Did anyone watch the Outlook Live 2022 Interagency Flood Insurance Q&As Webinar on July 27? I recall one of the speakers stating to not use the "FEMA RCV" from a flood policy. I just tried to listen to the webinar's recording and they only recorded the first 14 minutes. Does anyone recall why they said to not use the "FEMA RCV" listed on the dec page?

We have seen some dec pages that have a "replacement cost" and a "FEMA Determined Replacement Cost". What is the difference between the two?

I also remember this coming up, however, I don't remember the reasoning - but I was able to locate the full recording: https://www.webcaster4.com/Webcast/ListenPage?companyId=577&webcastId=45801

I have access to the whole 1:08 recording. I do not see anything in the slides that would indicate where in the presentation that may have been mentioned and I am not about to sit through the whole thing. But if you can narrow down the time that it occurred, I would be interested in listening to it.

I cannot imagine why they would have said that as the Condo Association has to attest to FEMA the current replacement costs at least every three years. How else would a lender determine the replacement costs of an entire condo structure?

I believe the statement that the FEMA RCV cannot be used was mentioned near the end when they were fielding questions.

Yes! They did say that, but it was a blink-and-you'll-miss-it statement. It was not in the body of the presentation (slide show) at all, and came near the very end when they did a couple of Q&As. I too, have tried to go back to hear it again, only to also by stymied by technical issues with the replay.

They said clearly that FEMA's RCV is NOT to be used to determine value, and then said something like "refer to FEMA's cost value worksheet for details."

Now, to perhaps color in some details.... The ABA RCC had a session on the Flood Q&As. In that session, the speaker offered a bit of explanation about the FEMA RCV. Apparently, some flood policies are listing both a "FEMA RCV" and an "Agent RCV". The speaker said the FEMA RCV is only one of several factors used in Risk Rating 2.0's Equity in Action premium pricing. It is not a reliable valuation for actual replacement cost, and is not used for claim payment. So don't use it. The "Agent RCV" (or whatever it is called) is more reliable and usable.

In short:
The "Agent RCV" is used to determine how much coverage to BUY for replacement- a better measure of coverage needed.
The "FEMA RCV" is used to determine how much to PAY for the insurance selected, and factors in much more than the collateral, including zip code, square footage, number of stories, etc. It is about making policy cost more equitable.

Hey Rebekah - hope all is well.

That is interesting, because there is only one Replacement Costs Value field on an actual NFIP declaration page. Whatever they are referring too is not a declaration page issued by the NFIP. See ID #45 on Page I.21 in the Flood Insurance Manual.

FEMA uses the RCV for calculating under-insurance penalties (Less than 80% of the RCV). I have no idea where the regulators are coming from as they are using terms that are not defined in the NFIP programs. And again, refer to page I.25 for the letter that the agent has to send to the Condo Association at least every three years. How can an agent possibly come up with a different figure?

Methinks they are still figuring it all out themselves which leaves us all in a bit of a pickle... especially in light of the revised Q&A "Amount 2", which flat out says lenders and borrowers may use "the replacement cost value listed on the flood insurance policy declarations page".

Here's another interesting tidbit, that doesn't really solve anything, but describes FEMAs RCV a bit more: RCV as a new Rating Variable

From the Q & A session (transcript):
QUESTION – FEMA is currently documenting a Replacement cost value, or RCV, on the policy declarations page for NFIP policies. What does this mean for lenders?
ANSWER – Lenders should not rely on FEMA's RCV listed on the policy declarations page for NFIP policies as FEMA's RCV is not intended to be used as a basis for determining the property's insurable value. This is because FEMA's RCV is meant to keep the policy premium calculation simple and only considers five factors (zip code, year build, square footage, number of floors, and number of units). FEMA's RCV is a key rating variable used to price flood insurance premiums more equitably under Risk Rating 2.0. Refer to FEMA's Replacement Cost Value Fact Sheet for more details.

I do not believe they are talking about Condos. Condos are rated totally differently. You are not require to submit proof of replacement cost values to the NFIP on single family residences. Sounds to me that they were painting with too broad a brush.

So, let us assume this is true, what do you all plan to do to determine the replacement costs of an entire condo complex?