NFIP Non-renewal

Non-renewal is the process of allowing an NFIP policy to expire at the end of its term without offering renewal. This differs from cancellation, which may terminate a policy before its expiration date under specific conditions.

Unlike private insurance policies that policyholders may cancel at will, NFIP policies are bound by federal regulations. If a policy is set to non-renew, coverage will remain in effect until its expiration date, after which it will cease unless a new application is submitted.

Important Details

Non-renewal does not mean immediate cancellation. The policy remains active until the end of the term.

Non-renewal does not require a refund calculation. Since coverage is provided for the full term, there are no adjustments for unused portions.

Policyholders should be aware of non-renewal in advance. It is important to ensure that clients understand when a policy is set to non-renew so they can take appropriate action if continued coverage is needed.

Some policies cannot be renewed due to NFIP regulations. In cases such as community suspension from the NFIP or certain violations, renewal may not be an option.

Common Misconceptions About Non-renewal

❌ "Non-renewal cancels the policy immediately."

No, non-renewal only prevents the policy from continuing after its expiration date. The policy remains active until then.

❌ "Non-renewal requires a refund calculation."

No, since coverage remains valid until expiration, there are no refund adjustments tied to non-renewal.

❌ "Non-renewal can be requested mid-term as an alternative to cancellation."

No, non-renewal is an insurer action that only applies before the renewal process. Policyholders may take steps to avoid renewal, but they cannot initiate non-renewal mid-term instead of cancellation.

Effective Communication to Policyholders

• Review policy renewal notices carefully. If a policy is set to non-renew, the policyholder should be informed well in advance.
• Understand that non-renewal does not mean immediate loss of coverage. The policyholder is still insured until the expiration date.
• If continued coverage is needed, act early. Policyholders who want uninterrupted flood insurance should secure a new NFIP policy or explore private flood insurance options before their current policy expires.

Understanding non-renewal is essential to assisting policyholders with their coverage options. By dispelling common misconceptions and ensuring policyholders are informed about their policy status, it is possible to help clients make the best decisions regarding their flood insurance needs.