Flood claims can pay out in two very different ways. Under the National Flood Insurance Program's Standard Flood Insurance Policy, Dwelling Form, replacement cost loss settlement applies to a single-family dwelling only when it is your principal residence and, at the time of loss, the insurance on the dwelling is 80 percent or more of its full replacement cost immediately before the loss, or is the maximum amount of insurance available under the NFIP.
A dwelling that is not your principal residence is generally settled at actual cash value, which accounts for depreciation. An underinsured dwelling has a separate rule: if coverage is below both 80 percent of replacement cost and the NFIP maximum, the policy pays the greater of actual cash value or a proportional repair-cost amount, subject to the policy limit. Manufactured homes can have special loss-settlement rules.
| Situation | How the Dwelling Form settles the loss |
|---|---|
| Single-family principal residence, insured to 80% of full replacement cost or the NFIP maximum | Replacement cost, after the deductible, without deduction for depreciation |
| Single-family home insured below both 80% and the NFIP maximum | Greater of actual cash value or a proportion of repair cost, capped at the insurance amount |
| Dwelling that is not your principal residence | Actual cash value |
| Two-, three-, or four-family dwelling; detached garage | Actual cash value |
| Personal property; appliances, carpets, and carpet pads | Actual cash value |
| Manufactured or mobile home or travel trailer used as principal residence (size rules apply) | Special loss settlement |
| Want to settle on actual cash value first? | Allowed; notify the insurer within 180 days after the date of loss to claim the rest |
Source: 44 CFR Part 61, Appendix A(1), Standard Flood Insurance Policy, Dwelling Form.
What replacement cost means on a flood claim
When replacement cost applies, the policy says the insurer will pay to repair or replace the damaged dwelling after application of the deductible and without deduction for depreciation, but not more than the least of three amounts: the building limit on your declarations page, the replacement cost of the damaged part with materials of like kind and quality, or the amount actually spent to repair or replace it.
There is a timing rule too. When the full cost of repair or replacement is more than $1,000, or more than 5 percent of the insurance on the dwelling, the replacement cost amount is not owed until actual repair or replacement is completed. The policy lets you claim on an actual cash value basis first and then claim the additional amount, as long as you notify the insurer of that intent within 180 days after the date of loss. Proof-of-loss deadlines are a separate step: A Tennessee flood claim under the NFIP comes with a 60-day proof-of-loss deadline that the adjuster will not file for you.
The 80 percent test
If the insurance on the dwelling is both less than 80 percent of its full replacement cost immediately before the loss and less than the maximum amount of insurance available under the NFIP, the Dwelling Form pays the greater of the actual cash value of the damaged part or a proportion of the repair cost, and never more than the insurance on the dwelling.
When figuring how much insurance is required, the policy does not count footings, foundations, piers, and similar supports below the lowest basement floor, or excavations and underground pipes, wiring, and drains. Building and contents limits are covered here: NFIP flood policies cap Tennessee home building coverage at $250,000 and contents at $100,000.
Second homes, cabins, and rentals
The Dwelling Form lists a dwelling that is not your principal residence among the property settled at actual cash value. A weekend cabin or a house you rent out does not meet the principal residence test, no matter how much insurance it carries. The same actual cash value list includes two- to four-family dwellings, units not used exclusively for single-family purposes, and detached garages.
Contents, appliances, and carpet
Personal property is settled at actual cash value, and the policy names appliances, carpets, and carpet pads on that list as well. Insured property that is abandoned after a loss and left as debris on the described location also falls there. For items the NFIP does not cover at all, see An NFIP flood policy does not pay for decks, fences, landscaping, cars, or a hotel while your home is repaired. Basement rules are their own topic: Tennessee homeowners with basements should know an NFIP flood policy pays for only a short list of items below ground level.
Manufactured homes
A manufactured or mobile home or travel trailer used as a principal residence, and meeting the policy's size rules, falls under special loss settlement. If it is totally destroyed or not economically feasible to repair, the insurer may pay the least of the replacement cost or 1.5 times the actual cash value, or the building limit on the declarations page.
Questions to ask before the next storm
- Is this house your principal residence, and does your flood policy show it that way?
- Is the building limit at least 80 percent of today's replacement cost, or the NFIP maximum?
- Has remodeling or rising construction cost pushed replacement cost up since the policy was written?
Rebuilding to code after a flood can involve another coverage: Tennessee NFIP flood policies include up to $30,000 in Increased Cost of Compliance coverage for qualifying rebuilds. For general homeowners terms, see TDCI explains Actual Cash Value versus Replacement Cost for Tennessee homeowners. Our overview: Tennessee Flood Insurance: Everything Homeowners Need to Know in 2026
This article is informational only. It summarizes the NFIP Standard Flood Insurance Policy, Dwelling Form, and does not promise coverage or eligibility. Your policy and declarations page control.
Related reading from All Seasons
- NFIP flood policies cap Tennessee home building coverage at $250,000 and contents at $100,000.
- An NFIP flood policy does not pay for decks, fences, landscaping, cars, or a hotel while your home is repaired.
- A Tennessee flood claim under the NFIP comes with a 60-day proof-of-loss deadline that the adjuster will not file for you.
- TDCI explains Actual Cash Value versus Replacement Cost for Tennessee homeowners.
- Tennessee homeowners with basements should know an NFIP flood policy pays for only a short list of items below ground level.
- Tennessee NFIP flood policies include up to $30,000 in Increased Cost of Compliance coverage for qualifying rebuilds.
- Tennessee Flood Insurance: Everything Homeowners Need to Know in 2026
Free policy review
All Seasons Insurance Group offers a free personal policy review. Call 865-263-1400 or visit asigtn.com/get-a-quote/. This article is informational only and does not promise coverage or eligibility; your policy forms control. Seasons change. So should your coverage.
When does an NFIP flood policy pay replacement cost?
Under the Dwelling Form, replacement cost applies to a single-family dwelling that is your principal residence and is insured to 80 percent or more of its full replacement cost, or to the NFIP maximum.
Does a Tennessee vacation cabin get replacement cost on a flood claim?
The Dwelling Form lists a dwelling that is not your principal residence among the property settled at actual cash value.
What happens if my home is insured below 80 percent?
If the insurance is below both 80 percent of full replacement cost and the NFIP maximum, the policy pays the greater of actual cash value or a proportion of repair cost, up to the insurance amount.
Are contents and carpet paid at replacement cost?
No. The Dwelling Form lists personal property and appliances, carpets, and carpet pads among the property settled at actual cash value.
Do I have to finish repairs before replacement cost is paid?
When the full repair cost is more than $1,000 or more than 5 percent of the insurance on the dwelling, the replacement cost amount is not owed until repair or replacement is completed.
Can I take actual cash value first and claim the rest later?
Yes. The policy allows an actual cash value claim first, then a claim for the additional amount if you notify the insurer within 180 days after the date of loss.
Do foundations count toward the 80 percent figure?
No. Footings, foundations, piers, and similar supports below the lowest basement floor are not included when the amount of insurance required is figured.
How can All Seasons help after reading this?
Call 865-263-1400 or visit asigtn.com/get-a-quote/ for a free personal policy review. Informational only; no coverage promises. Seasons change. So should your coverage.
