Cancellation Qualifying Reasons/RC 28
Reason Code 28: Insurance No Longer Required by Lender
This reason code applies when a policyholder was originally required to maintain flood insurance by a lender, but the lender no longer requires coverage due to a loan payoff, map revision, or other circumstances.
| Condition | Details |
|---|---|
| Eligibility for Cancellation | A policy may be canceled if the lender no longer requires flood insurance, such as when the mortgage is paid off, the building is removed from the Special Flood Hazard Area (SFHA) by a FEMA map revision, or the lender waives the requirement. |
| Effective Date of Cancellation | The date the insurer receives the cancellation request. |
| 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 | A signed statement from the policyholder confirming that the lender no longer requires flood insurance or a letter from the lender. |
This table can be seen on page 6-10 of the FIM.
Additional Guidance
This cancellation reason alone is cancelled on the date that the cancellation document is received by the insurer. [1]
Two documents are required for this qualifying reason:
- A completed Cancellation Request form.
- A completed Cancellation Verification Letter.
If one of these two required documents (request and CVL) is missing, the insurer will send a notice that requests the missing document.
- If the missing document is received within 60 days of the insurer's initial notice, then the cancellation effective date will be the date the insurer received the first cancellation document.
- If the missing document is received more than 60 days of the insurer's initial notice, then the cancellation effective date will be the date the insurer received the missing document.
Refunds do not include HFIAA Surcharges, Federal Policy Fees, or Probation Surcharges.
Required Documents
To process this cancellation reason, underwriters must review the documentation provided.
- The preferred method for verification is a completed Cancellation Verification Letter signed by the insured.
- If the CVL is not used, the following is acceptable:
- A similarly worded statement from the policyholder that confirms the lender no longer requires flood insurance
- A letter from the lender verifying that coverage is no longer required
FEMA Letters of Map Change (LOMAs, LOMRs, etc) are not required and should not be accepted in place of a statement that the lender no longer mandates flood insurance coverage.
Document Gallery
- Lender Statement: Letter verifying that flood insurance is no longer required.
- Policyholder Signed Statement: Confirmation from the policyholder.
- FEMA LOMR/LOMA Documentation: Proof of map revision affecting flood zone designation.
Scenarios for Context
Scenario 1:
A homeowner pays off their mortgage, and the lender no longer requires flood insurance. The policyholder submits a signed cancellation request, and the insurer processes the cancellation with a pro-rata refund.
Scenario 2:
A commercial property owner receives a FEMA Letter of Map Revision (LOMR) indicating that their building is no longer in an SFHA. The lender removes the flood insurance requirement, and the policy is canceled effective the date the insurer receives the request.
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This page contains details about NFIP Cancellations. |