National Flood Insurance Program’s R-22 Catch-22


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The Environmental Protection Agency’s (EPA) R-22 phase-out and ban on the sale of pre-charged condensing units, and the Department of Energy’s (DOE) higher SEER requirements on new equipment are “old news” to contractors. However, some of the unintended effects of those changes will ripple through the national HVAC inventory for the next decade or two. For example, the Federal Emergency Management Agency’s (FEMA) policy regarding replacement of flood-damaged or failed condensing units, but not the original furnace or matching air-handler appears to be in conflict with these rules.

The Problem

Without federal backing through the FEMA National Flood Insurance Program (NFIP), it is unlikely that insurance providers would offer flood insurance to homeowners. The NFIP limits claims to “direct physical loss caused by flood.” Since HVAC equipment split-systems are made up of separate components that may not both be affected by flood damage, homeowners are not insured for all of the replacement costs they actually need to have systems properly repaired. The Catch 22 is that if the homeowner cannot afford the additional out of pocket cost, they are forced to accept repairs that generally result in an inefficiently operating HVAC system that is unlikely to meet the DOE minimum energy conservation standards.

The Cause

Congress mandated that NFIP claim payments only cover items directly damaged by flooding in order to avoid homeowners from gaming the system to pay for upgrades. Thus, HVAC systems are covered at the individual component level. Since AHRI data for matching systems does not exist for most of the older equipment models, new dry-charged 13 SEER condensing units aren’t likely to be properly matched to older furnaces and air-handlers.

Retrofit Change Out Requirements

ACCA issued a Technical Bulletin entitled Replacing R-22 Systems with R-410A Systems that is available to ACCA members at: https://hvac-blog.acca.org/techbulletins. Additionally, the ACCA 5 QI standard  https://hvac-blog.acca.org/quality) provides contractors with a performance based guideline for documenting that component level retrofits are operating correctly. ACCA 5 QI Section 3.5.2 (Acceptable Procedures) provides the following requirement: “Copy of OEM-provided catalog data, indicating acceptable combination selection and performance data, in the installation fi le.” Thus, an OEM-provided evaporator coil chart and the required expansion device, or an OEM letter stating the retrofit results in a matched system is required. Finally, to meet the documentation and performance requirements in ACCA 5 QI, the final air-side static pressure drop across that coil needs to be compared to the OEM’s coil chart to ensure that the installed airflow meets the system’s requirements.

Actual Cost

Based on insurance company calls received at ACCA, it would appear that some insurance companies would like ACCA to recommend that professional contractors offer homeowners mismatched components as an acceptable alternative to a complete system change outs. Since the simple component replacement cost does not equal the actual expense paid by the homeowner those insurance company requests seem to be self-serving and shortsighted. Professional contractors know that over the lifetime of a new matching system the energy savings will exceed the initial cost savings achieved by the piecemeal installation of unmatched components.

Sales Aid

Hopefully, contractors can convince homeowners that a complete system replacement saves them the most in the long run. Additionally, new equipment will operate as designed resulting in occupant comfort. To aid ACCA members with customers who are surprised by the changes caused by advancing technologies; a ComforTool entitled “Replacing Old R-22 HVAC Systems” was developed. It is available at: https://hvac-blog.acca.org/comfortools.

Related Issues

At this time it does not appear that any insurance company is planning on addressing the gap between government interagency requirements and minimum insurance coverage offered. To make things worse, homeowners face the same coverage language and limitations in their private homeowner’s insurance plans. ACCA has received insurance Catch-22 related questions on severe hail damage, fallen trees, vandalism/theft, and damaged furnaces in the last year. Even those who understand insurance and read the fi ne print can be blindsided due to the technical requirements involved when replacing HVAC components. Unfortunately for the homeowners, the insurance gap isn’t discovered until it is too late. Contractors and insurance agents need to let their customers know they are not covered for a system replacement even when there are no suitable component replacement options. Until the insurance gap is common knowledge, our industry will have to deal with unhappy customers who did not understand they are at risk.

Note: When this article was written, the author called three major home insurance companies and asked if they had any form of gap insurance for homeowners who had older HVAC systems that would cover complete  replacement. Unfortunately they don’t, so the R-22 Catch-22 will be with us for a while.

Don Prather

Posted In: ACCA Now, Technical Tips

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