Cancellation Qualifying Reasons/RC 27
Reason Code 27: Property Becomes Ineligible for Coverage During Policy Term
This reason code applies when a property that was initially eligible for NFIP coverage becomes ineligible during the policy term due to a change in status, such as a community suspension or a Section 1316 violation.
| Condition | Details |
|---|---|
| Eligibility for Cancellation | A policy may be canceled if the property, which was eligible at the time of application, becomes ineligible due to a FEMA designation, such as a community suspension or Section 1316 floodplain management violation. |
| Effective Date of Cancellation | The first renewal date after the property became ineligible. |
| Policy Terms Eligible for Refund | All policy terms since the first renewal date after ineligibility was established, up to 5 years prior to the request. |
| Type of Refund | A full refund, including surcharges and fees, less any claims paid. |
| Required Documentation | Evidence of ineligibility, such as community suspension documentation, Section 1316 declaration, or FEMA correspondence. |
This table can be seen on pages 6-8 and 6-9 of the FIM.
Additional Guidance
- Common reasons for ineligibility include:
* The property is in a community suspended from NFIP participation. * The property is designated as a Section 1316 violation due to noncompliance with floodplain management regulations. * Annexation of the property into a non-participating NFIP community.
- If the property was never eligible for coverage at the time of application, use **Reason Code 06** instead.
- If a claim has been paid under the policy, the policyholder must return the claim payment before a refund is issued.
Required Documents
To process this cancellation reason, underwriters must verify the documentation provided.
- FEMA notification confirming property ineligibility.
- Community suspension or Section 1316 violation documentation.
Document Gallery
- FEMA Community Suspension Notice: Documentation showing the property’s ineligible status.
- Section 1316 Declaration: Proof of noncompliance leading to ineligibility.
Scenarios for Context
Scenario 1:
A property was insured under NFIP but later received a Section 1316 violation due to noncompliance with floodplain management regulations. The insurer cancels the policy at the first renewal after the violation and issues a full refund.
Scenario 2:
An insured property was located in an NFIP-participating community but later became ineligible when the community was suspended from the program. The policy is canceled at the first renewal date following suspension, with a refund provided for applicable terms.
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This page contains details about NFIP Cancellations. |