Actual Cash Value (ACV)

ACV is Replacement Cost Value at the time of loss, less 

the value of its physical depreciation. 

Some building items such as carpeting are always 

adjusted on an ACV basis. For example, wall-to-wall 

carpeting could lose between 10 to 14 percent of 

its value each year, depending on the quality of the 

carpeting. This depreciation would be factored in the 

adjustment.

Personal property is always valued at ACV.

Replacement Cost Value (RCV)

RCV is the cost to replace that part of a building that 

is damaged (without depreciation). To be eligible, three 

conditions must be met: 

1. The building must be a single-family dwelling, and

2. Be your principal residence, meaning you live there 

at least 80-percent of the year, and

3. Your building coverage is at least 80-percent of 

the full replacement cost of the building, or is the 

maximum available for the property under the NFIP.

The value of flood damage in the Dwelling Form is based on either Replacement Cost Value 

or Actual Cash Value. 

Special Considerations for 

Multiple Claims

Property owners of “severe repetitive loss properties” 

may be eligible for a FEMA mitigation grant for 

property improvements that reduce the likelihood of 

future flood damages. Property owners who refuse the 

grant money could be required to pay increased flood 

insurance premiums.

A property is defined as a “severe repetitive loss property” 

when it meets one of these conditions: 

1. Four or more separate flood claim payments have been 

made and each claim payment exceeds $5,000, or

2. At least two flood claim payments have been made 

and the cumulative payments exceed the value 

of the property.

A final note

This document provides general information about flood 

insurance coverage. However, please be aware that your 

Standard Flood Insurance Policy, your application, and any 

endorsements, including the Declarations Page, make up 

your official contract of insurance. Any differences between 

this information and your policy will be resolved in favor 

of your policy. If you have questions, call your insurance 

agent or company representative. 

What is Increased Cost of Compliance 

(ICC) coverage? 

Most NFIP policies include ICC coverage, which 

applies when flood damages are severe. ICC 

coverage provides up to $30,000 of the cost to 

elevate, demolish, or relocate your home. If your 

community declares your home “substantially 

damaged” or “repetitively damaged” by a flood, it 

will require you to bring your home up to current 

community standards. 

The total amount of your building claim and 

ICC claim cannot exceed the maximum limit for 

Building Property coverage ($250,000 for a singlefamily home). Having an ICC claim does not affect a 

Personal Property claim (up to $100,000), which is 

paid separately. 

Details about eligibility are in Part III, 

Section D of your policy. 

Congress created the National Flood Insurance Program (NFIP) in 1968 to reduce future flood damage through floodplain 

management, and to provide people with flood insurance through individual agents and insurance companies. The Federal 

Emergency Management Agency (FEMA) manages the NFIP. As required by Congress, this document was prepared by the 

NFIP to help flood insurance policyholders understand their policy.

4

How Flood Damages Are Valued
What is a Flood? 

Flood insurance covers direct physical loss caused by 

“flood.” In simple terms, a flood is an excess of water on 

land that is normally dry. The official definition used by 

the National Flood Insurance Program is: “A general and 

temporary condition of partial or complete inundation of 

two or more acres of normally dry land area or of two 

or more properties (at least one of which is your 

property) from:

Overflow of inland or tidal waters; 

Unusual and rapid accumulation or runoff of surface 

waters from any source; 

Mudflow*; or 

Collapse or subsidence of land along the shore of a 

lake or similar body of water as a result of erosion or 

undermining caused by waves or currents of water 

exceeding anticipated cyclical levels that result in a flood 

as defined above.”

*Mudflow is defined as “A river of liquid and flowing mud on the 

surfaces of normally dry land areas, as when earth is carried by a 

current of water...”

Three Important Facts About Your 

Flood Policy

A Standard Flood Insurance Policy is a single-peril (flood) 

policy that pays for direct physical damage to your insured 

property up to the replacement cost or Actual Cash Value 

(ACV) (See “How Flood Damages Are Valued”) of the actual 

damages or the policy limit of liability, whichever is less. 

1. Contents coverage must be purchased separately. 

2. It is not a valued policy. A valued policy pays the 

limit of liability in the event of a total loss. For example: 

Your home is totally destroyed by a fire and it costs 

$150,000 to rebuild. If your homeowners insurance 

policy is a valued policy with a $200,000 limit of 

liability on the building, you would receive $200,000. 

Flood insurance pays the replacement cost or ACV 

of actual damages, up to the policy limit.

3. It is not a guaranteed replacement cost policy.

A guaranteed replacement cost policy pays the cost to 

rebuild your home regardless of the limit of liability. For 

example: Your home is totally destroyed by a fire and it 

costs $200,000 to rebuild. If your homeowners insurance 

policy is a guaranteed replacement cost policy with a 

$150,000 limit of liability on the building, you would 

receive $200,000. Flood insurance does not pay more 

than the policy limit.

