Cancellation Qualifying Reasons/RC 06
Reason Code 06: Property Not Eligible for Coverage
This reason code applies when a policy was issued for a property that was never eligible for NFIP coverage at the time of application. The policy must be nullified from inception.
| Condition | Details |
|---|---|
| Eligibility for Cancellation | A policy may be nullified if the insured property was not eligible for NFIP coverage at the time of application. |
| Effective Date of Cancellation | The policy is nullified from the initial effective date. |
| Policy Terms Eligible for Refund | All policy terms since inception, up to 5 years prior to the cancellation request. |
| Type of Refund | A full refund, including surcharges and fees, unless a claim was paid during the policy term. |
| Required Documentation | Evidence that the property was never eligible for coverage, such as property tax records, CBRA determination, or floodplain management violation notice. |
This table can be seen on page 6-7 and 6-8 of the FIM.
Additional Guidance
- If a claim has already been paid, the policyholder must return the claim payment before the policy can be canceled.
- Common ineligibility reasons include:
* Structures that do not meet the definition of a building. * Properties located in a non-participating NFIP community. * Coastal Barrier Resources System (CBRS) designation. * Section 1316 floodplain management violations.
- If the property later becomes ineligible after initially qualifying for coverage, use **Reason Code 27** instead.
Required Documents
To process this cancellation reason, underwriters must verify documentation confirming the property's ineligibility.
- Documentation proving non-eligibility, such as:
* Property tax records. * CBRA designation documentation. * Violation notice from local floodplain management authority.
Document Gallery
- CBRS Determination: Letter confirming property falls under CBRS.
- Floodplain Violation Notice: Official document stating property is in violation of NFIP floodplain management regulations.
- Property Tax Records: Documentation proving the structure does not meet NFIP eligibility criteria.
Scenarios for Context
Scenario 1:
An NFIP policy was issued for a property located within the Coastal Barrier Resources System (CBRS). The insurer later discovers the ineligibility and nullifies the policy from inception, issuing a full refund.
Scenario 2:
A policyholder obtains flood insurance for a structure that does not meet the NFIP definition of a building. Upon review, the insurer confirms the ineligibility and cancels the policy retroactively.
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This page contains details about NFIP Cancellations. |