Cancellation Qualifying Reasons/RC 29: Difference between revisions

Latest revision as of 08:33, 26 March 2025

Reason Code 29: Building Physically Altered and No Longer Eligible for NFIP Coverage

This reason code applies when a building has been physically altered in such a way that it is no longer eligible for flood insurance coverage. An example of this scenario is when a policyholder removes a mobile home from a permanent foundation and places it on wheels, making it ineligible for NFIP coverage.

Condition	Details
Eligibility for Cancellation	A policy may be canceled if the insured building has been physically altered in a manner that makes it ineligible for NFIP coverage.
Effective Date of Cancellation	The date the building became ineligible for NFIP coverage.
Policy Terms Eligible for Refund	The current policy term.
Type of Refund	A pro-rata refund, excluding the HFIAA Surcharge, Federal Policy Fee, and Probation Surcharge.
Required Documentation	Documentation verifying the building’s ineligibility for NFIP coverage, such as photographs or other relevant proof.

This table can be seen on page 6-9 of the FIM.

Additional Guidance

This reason code applies strictly to cases where the building itself has been physically altered, affecting its eligibility for NFIP coverage.
If the policyholder moves the building to a different location but it remains insurable, this reason code does not apply.
The cancellation effective date must reflect the date the building was physically altered and deemed ineligible.

Required Documents

To process this cancellation reason, underwriters must verify the documentation provided.

Photographs or other visual evidence confirming the building alteration.
Documentation explaining how the alteration affected the eligibility of the building for NFIP coverage.

Document Gallery

Photographs: Images demonstrating the physical alteration of the building.
Verification Report: A report or official document confirming the ineligibility status.

Scenarios for Context

Scenario 1:
A policyholder removes a manufactured home from a permanent foundation and places it on a wheeled chassis. This alteration makes the building ineligible for NFIP coverage. The insurer processes a cancellation effective the date of the modification.

Scenario 2:
A commercial structure is converted into an open pavilion without walls, removing it from eligibility under NFIP guidelines. The underwriter reviews the documentation and cancels the policy effective the date of the modification.

This page contains details about NFIP Cancellations.
Find more in the How To Cancel section of the NFIP Flood Insurance Manual.

@@ Line 1: / Line 1: @@
-=== Reason Code 29: Building physically altered and no longer eligible for NFIP coverage ===
+=== Reason Code 29: Building Physically Altered and No Longer Eligible for NFIP Coverage ===
-This reason code applies when a policy must be canceled due to an error in the Risk Rating 2.0 premium calculation, requiring the policy to be reissued with the correct rating.
+This reason code applies when a building has been physically altered in such a way that it is no longer eligible for flood insurance coverage. An example of this scenario is when a policyholder removes a mobile home from a permanent foundation and places it on wheels, making it ineligible for NFIP coverage.
 {| class="wikitable"
@@ Line 8: / Line 8: @@
 |-
 |'''Eligibility for Cancellation'''
-|A policy may be canceled if an error in the Risk Rating 2.0 calculation resulted in an incorrect premium, and a corrected policy needs to be issued.
+|A policy may be canceled if the insured building has been physically altered in a manner that makes it ineligible for NFIP coverage.
 |-
 |'''Effective Date of Cancellation'''
-|The effective date of the incorrectly rated policy.
+|The date the building became ineligible for NFIP coverage.
 |-
 |'''Policy Terms Eligible for Refund'''
@@ Line 17: / Line 17: @@
 |-
 |'''Type of Refund'''
-|A full refund, including surcharges and fees, is applied to the canceled policy. The corrected policy is issued separately.
+|A pro-rata refund, excluding the HFIAA Surcharge, Federal Policy Fee, and Probation Surcharge.
 |-
 |'''Required Documentation'''
-|Documentation showing the incorrect Risk Rating 2.0 calculation and the corrected rating determination.
+|Documentation verifying the building’s ineligibility for NFIP coverage, such as photographs or other relevant proof.
 |}
-''This table can be seen on page 6-9 of the {{FIM|171}}.''
+''This table can be seen on page 6-9 of the {{FIM|page=171}}.''
 ==== Additional Guidance ====
-* The corrected policy must be issued to replace the canceled policy with no lapse in coverage.
+* This reason code applies strictly to cases where the building itself has been physically altered, affecting its eligibility for NFIP coverage.
-* Common Risk Rating 2.0 errors include:
+* If the policyholder moves the building to a different location but it remains insurable, this reason code does not apply.
-  * Miscalculated first-floor height.
+* The cancellation effective date must reflect the date the building was physically altered and deemed ineligible.
-  * Incorrect base flood elevation data.
-  * Incorrect structure characteristics leading to rating discrepancies.
-* If a claim has been paid on the incorrectly rated policy, adjustments should be made through endorsement rather than cancellation and reissuance.
 == Required Documents ==
 To process this cancellation reason, underwriters must verify the documentation provided.
-* Evidence of the rating miscalculation.
+* Photographs or other visual evidence confirming the building alteration.
-* Corrected rating determination.
+* Documentation explaining how the alteration affected the eligibility of the building for NFIP coverage.
 === Document Gallery ===
-* '''Incorrect Rating Documentation:''' Screenshot or underwriting memo highlighting the miscalculation.
+* '''Photographs:''' Images demonstrating the physical alteration of the building.
-* '''Corrected Rating Details:''' The new rating information used for the corrected policy.
+* '''Verification Report:''' A report or official document confirming the ineligibility status.
 == Scenarios for Context ==
 '''Scenario 1:''' <br>
-An NFIP policy is issued with an incorrect premium due to an erroneous first-floor height calculation. The underwriter identifies the mistake, cancels the policy, and issues a corrected policy with the proper premium.
+A policyholder removes a manufactured home from a permanent foundation and places it on a wheeled chassis. This alteration makes the building ineligible for NFIP coverage. The insurer processes a cancellation effective the date of the modification.
 '''Scenario 2:''' <br>
-A homeowner’s flood policy premium is based on outdated base flood elevation data. Upon review, the insurer determines that the property should have a lower rate. The policy is canceled and reissued with the correct premium calculation.
+A commercial structure is converted into an open pavilion without walls, removing it from eligibility under NFIP guidelines. The underwriter reviews the documentation and cancels the policy effective the date of the modification.
 {{line-nfip-cxl}}