This document was prepared by the National Flood Insurance Program (NFI P) to help you 

understand your flood insurance policy. It provides general information about deductibles, what 

is and is not covered by flood insurance, and how items are valued at time of loss.

This document is based on the Standard Flood Insurance Policy Dwelling Form, which is used to 

insure one to four family residential buildings and single family dwelling units in a condominium 

building. There are two other policy forms: 

The General Property Form is used to insure five or more family residential buildings and 

non-residential buildings.

 The Residential Condominium Building Association Policy Form is used to insure residential 

condominium association buildings. 

While the three forms are similar, they do contain some important differences. For example, the 

General Property Form does not provide coverage for contents in any building other than the 

insured building, and the Residential Condominium Building Association Policy Form contains a 

coinsurance clause, which provides for a pro rata reduction in the building claim payment if the 

building is not insured to 80 percent of its replacement value.

1

The NFIP's Dwelling Form offers coverage for: 1) Building Property, up to $250,000, and 2) Personal Property 

(Contents), up to $100,000. The NFIP encourages people to purchase both types of coverage. Your mortgage 

company may require that you purchase a certain amount of flood insurance coverage. 

For information about your specific limits of coverage and deductibles, refer to the Declarations Page in your flood insurance 

policy. It is also a good idea to review your policy with your insurance agent or company representative. 

Two Types of Flood Insurance Coverage
What is a Flood? 

Flood insurance covers direct physical loss caused by 

“flood.” In simple terms, a flood is an excess of water on 

land that is normally dry. The official definition used by 

the National Flood Insurance Program is: “A general and 

temporary condition of partial or complete inundation of 

two or more acres of normally dry land area or of two 

or more properties (at least one of which is your 

property) from:

Overflow of inland or tidal waters; 

Unusual and rapid accumulation or runoff of surface 

waters from any source; 

Mudflow*; or 

Collapse or subsidence of land along the shore of a 

lake or similar body of water as a result of erosion or 

undermining caused by waves or currents of water 

exceeding anticipated cyclical levels that result in a flood 

as defined above.”

*Mudflow is defined as “A river of liquid and flowing mud on the 

surfaces of normally dry land areas, as when earth is carried by a 

current of water...”

Three Important Facts About Your 

Flood Policy

A Standard Flood Insurance Policy is a single-peril (flood) 

policy that pays for direct physical damage to your insured 

property up to the replacement cost or Actual Cash Value 

(ACV) (See “How Flood Damages Are Valued”) of the actual 

damages or the policy limit of liability, whichever is less. 

1. Contents coverage must be purchased separately. 

2. It is not a valued policy. A valued policy pays the 

limit of liability in the event of a total loss. For example: 

Your home is totally destroyed by a fire and it costs 

$150,000 to rebuild. If your homeowners insurance 

policy is a valued policy with a $200,000 limit of 

liability on the building, you would receive $200,000. 

Flood insurance pays the replacement cost or ACV 

of actual damages, up to the policy limit.

3. It is not a guaranteed replacement cost policy.

A guaranteed replacement cost policy pays the cost to 

rebuild your home regardless of the limit of liability. For 

example: Your home is totally destroyed by a fire and it 

costs $200,000 to rebuild. If your homeowners insurance 

policy is a guaranteed replacement cost policy with a 

$150,000 limit of liability on the building, you would 

receive $200,000. Flood insurance does not pay more 

than the policy limit.

This document was prepared by the National Flood Insurance Program (NFI P) to help you 

understand your flood insurance policy. It provides general information about deductibles, what 

is and is not covered by flood insurance, and how items are valued at time of loss.

This document is based on the Standard Flood Insurance Policy Dwelling Form, which is used to 

insure one to four family residential buildings and single family dwelling units in a condominium 

building. There are two other policy forms: 

The General Property Form is used to insure five or more family residential buildings and 

non-residential buildings.

 The Residential Condominium Building Association Policy Form is used to insure residential 

condominium association buildings. 

While the three forms are similar, they do contain some important differences. For example, the 

General Property Form does not provide coverage for contents in any building other than the 

insured building, and the Residential Condominium Building Association Policy Form contains a 

coinsurance clause, which provides for a pro rata reduction in the building claim payment if the 

building is not insured to 80 percent of its replacement value.

1

The NFIP's Dwelling Form offers coverage for: 1) Building Property, up to $250,000, and 2) Personal Property 

(Contents), up to $100,000. The NFIP encourages people to purchase both types of coverage. Your mortgage 

company may require that you purchase a certain amount of flood insurance coverage. 

