Reviewed by the CoveragePrep editorial team · Sources: state insurance departments, statutes, exam candidate handbooks · How we research
Practice test · 25 questions
Flood Insurance (NFIP) Practice Test (Part 1 of 2)
Flood is excluded from almost every homeowners and commercial policy, so most flood losses in the United States are paid under the National Flood Insurance Program. Adjusters who work catastrophe season need to know the Standard Flood Insurance Policy cold.
These questions are written from FEMA primary sources: the SFIP Dwelling and General Property forms, the NFIP Flood Insurance Manual and FEMA claims guidance on proof of loss, appeals and Increased Cost of Compliance.
Questions
25
Suggested time
30 min
Difficulty mix
10 / 12 / 3
Passing target
70%
What these questions cover
How the NFIP works: FEMA, Write Your Own carriers and flood zones
The SFIP definition of flood
Building and contents limits, deductibles and loss settlement
Basement and enclosure limitations
Waiting periods and their exceptions
Proof of loss, appeals, lawsuits and Increased Cost of Compliance
Which statement correctly describes how NFIP flood policies sold through Write Your Own (WYO) companies compare with policies sold through NFIP Direct?
Show answer and explanation
Correct answer: A. Both issue the same SFIP at FEMA-set rates; WYO insurers sell in their own names, and NFIP Direct is FEMA's servicing agent
WYO companies sell and service the SFIP in their own names and adjust and pay its claims, but FEMA determines rates and coverage, so there is no difference in what WYO companies and NFIP Direct offer. The federal government retains responsibility for underwriting losses. NFIP Direct is FEMA's contracted direct servicing agent, open to any applicant and the sole servicer of severe repetitive loss properties.
Can the NFIP sell a flood insurance policy on a building located in a community that does not participate in the National Flood Insurance Program?
Show answer and explanation
Correct answer: B. No, the NFIP may not sell flood insurance in a non-participating community
The NFIP offers insurance only for buildings and contents in participating communities or on federal land. A community participates by adopting and enforcing a floodplain management ordinance that meets NFIP minimum criteria. The NFIP may not sell or renew coverage in a non-participating or suspended community. Emergency Program limits apply to communities that have joined but remain in the initial phase of participation.
On a Flood Insurance Rate Map, which zone identifies a coastal area subject to the 1-percent-annual-chance flood with additional hazards from storm-induced velocity wave action, where base flood elevations are shown?
Show answer and explanation
Correct answer: C. Zone VE
Special Flood Hazard Areas are areas inundated by the 1-percent-annual-chance (base) flood. Zone VE marks coastal SFHAs with storm-induced velocity wave action and shows BFEs; Zone V has the same hazard without BFEs. Zone AE has BFEs but no velocity wave hazard, Zone AO is shallow sheet flow, and shaded Zone X is a moderate-hazard area outside the SFHA where mandatory purchase does not apply.
Hannah is closing on a loan from a federally backed lender to buy a house in Zone AE of an NFIP participating community. What does the mandatory purchase requirement created by the Flood Disaster Protection Act of 1973 require?
Show answer and explanation
Correct answer: D. The building must be covered by flood insurance as a condition of the loan
The Flood Disaster Protection Act of 1973 prohibits federally backed lenders from making loans secured by buildings in a Special Flood Hazard Area of a participating community unless the building is covered by flood insurance. Zone AE is an SFHA, so coverage is mandatory. In moderate or minimal hazard zones such as B, C, and X, the federal mandatory purchase requirement does not apply.
Which statement accurately describes the NFIP's Risk Rating 2.0 pricing approach, which took effect for new policies on October 1, 2021?
Show answer and explanation
Correct answer: B. Premiums reflect property-specific factors such as distance to water, flood types, and cost to rebuild
FEMA's pricing approach incorporates flood frequency, multiple flood types (river overflow, storm surge, coastal erosion, heavy rainfall), distance to a water source, and property characteristics such as elevation and cost to rebuild. It does not use flood zones to determine flood risk, although FIRMs still govern mandatory purchase and floodplain management. Grandfathering ended for policies written or renewed on or after October 1, 2021.
