Waiting Period

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This page contains details about the NFIP Application and is written for insurance agents. Find more in the How To Write section of the NFIP Flood Insurance Manual.

Policy Guide

Standard Flood Insurance Policy

Applications

Equinox Procedure
Waiting Periods : Occupancy Foundations : Discounts

New Business

Elevation Certificates
Primary Residence
BRCV : Venting : Condos

Renewals

Equinox Procedure
Billing Changes

Changes

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Mortgagee : Insured
Transfer of Ownership
Coverage Limits

Cancellations

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Request Forms : Signatures
Reasons : Documents

Summary

The NFIP establishes a standard waiting period and specific exceptions to govern when coverage becomes effective for new policies and endorsements that add or increase coverage.

Standard Waiting Period

• The default waiting period for new policies and endorsements is 30 calendar days from the application date.
• The effective date depends on when the insurer receives the application form and full payment:
  • If received within 10 days of application: Coverage is effective 30 days after the application date.
  • If received after 10 days: Coverage is effective 30 days after receipt by the insurer.

Exceptions to the Standard Waiting Period

1. Map Revision Exception (1-Day Waiting Period):
   • Applies when a property is newly identified within a Special Flood Hazard Area (SFHA) due to a flood map revision.
   • Coverage is effective the day after the application is submitted, provided it is within 13 months of the map revision.
2. Loan Exception (No Waiting Period):
   • When flood insurance is purchased in connection with a loan (e.g., mortgage origination or refinancing), coverage begins immediately at the time of loan closing.
   • Payment and application must be submitted on or before the closing date.
3. Post-Wildfire Exception (1-Day Waiting Period):
   • Applies to properties damaged by flooding caused or worsened by post-wildfire conditions on federal land.
   • Coverage becomes effective the day after the application date if purchased within 60 days of the wildfire containment date.

Key Comparisons to Standard Insurance Policies

• Unlike most insurance policies, NFIP policies require a waiting period to mitigate adverse selection (e.g., last-minute purchases before a predicted flood).
• Loan-related transactions and disaster-related events are notable exceptions to this rule, aligning with immediate coverage practices in other types of insurance.

Important Details for Agents

The NFIP uses a 30-day waiting period primarily to manage risk and promote program sustainability. Here are the key reasons:

1. Preventing Adverse Selection: The waiting period reduces the likelihood of individuals purchasing flood insurance only when a flood is imminent or predicted, which could lead to disproportionately high claims.
2. Encouraging Long-Term Planning: By requiring a waiting period, the NFIP incentivizes property owners to plan ahead and maintain continuous coverage, rather than viewing flood insurance as a last-minute safeguard.
3. Program Sustainability: Flood events can result in large-scale claims, and the waiting period helps mitigate spikes in policy purchases that could destabilize the program financially.
4. Aligning Risk with Coverage: The waiting period ensures that coverage is intended for unforeseen or unpredictable risks rather than known, immediate threats.
5. Administrative Consistency: Establishing a standard waiting period streamlines operations, making it easier for insurers and agents to communicate effective dates and manage client expectations.

Overall, the 30-day rule helps balance fairness for policyholders and financial stability for the program.