For information about your specific limits of coverage and deductibles, refer to the Declarations Page in your flood insurance 

policy. It is also a good idea to review your policy with your insurance agent or company representative. 

Two Types of Flood Insurance Coverage
What is a Flood? 

Flood insurance covers direct physical loss caused by 

“flood.” In simple terms, a flood is an excess of water on 

land that is normally dry. The official definition used by 

the National Flood Insurance Program is: “A general and 

temporary condition of partial or complete inundation of 

two or more acres of normally dry land area or of two 

or more properties (at least one of which is your 

property) from:

Overflow of inland or tidal waters; 

Unusual and rapid accumulation or runoff of surface 

waters from any source; 

Mudflow*; or 

Collapse or subsidence of land along the shore of a 

lake or similar body of water as a result of erosion or 

undermining caused by waves or currents of water 

exceeding anticipated cyclical levels that result in a flood 

as defined above.”

*Mudflow is defined as “A river of liquid and flowing mud on the 

surfaces of normally dry land areas, as when earth is carried by a 

current of water...”

Three Important Facts About Your 

Flood Policy

A Standard Flood Insurance Policy is a single-peril (flood) 

policy that pays for direct physical damage to your insured 

property up to the replacement cost or Actual Cash Value 

(ACV) (See “How Flood Damages Are Valued”) of the actual 

damages or the policy limit of liability, whichever is less. 

1. Contents coverage must be purchased separately. 

2. It is not a valued policy. A valued policy pays the 

limit of liability in the event of a total loss. For example: 

Your home is totally destroyed by a fire and it costs 

$150,000 to rebuild. If your homeowners insurance 

policy is a valued policy with a $200,000 limit of 

liability on the building, you would receive $200,000. 

Flood insurance pays the replacement cost or ACV 

of actual damages, up to the policy limit.

3. It is not a guaranteed replacement cost policy.

A guaranteed replacement cost policy pays the cost to 

rebuild your home regardless of the limit of liability. For 

example: Your home is totally destroyed by a fire and it 

costs $200,000 to rebuild. If your homeowners insurance 

policy is a guaranteed replacement cost policy with a 

$150,000 limit of liability on the building, you would 

receive $200,000. Flood insurance does not pay more 

than the policy limit.

This document was prepared by the National Flood Insurance Program (NFI P) to help you 

understand your flood insurance policy. It provides general information about deductibles, what 

is and is not covered by flood insurance, and how items are valued at time of loss.

This document is based on the Standard Flood Insurance Policy Dwelling Form, which is used to 

insure one to four family residential buildings and single family dwelling units in a condominium 

building. There are two other policy forms: 

The General Property Form is used to insure five or more family residential buildings and 

non-residential buildings.

 The Residential Condominium Building Association Policy Form is used to insure residential 

condominium association buildings. 

While the three forms are similar, they do contain some important differences. For example, the 

General Property Form does not provide coverage for contents in any building other than the 

insured building, and the Residential Condominium Building Association Policy Form contains a 

coinsurance clause, which provides for a pro rata reduction in the building claim payment if the 

building is not insured to 80 percent of its replacement value.

1

The NFIP's Dwelling Form offers coverage for: 1) Building Property, up to $250,000, and 2) Personal Property 

(Contents), up to $100,000. The NFIP encourages people to purchase both types of coverage. Your mortgage 

company may require that you purchase a certain amount of flood insurance coverage. 

For information about your specific limits of coverage and deductibles, refer to the Declarations Page in your flood insurance 

policy. It is also a good idea to review your policy with your insurance agent or company representative. 

Two Types of Flood Insurance Coverage
Actual Cash Value (ACV)

ACV is Replacement Cost Value at the time of loss, less 

the value of its physical depreciation. 

Some building items such as carpeting are always 

adjusted on an ACV basis. For example, wall-to-wall 

carpeting could lose between 10 to 14 percent of 

its value each year, depending on the quality of the 

carpeting. This depreciation would be factored in the 

adjustment.

Personal property is always valued at ACV.

Replacement Cost Value (RCV)

RCV is the cost to replace that part of a building that 

is damaged (without depreciation). To be eligible, three 

conditions must be met: 

1. The building must be a single-family dwelling, and

2. Be your principal residence, meaning you live there 

at least 80-percent of the year, and

3. Your building coverage is at least 80-percent of 

the full replacement cost of the building, or is the 

maximum available for the property under the NFIP.

The value of flood damage in the Dwelling Form is based on either Replacement Cost Value 

or Actual Cash Value. 

