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. |