California Property & Casualty Broker-AgentMiscellaneousMedium
A homeowner lives in a designated flood zone and has purchased a National Flood Insurance Program (NFIP) policy. A major flood event occurs, causing $75,000 in damage to their home's structure and $30,000 in damage to their personal belongings. Assuming they have maximum available coverage for both, how much would the NFIP policy pay for the structural damage?
- A$250,000
- B$75,000
- C$50,000
- D$100,000
Show answer & explanationAnswer & explanation
Correct answer: B. $75,000
The NFIP policy provides a maximum of $250,000 for structural damage (building coverage) and $100,000 for personal property (contents coverage). Since the structural damage was $75,000, and this is within the maximum limit, the policy would pay the full $75,000.
Why the other options are wrong
- A. $250,000 is the maximum building coverage limit, not the amount paid for this specific loss.
- C. $50,000 is less than the actual structural damage and not a standard NFIP limit for structural damage in this context.
- D. $100,000 is the maximum contents coverage limit, not applicable to structural damage in this question.
NFIP Coverage Limits
The maximum amount of coverage available under a standard National Flood Insurance Program (NFIP) policy for building and contents.
- Building coverage: up to $250,000
- Contents coverage: up to $100,000
- Policies pay actual damage up to these limits
Memory trick: NFIP: 250 for the HOUSE, 100 for the STUFF, that's what you'll GET.