Special Considerations for 

Multiple Claims

Property owners of “severe repetitive loss properties” 

may be eligible for a FEMA mitigation grant for 

property improvements that reduce the likelihood of 

future flood damages. Property owners who refuse the 

grant money could be required to pay increased flood 

insurance premiums.

A property is defined as a “severe repetitive loss property” 

when it meets one of these conditions: 

1. Four or more separate flood claim payments have been 

made and each claim payment exceeds $5,000, or

2. At least two flood claim payments have been made 

and the cumulative payments exceed the value 

of the property.

A final note

This document provides general information about flood 

insurance coverage. However, please be aware that your 

Standard Flood Insurance Policy, your application, and any 

endorsements, including the Declarations Page, make up 

your official contract of insurance. Any differences between 

this information and your policy will be resolved in favor 

of your policy. If you have questions, call your insurance 

agent or company representative. 

What is Increased Cost of Compliance 

(ICC) coverage? 

Most NFIP policies include ICC coverage, which 

applies when flood damages are severe. ICC 

coverage provides up to $30,000 of the cost to 

elevate, demolish, or relocate your home. If your 

community declares your home “substantially 

damaged” or “repetitively damaged” by a flood, it 

will require you to bring your home up to current 

community standards. 

The total amount of your building claim and 

ICC claim cannot exceed the maximum limit for 

Building Property coverage ($250,000 for a singlefamily home). Having an ICC claim does not affect a 

Personal Property claim (up to $100,000), which is 

paid separately. 

Details about eligibility are in Part III, 

Section D of your policy. 

Congress created the National Flood Insurance Program (NFIP) in 1968 to reduce future flood damage through floodplain 

management, and to provide people with flood insurance through individual agents and insurance companies. The Federal 

Emergency Management Agency (FEMA) manages the NFIP. As required by Congress, this document was prepared by the 

NFIP to help flood insurance policyholders understand their policy.

4

How Flood Damages Are Valued
Actual Cash Value (ACV)

ACV is Replacement Cost Value at the time of loss, less 

the value of its physical depreciation. 

Some building items such as carpeting are always 

adjusted on an ACV basis. For example, wall-to-wall 

carpeting could lose between 10 to 14 percent of 

its value each year, depending on the quality of the 

carpeting. This depreciation would be factored in the 

adjustment.

Personal property is always valued at ACV.

Replacement Cost Value (RCV)

RCV is the cost to replace that part of a building that 

is damaged (without depreciation). To be eligible, three 

conditions must be met: 

1. The building must be a single-family dwelling, and

2. Be your principal residence, meaning you live there 

at least 80-percent of the year, and

3. Your building coverage is at least 80-percent of 

the full replacement cost of the building, or is the 

maximum available for the property under the NFIP.

The value of flood damage in the Dwelling Form is based on either Replacement Cost Value 

or Actual Cash Value. 

Special Considerations for 

Multiple Claims

Property owners of “severe repetitive loss properties” 

may be eligible for a FEMA mitigation grant for 

property improvements that reduce the likelihood of 

future flood damages. Property owners who refuse the 

grant money could be required to pay increased flood 

insurance premiums.

A property is defined as a “severe repetitive loss property” 

when it meets one of these conditions: 

1. Four or more separate flood claim payments have been 

made and each claim payment exceeds $5,000, or

2. At least two flood claim payments have been made 

and the cumulative payments exceed the value 

of the property.

A final note

This document provides general information about flood 

insurance coverage. However, please be aware that your 

Standard Flood Insurance Policy, your application, and any 

endorsements, including the Declarations Page, make up 

your official contract of insurance. Any differences between 

this information and your policy will be resolved in favor 

of your policy. If you have questions, call your insurance 

agent or company representative. 

What is Increased Cost of Compliance 

(ICC) coverage? 

Most NFIP policies include ICC coverage, which 

applies when flood damages are severe. ICC 

coverage provides up to $30,000 of the cost to 

elevate, demolish, or relocate your home. If your 

community declares your home “substantially 

damaged” or “repetitively damaged” by a flood, it 

will require you to bring your home up to current 

community standards. 

The total amount of your building claim and 

ICC claim cannot exceed the maximum limit for 

Building Property coverage ($250,000 for a singlefamily home). Having an ICC claim does not affect a 

Personal Property claim (up to $100,000), which is 

paid separately. 

Details about eligibility are in Part III, 

Section D of your policy. 

Congress created the National Flood Insurance Program (NFIP) in 1968 to reduce future flood damage through floodplain 

management, and to provide people with flood insurance through individual agents and insurance companies. The Federal 

Emergency Management Agency (FEMA) manages the NFIP. As required by Congress, this document was prepared by the 

NFIP to help flood insurance policyholders understand their policy.

4

How Flood Damages Are Valued