Hawaii Insurance Adjuster License Practice Exam

Under the National Flood Insurance Program, to whom is replacement cost coverage available?

1. Commercial properties

2. Single family dwellings only

3. Multi-family residences

4. All property types

The correct answer is: Single family dwellings only

Replacement cost coverage under the National Flood Insurance Program (NFIP) is specifically available for single-family dwellings. This type of coverage aims to provide homeowners with the financial protection necessary to replace their home and its contents in the event of flood damage, ensuring they can rebuild or repair their primary residence to its pre-loss condition without a deduction for depreciation. While commercial properties, multi-family residences, and other property types may be covered under the NFIP, they are typically limited to actual cash value coverage rather than replacement cost. This distinction between types of properties and the associated coverage options is essential for policyholders to understand, as it can significantly affect their financial support following a flood event.