NFIP Cancellations

This page is a rough draft and will need more work before it's finalized.

This page contains information about the NFIP. Find more NFIP Resources.

NFIP flood insurance policies have a one-year term. After a policy is issued, it can be cancelled prior to end of the term if a specific process is followed.

Unlike general insurance practices, where a signed "lost policy release" form typically allows a policyholder to cancel their insurance, the NFIP has a more structured process. Here's what agents need to know about NFIP cancellations:

Key Differences from Lost Policy Release Process

• Documentation Requirements: NFIP cancellations require specific supporting documents to justify the reason for cancellation. A simple signed request from the policyholder is not sufficient.
• Reason Codes: NFIP uses predefined cancellation reason codes, each with its own conditions, refund rules, and required documentation.

Steps for Processing NFIP Cancellations

1. Identify the Cancellation Reason Code
2. Gather Supporting Documentation
3. Ensure Proper Signatures
4. Submit the Cancellation Request

Special Considerations for Agents

• Policies with Claims: Open claims prevent cancellation. Closed claims limit refund eligibility based on specific reason codes.
• Eligibility Rules: Some properties may lose eligibility mid-term, such as those in communities suspended from the NFIP.
• Lender Requirements: Lenders may impose requirements beyond federal regulations. Ensure proper documentation if a lender no longer requires flood insurance.

Documentation and Refund Handling

• Refunds must account for fees and surcharges. In some cases, FEMA reviews multi-term cancellations or refunds involving paid claims.
• Agents must understand refund calculations and guide policyholders on eligibility.

By following these structured steps, agents can navigate the NFIP’s cancellation process effectively, ensuring compliance while addressing policyholder concerns.