Insurance Continuing Education - Flood Insurance Application

The APPLICATION for flood insurance is, understandably, a little more complicated than some of the other property and casualty policy applications as it covers a specific risk on property that must be identified although the range of buildings and property can run the gamut.  Because of this need to be precise, this form must be completed only in the correct fashion as there is no room for guessing.

This Application form or a similar form used for WYO companies, must be used for all flood policies except the Preferred Risk Policy.  The NFIP Flood Insurance Application form, or a similar form for WYO companies, must be used for all flood insurance policies except the Preferred Risk Policy.

The Application form must be completed accurately as it contains the necessary information required by statutory intent and it provides the instructions in respect to the rating of the different building types.

The Application provides the initial information so that the flood insurance rate can be properly applied to the building, particularly as to whether the building is Post-FIRM construction or Pre-FIRM construction; and provides information as to building occupancy, building type, basement type and elevated building type.

The flood risk Zone must also be determined as well as the elevation of the building.

TYPES OF BUILDINGS

For purposes of the NFIP, distinctions have been made among the following building types:

 

1. No basement

- One floor

- Split level

- Two or more floors

1. Unfinished basement

- Split level

- Two or more floors

1. Finished basement

- Split level

- Two or more floors

1.

Manufactured (mobile) home, including doublewide, or travel trailer, on foundation

2. Elevated building

- No enclosure

- With enclosure (including crawl space)

An elevated building is a building that has no basement and that has its lowest elevated floor raised above ground level by foundation walls, shear walls, posts, piers, pilings, or columns.

SCHEDULED BUILDING POLICY

1. To obtain a Scheduled Building Policy, an Application must be completed for each building and/or contents for which coverage is requested.

2.  For each scheduled building (building and/or contents coverage); the Federal Policy Fee is .00 per building

3. All Flood Insurance Application forms must be completed in accordance with all Flood Insurance Manual rules and the Scheduled Building Policy qualifications.

4. If requesting a Scheduled Building Policy, indicate Building #1, Building #2, etc., in the upper right corner of each Application.  Staple together the Applications as a single unit.

COMPLETING PART 1 OF THE APPLICATION

The following instructions apply for completing Part 1 of the Flood Insurance Application form.

POLICY STATUS

In the upper right corner of the form, check the appropriate box to indicate if the application is for a NEW policy or a RENEWAL of an existing policy.  If the application is for a renewal, enter the current 10-digit NFIP policy number.

POLICY TERM (BILLING/POLICY PERIOD

Check the appropriate box to indicate who should receive the renewal bill.

If "BILL FIRST MORTGAGEE is checked, complete "First Mortgagee" section."

If BILL SECOND MORTGAGEE, BILL LOSS PAYEE, or BILL OTHER is checked, provide mailing instructions in the "Second Mortgagee or Other" section.

Enter the policy effective date and policy expiration date (month-day-year).

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Insurance Continuing Education - Cancelling a Flood Insurance Policy

The cancellation or nullification of Flood Insurance Policy procedures can be found in detail at http://www.fema.gov/business/nfp/manual.shtm  -  and it contains some10 pages of detail.  This discussion does not cover all of the intricacies and details contained in the manual, but should give the agent guidance on what canceling or nullifying a policy can entail, what is needed, and how it can be explained to the client.

REFUNDS

Refunds will be made by the insurance company for the current and one prior year.  If refund is requested for a period of more than 2 years, then the NFIP must process the request.  The request must consist of a policy cancellation request and the premium refund calculation for each year.  (A copy of the cancellation request form follows.)  The insurer must also include statistical records for each policy term and evidence of premium having been received—accounting details which should be expected.

COMPLETING THE CANCELLATION FORM

Current Policy Number: In the upper right-hand corner of the form, enter the NFIP policy number.

Policy Term: Enter the policy term and the cancellation effective date.

Agent Information: Enter the complete name, mailing address, phone number and fax number of the agent/producer.

Insured Mail Address: Enter complete name, mailing address and phone number of the insured.  If insured has moved, enter the new mailing address.

First Mortgage: Enter the complete name, mailing address, phone number and fax number of the first mortgagee.

Other Parties Notified: Enter the complete name, mailing address of all other interested parties that should be notified, such as an additional insured, second mortgagee, loss payee, trustee, or disaster assistance agency.

Property Location: Enter the location of the insured property.

Cancellation Reason Code: Check the reason for cancellation of the policy and provide any additional information required.  (A list of cancellation codes follows.)

Refund: Check the appropriate box to indicate to whom the refund is to be made payable.

When the cancellation/nullification notice has been received and if it directs the NFIP to make a premium refund to the PAYOR, and the policy has been endorsed showing the PAYOR as a WYO company or agency, then

F the NFIP will make the refund payable to the insured and mail the refund in care of the producer.

Check the appropriate box to indicate to whom the refund should be mailed.

Signature: The insured must sign and date the Cancellation/Nullification Request Form for all cancellation reason codes except for 5 and 6.  The producer must sign, date, and enter a Tax ID Number or Social Security number in every case.  After the form is completed, attach all supporting documents, and mail the original to the NFIP

The producer should retain the second copy; the third copy goes to the insured and the 4th copy to the mortgagee.

After this form has been processed, the NFIP will send the producer, mortgagee and insured a notice of cancellation.

 

CANCELLATION REASON CODES

The following reason codes for cancellation/nullification of NFIP policies is a summary of the reasons as most of them are self explanatory.  For more details, please refer to the Flood Insurance Manual.

1.  Building Sold or Removed.  Insured has no more insurable interest, or any other reason that the building is sold or removed.  If the building is sold, proof of sale is required.  Request must be received within 1 year of sale/removal, accompanied by Bill of Sale, settlement statement, or other such proof of removal or total loss.  Up to 2 years pro rata refund

2.  Contents Sold or Removed.  Insured no longer has an insurable interest or the property has been removed from the property.  Proof is needed, such as Bill of Sale, etc.  Pro rata refund.  Cancellation request must be received within 1 year of new policy effective date.

3.

Policy Canceled and Rewritten to Establish a Common Expiration Date with Other insurance Coverage.  A "housekeeping" reason and new policy must be rewritten with the same company for the same or higher" amounts of coverage.  This should be accompanied by a Cancellation form for the previous policy.  One year refund maximum.

4.  Duplicate NFIP Policies.  Refund is pro rata.  Insured can choose which policy to keep, but only one policy will be effective.  Document by submitting copy of declaration page(s) and copy of force-placement letter from the mortgagee if applicable. Force-placement usually has been done by the lender, but if both policies are applicable, the WYO company will cancel the force-placed policy.

5.  Non-Payment.  If there has been an "insufficient funds" check used to pay the premiums, policy is then nullified, with bank's notice attached to the form.  A full premium refund will be provided to the producer if the producer has sent his funds to the insurer.  If the WYO covers the premium for a prospective insured and then does not receive payment, the policy can be nullified.  Full refund.

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