Cancellation Qualifying Reasons/RC 13
Reason Code 13: Nullification Prior to Policy Effective Date
This reason code applies when a policyholder pays the premium for a new or renewal policy but decides before the effective date that they do not want coverage. Since the policy never became effective, it must be nullified from inception.
| Condition | Details |
|---|---|
| Eligibility for Cancellation | A policy may be nullified if the policyholder requests cancellation before the policy’s effective date and the property is not subject to a statutory or contractual flood insurance requirement. |
| Effective Date of Cancellation | The policy is nullified from the start of the policy term. |
| Policy Terms Eligible for Refund | The nullified policy term. |
| Type of Refund | A full refund, including surcharges and fees, unless a claim was paid during the policy term. |
| Required Documentation | A signed statement from the policyholder requesting nullification before the effective date. |
This table can be seen on page 6-12 of the FIM.
Additional Guidance
- Since the policy was never effective, there is no need to determine coverage eligibility.
- If the property is subject to a lender’s mandatory flood insurance requirement, the request must include documentation proving the lender no longer requires coverage, such as a completed Cancellation Verification Letter.
Required Documents
To process this cancellation reason, underwriters must verify the documentation provided.
- Signed statement from the policyholder requesting nullification before the effective date.
- When a mortgagee clause is included on the policy, documentation showing the lender no longer requires coverage.
Scenarios for Context
Scenario 1:
A homeowner purchases a flood policy in anticipation of a property closing but later decides not to proceed with the purchase. Before the policy effective date, they submit a request to nullify the policy, and the insurer issues a full refund.
Scenario 2:
A lender requires a borrower to purchase flood insurance as a loan condition. Before the policy effective date, the lender determines the property is outside the SFHA and no longer requires coverage. The borrower submits documentation from the lender, and the policy is nullified with a full refund.
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This page contains details about NFIP Cancellations. |