Cancellation Qualifying Reasons/RC 28
Reason Code 28: Insurance No Longer Required by Lender
This reason code applies when a policyholder was originally required to maintain flood insurance by a lender, but the lender no longer requires coverage due to a loan payoff, map revision, or other circumstances.
| Condition | Details |
|---|---|
| Eligibility for Cancellation | A policy may be canceled if the lender no longer requires flood insurance, such as when the mortgage is paid off, the building is removed from the Special Flood Hazard Area (SFHA) by a FEMA map revision, or the lender waives the requirement. |
| Effective Date of Cancellation | The date the insurer receives the cancellation request. |
| Policy Terms Eligible for Refund | The current policy term. |
| Type of Refund | A pro-rata refund, excluding the HFIAA Surcharge, Federal Policy Fee, and Probation Surcharge. |
| Required Documentation | A signed statement from the policyholder confirming that the lender no longer requires flood insurance or a letter from the lender. |
This table can be seen on page 6-10 of the FIM.
Additional Guidance
- If the lender no longer requires flood insurance due to a FEMA Letter of Map Revision (LOMR) or Letter of Map Amendment (LOMA), documentation of the map change must be provided.
- A lender may waive the requirement at its discretion, even if the building remains in an SFHA.
- If the policyholder has refinanced with a new lender that does not require flood insurance, documentation from both lenders may be required.
- Refunds do not include HFIAA Surcharges, Federal Policy Fees, or Probation Surcharges.
Required Documents
To process this cancellation reason, underwriters must verify the documentation provided.
- Signed statement from the policyholder confirming lender no longer requires flood insurance.
- Letter from the lender verifying that coverage is no longer required.
- If applicable, FEMA LOMR or LOMA documentation.
Document Gallery
- Lender Statement: Letter verifying that flood insurance is no longer required.
- Policyholder Signed Statement: Confirmation from the policyholder.
- FEMA LOMR/LOMA Documentation: Proof of map revision affecting flood zone designation.
Scenarios for Context
Scenario 1:
A homeowner pays off their mortgage, and the lender no longer requires flood insurance. The policyholder submits a signed cancellation request, and the insurer processes the cancellation with a pro-rata refund.
Scenario 2:
A commercial property owner receives a FEMA Letter of Map Revision (LOMR) indicating that their building is no longer in an SFHA. The lender removes the flood insurance requirement, and the policy is canceled effective the date the insurer receives the request.
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This page contains details about NFIP Cancellations. |