Grace applies for a new NFIP policy on her Zone AE home under current rating rules. She has an Elevation Certificate completed for a prior owner. How may the certificate be used?
Show answer and explanation
Correct answer: D. She may optionally submit it to supply first floor height data
Under Risk Rating 2.0, FEMA determines a first floor height from application information and other datasets, and the policyholder can optionally provide an Elevation Certificate (or a licensed survey) to supply that value. The EC is no longer mandatory for rating, and grandfathering is no longer available. Communities still use ECs to show that new and substantially improved SFHA buildings are properly elevated.
A community in the NFIP's voluntary Community Rating System earns a Class 1 rating. What is the effect for eligible flood insurance policyholders in that community?
Show answer and explanation
Correct answer: A. They receive a 45 percent premium discount on eligible policies
The CRS is a voluntary incentive program that recognizes floodplain management exceeding NFIP minimums. Every community starts at Class 10 with no discount, and discounts rise in 5 percent steps to a maximum of 45 percent at Class 1. CRS affects premiums only; it does not change coverage limits, waiting periods, or mandatory purchase rules. Emergency Program and provisionally rated policies are ineligible.
A severe thunderstorm causes unusual and rapid runoff of surface water that inundates Ravi's normally dry lot and his neighbor's lot, entering both homes. The flooded area totals less than one acre. Under the SFIP Dwelling Form, is this a flood?
Show answer and explanation
Correct answer: C. Yes, because two or more properties were inundated, one of them Ravi's
The SFIP defines flood as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land OR of two or more properties (one of which is the insured's) from causes including unusual and rapid accumulation or runoff of surface waters from any source. Either test is enough, so the small acreage does not matter, and no official declaration is required.
A water supply line bursts inside Dana's single-family home and soaks the first floor. No other property and no surrounding land are affected. How should the claim be handled under her NFIP Dwelling Form policy?
Show answer and explanation
Correct answer: D. Not covered, because the event does not meet the SFIP flood definition
Flood requires a general and temporary condition of inundation of two or more acres of normally dry land or two or more properties. A burst pipe affecting one dwelling meets neither test. The SFIP also excludes water damage resulting primarily from conditions substantially confined to the dwelling or within the insured's control, including failure or breakage of water lines. Any coverage would come from a homeowners policy instead.
Under the SFIP Dwelling Form, which event fits the policy's definition of mudflow and therefore can qualify as a flood?
Show answer and explanation
Correct answer: B. A river of liquid, flowing mud on normally dry land carried by a current of water
The SFIP defines mudflow as a river of liquid and flowing mud on the surface of normally dry land areas, as when earth is carried by a current of water. The definition expressly states that landslide, slope failure, or a saturated soil mass moving by liquidity down a slope are not mudflows. Other earth movement, such as subsidence and settling, is excluded even when flood causes it.
Definition of flood: shoreline collapse · Challenging
During an unusually severe storm, waves exceeding anticipated cyclical levels undermine the lakeshore, and the land beneath Chen's insured lakefront cottage collapses, resulting in a flood as the SFIP defines it. How does the Dwelling Form treat the loss?
Show answer and explanation
Correct answer: A. Covered, because shoreline collapse from such waves is part of the flood definition
The flood definition includes collapse or subsidence of land along the shore of a lake or similar body of water caused by erosion or undermining from waves or currents exceeding anticipated cyclical levels that result in a flood. The earth movement exclusion specifically gives back land subsidence as a result of erosion that fits this definition. Gradual erosion, by contrast, is excluded.
In a Regular Program community, what are the maximum NFIP limits available for a single-family home insured under the SFIP Dwelling Form?
Show answer and explanation
Correct answer: C. $250,000 building and $100,000 contents
Under 44 CFR 61.6 and the Flood Insurance Manual, single-family and two-to-four family buildings may carry up to $250,000 of building coverage, and residential contents coverage is capped at $100,000. Building coverage also may not exceed the building's replacement cost value. The $500,000 building and $500,000 contents limits apply to non-residential buildings insured under the General Property Form.
