "repair" and exempted by 28 TAC §5.4904(c)(1) from the flood insurance requirement.
In other words, Insurance Code §2210.203(a-1) and 28 TAC §5.4904 may not require policyholders to obtain flood insurance following a repair activity, even if the repair requires a certificate of compliance.
The law initiating the flood insurance requirement went into effect on September 1, 2009. The requirement therefore applies to structures that have been constructed, altered, remodeled, or enlarged on or after September 1, 2009, that required the applicant to obtain a certificate of compliance.
The flood insurance requirement is triggered when all of the following conditions exist:
1. All or any part of the property is located in one of the designated National Flood Insurance Program (NFIP) flood zones (V, VE or V1 – V30).
2. Flood insurance is available for the property from the NFIP.
3. The structure is constructed, altered, remodeled, or enlarged beginning on or after September 1, 2009, and it requires a certificate of compliance. A structural repair requiring a certificate of compliance is exempted from the flood insurance requirement.
If Flood Insurance is required, the agent MUST maintain written proof of flood coverage and provide such proof to the Association if requested.
Summary of Key Criteria for Proof of Flood Insurance
A. Minimum amount of available flood insurance must be at least equal to the lesser of:
- 90% of the amount of insurance for the property insured by TWIA, if NFIP coverage is on a replacement cost basis.
- 90% of ACV if replacement cost is not available through the NFIP.
- The maximum amount available under the NFIP for the property.
B. Flood insurance:
- Must be maintained the entire period the Association policy is in effect.
- Is not required for repair of a structure. This includes reconstruction/restoration of an existing structure that is deteriorated or damaged.
- Is only required if flood insurance is available through the NFIP.
- Is not required for insurable corporeal movable property that is located on or above the third floor of a structure.
C. Proof of flood insurance:
- Shall include a copy of the flood insurance policy declarations page or a copy of the flood insurance policy. (If flood insurance is unavailable through the NFIP, acceptable proof of this fact may include written or printable electronic evidence from the NFIP or the participating “Write Your Own" insurance company.)
- Must be maintained for a period of not less than five years following the date of the submission of the application for Association coverage.
TWIA STRONGLY RECOMMENDS POLICYHOLDERS PURCHASE FLOOD COVERAGE IN ALL FLOOD ZONES
You may view the source of these requirements in the Texas Administrative Code.