Cancellation Qualifying Reasons/RC 29
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.
| Condition | Details |
|---|---|
| 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. |
| Effective Date of Cancellation | The effective date of the incorrectly rated policy. |
| Policy Terms Eligible for Refund | The current policy term. |
| Type of Refund | A full refund, including surcharges and fees, is applied to the canceled policy. The corrected policy is issued separately. |
| Required Documentation | Documentation showing the incorrect Risk Rating 2.0 calculation and the corrected rating determination. |
This table can be seen on page 6-9 of the FIM.
Additional Guidance
- The corrected policy must be issued to replace the canceled policy with no lapse in coverage.
- Common Risk Rating 2.0 errors include:
* Miscalculated first-floor height. * 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.
- Corrected rating determination.
Document Gallery
- Incorrect Rating Documentation: Screenshot or underwriting memo highlighting the miscalculation.
- Corrected Rating Details: The new rating information used for the corrected policy.
Scenarios for Context
Scenario 1:
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.
Scenario 2:
A homeowner’s flood policy premium is based on outdated base flood elevation data.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.
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This page contains details about NFIP Cancellations. |