A hardware store owns its one-story retail building in a Regular Program community. What maximum building and contents limits are available under the NFIP General Property Form?
Show answer and explanation
Correct answer: B. $500,000 building and $500,000 contents
The General Property Form insures non-residential buildings, residential buildings of five or more units that are not condominiums, and their contents. A non-residential building in the Regular Program may carry up to $500,000 building and $500,000 contents coverage. The $250,000/$100,000 limits apply to one-to-four family residences, and an Other Residential Building has a $500,000 building limit but only $100,000 contents.
A residential condominium association insures its 12-unit building under the Residential Condominium Building Association Policy (RCBAP). What is the maximum building coverage the association can purchase?
Show answer and explanation
Correct answer: D. The lesser of replacement cost value or $3,000,000
For a residential condominium building insured under the RCBAP, building coverage may not exceed the lesser of the building's replacement cost value or the number of units multiplied by $250,000. Twelve units times $250,000 equals $3,000,000. RCBAP contents coverage, for property owned in common by the association, is limited to $100,000, and the $500,000 limit applies to non-residential buildings.
Kwame insures his home under the Dwelling Form with $200,000 of Coverage A and a $1,250 building deductible. A flood causes $28,000 of damage (actual cash value) to his detached garage, which is used only for parking and storage. What is the most Coverage A will pay for the garage?
Show answer and explanation
Correct answer: A. $20,000
The Dwelling Form covers a detached garage at the described location, limited to no more than 10 percent of the dwelling's building limit: 10 percent of $200,000 is $20,000. The loss after deductible ($28,000 minus $1,250, or $26,750) exceeds that cap, so $20,000 is paid; FEMA applies the deductible to the gross loss before the limit. This is not extra insurance; it reduces the building limit. Garages used for residential, business, or farming purposes are not covered.
Coverage C: loss avoidance (sandbags) · Application
A river overflows and floods streets in Rosa's neighborhood, but the water stops short of her insured home. Beforehand, she spent $1,600 on sandbags, sand, and plastic sheeting to protect the house. Her Dwelling Form deductible is $2,000. How much will the policy pay?
Show answer and explanation
Correct answer: C. $1,000
Coverage C Loss Avoidance Measures pays up to $1,000 for reasonable expenses to buy sandbags and sand, fill for temporary levees, pumps, and related plastic sheeting and lumber when flood is imminent and a general condition of flooding occurs near the described location, even if it never reaches the building. No deductible applies to loss avoidance measures, so Rosa receives the $1,000 maximum.
Ahead of an approaching flood, Ingrid moves her insured furniture to a relative's enclosed garage on higher ground outside the SFHA. Under the Dwelling Form's Property Removed to Safety coverage, how long is the furniture insured at that location?
Show answer and explanation
Correct answer: D. For 45 consecutive days from when she begins moving it
Property Removed to Safety insures property moved to protect it from flood or imminent flood for 45 consecutive days from the date the move begins. The property must be placed in a fully enclosed building or otherwise reasonably protected, and above ground level or outside the SFHA. The policy also pays up to $1,000 of reasonable moving expenses, including household labor valued at the federal minimum wage.
How does the SFIP Dwelling Form treat the expense of removing flood debris, including non-owned debris deposited on the insured property?
Show answer and explanation
Correct answer: A. It is covered under Coverage C, but payment does not increase the Coverage A or B limit
Coverage C Debris Removal pays to remove non-owned debris that is on or in insured property and debris of insured property anywhere. If the insured or a household member does the work, it is valued at the federal minimum wage. The coverage does not increase the Coverage A or Coverage B limit of liability, so it comes out of the same limits as the physical damage.
Under SFIP Coverage D, Increased Cost of Compliance (ICC), what is the maximum benefit, and what most commonly triggers eligibility?
Show answer and explanation
Correct answer: B. $30,000, when the community declares the building substantially damaged
ICC pays up to $30,000 to elevate, floodproof, relocate, or demolish a building to comply with floodplain management laws after a flood. Eligibility generally requires a community determination that the building is substantially damaged (repair cost of 50 percent or more of market value) or a qualifying repetitive loss (two losses in 10 years averaging at least 25 percent). No deductible applies to ICC.
Coverage D: ICC and the statutory maximum · Challenging
Thomas carries the maximum $250,000 of Coverage A on his single-family home. After a flood, his building claim is paid at $236,000, and the community declares the home substantially damaged. How much ICC benefit remains available to him?
Show answer and explanation
Correct answer: C. $14,000
ICC is an additional amount above the Coverage A limit, up to $30,000, but federal law caps combined Coverage A and Coverage D payments at the program maximum of $250,000 for a dwelling. With $236,000 already paid under Coverage A, only $250,000 minus $236,000, or $14,000, remains for ICC. Had the building claim been $220,000 or less, the full $30,000 would have been available.
Floodwater fills the finished basement of Aisha's home, which is insured under the Dwelling Form for both building and contents. Which damaged basement item is NOT covered?
Show answer and explanation
Correct answer: A. Carpeting and wood paneling in the finished family room
In a basement, regardless of zone, building coverage is limited to listed items such as furnaces, hot water heaters, central air conditioners, electrical boxes, outlets and switches, sump pumps, and unfinished drywall, plus clean-up. Contents coverage is limited to washers, dryers, portable or window air conditioners, and food freezers with their food. Finishes such as carpeting and paneling appear on neither list.
Which of these buildings is subject to the SFIP's coverage limitations for property located in an enclosure below the lowest elevated floor?
Show answer and explanation
Correct answer: D. A post-FIRM elevated home on pilings in Zone VE
The limitation applies to items below the lowest elevated floor of an elevated post-FIRM building in Zones A1-A30, AE, AH, AR (and AR combinations), V1-V30, or VE, and to basements in any zone. A LOMA or LOMR that removes the building from the SFHA lifts the limitation. Pre-FIRM elevated buildings, and post-FIRM elevated buildings outside the SFHA, are not subject to this enclosure limitation.
Loss settlement: replacement cost vs ACV · Application
Under the SFIP Dwelling Form, which insured dwelling qualifies for replacement cost loss settlement on a building claim?
Show answer and explanation
Correct answer: C. A single-family principal residence with a $400,000 replacement cost insured for $250,000
Replacement cost settlement applies to a single-family dwelling that is the insured's principal residence and is insured at the time of loss for at least 80 percent of full replacement cost or for the maximum available under the NFIP. $250,000 is the program maximum, so the $400,000 home qualifies. Non-principal residences and two-to-four family dwellings are settled at actual cash value.
How are personal property (contents) losses settled under the SFIP Dwelling Form?
Show answer and explanation
Correct answer: B. At actual cash value, meaning replacement cost minus physical depreciation
The Dwelling Form lists personal property among the property settled at actual cash value, defined as the cost to replace an item at the time of loss less the value of its physical depreciation. The replacement cost option applies only to a qualifying single-family dwelling building, not contents. The SFIP also states that it is not a valued policy, so no agreed value is paid.
Nadia's Dwelling Form policy has a $1,250 building deductible and a $1,000 contents deductible. A flood causes $18,000 of covered building damage and $6,500 of covered contents damage. Assuming adequate limits, what is the total claim payment?
Show answer and explanation
Correct answer: D. $22,250
In each flood loss, separate deductibles apply to the building and to personal property. Building: $18,000 minus $1,250 equals $16,750. Contents: $6,500 minus $1,000 equals $5,500. Total: $22,250. Applying one $1,250 deductible to the combined $24,500 loss gives the tempting but incorrect $23,250, and charging the $1,250 building deductible against contents too gives $22,000.
Pick an answer and the correct choice appears with an explanation and the policy form, statute or FEMA document it comes from. Difficulty is labeled on each question: recall items test a definition, application items put the rule into a short claim scenario, and challenging items combine two rules or require a calculation.
Aim for at least 80% before moving on, since the real exam mixes these topics with state law under time pressure. When you are consistently above that line, take a full timed exam or the version for your state: Texas or Florida 6-20.