Statewide Insurance Blog

Frequently Asked Questions (FAQs) Concerning NFIP Reauthorization
1. How does the “hiatus” in authority for the NFIP affect me and how long will it last?
Most of the 5.6 million flood insurance policyholders nationwide will not be affected. Policies
that are in force will remain in force, and claims under those policies can continue to be paid
after March 28, 2010. However, during the hiatus there are limits on our ability to issue new
policies, issue increased coverage on existing policies, or issue renewal policies. The limited
interruption is of concern to property owners who need to renew policies that were not renewed
prior to the end of the 30-day grace period, homebuyers who must purchase flood insurance as a
condition for obtaining mortgages from federally regulated lenders, and property owners
refinancing existing mortgages who must purchase or renew coverage.
The hiatus is expected to be brief. We are doing everything we can to communicate with our
insurance and lending industry partners to see that this issue is resolved with as little disruption
of insurance operations as possible.
2. Has this lapse in Congressional authority for the NFIP ever happened before? Did
Congress make the reauthorization retroactive before?
Yes, there have been several lapses in authority for the NFIP in the past. In most of those cases,
Congress reauthorized the NFIP retroactively.
3. If I purchased flood insurance coverage, as required by my federally regulated lender,
for a loan closing on or before March 28, 2010, will my policy be issued?
If the premium payment was part of the loan closing and made from the escrow account (lender’s
check), title company, or settlement attorney, and is received by the insurance company within
30 days from the closing, the policy will be issued.
If the premium was not part of the closing, meaning the borrower wrote his/her check at or
before closing, both the application and premium must be received within 10 days of the closing
date, in order for the policy to be issued.
4. If I purchased flood insurance coverage on or before March 28, 2010, but was not
required to do so by my lender, will my policy be issued?
If the application and premium payment were made prior to March 29, 2010, and are received
within 10 days from the application date, the policy will be issued.
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5. My flood insurance policy is set to expire on April 1, 2010. I received my renewal notice
on March 1, 2010, but did not send my payment to my insurance company until March 28,
2010. Will my insurance policy be renewed?
Yes. As long as the renewal notice was issued prior to March 29, 2010, and the payment is
received before the end of the 30-day renewal grace period, the company is authorized to renew
the policy.
NOTE: Effective March 29, 2010, insurance companies are no longer authorized to issue
renewal notices until Congress reauthorizes the program.
6. I have a loan closing on April 1, 2010, and have been told by my lender to purchase
flood insurance before settlement. Will I be able to purchase a new flood insurance policy?
Insurance companies cannot issue new flood insurance policies for loans closing on or after
March 29, 2010, until the NFIP is reauthorized, unless the application and presentment of
premium were made on or before March 28, 2010, and the application and premium payment
were received within 10 days of the closing date. In this case, the new policy may be issued with
a requested effective date on or after March 29, 2010.
For applications and premium payments made on or after March 29, 2010, it is recommended
that the companies hold new applications and premium payments for processing until the
reauthorization is received. If Congress retroactively reauthorizes the program, then these
policies may be issued with effective dates as early as March 29, 2010. If Congress does not
retroactively reauthorize the program, the earliest effective date for these policies will be the date
the NFIP is reauthorized.
7. If I suffer a loss during this hiatus, will my claim be paid?
Claims for existing policies and for new policies issued based on applications and premium
payments made prior to the hiatus are not affected, and the claims will be processed. Claims for
new policies where the premiums were received and held by the company during the hiatus will
not be paid until Congress reauthorizes the NFIP. However, your insurance company can
proceed with investigating your claim under a “non-waiver” agreement, up to the point of
payment. Under the “non-waiver” agreement, the company would reserve the right not to pay the
claim if Congress does not reauthorize the NFIP.
8. What happens if my premium for a new policy or an endorsement for added coverage is
received by the company after March 28, 2010, and I suffer a flood loss before Congress
reauthorizes the Program?
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If the application or added-coverage endorsement and premium payment were made on or before
March 28, 2010, and were received by the company within 10 days of the date of application or
endorsement and premium payment, the policy or coverage increase will be effective on the
applicable date, based on the NFIP waiting-period rules. Claim payments can be made for these
policies for losses occurring during the period that the coverage is in force.
For applications or endorsements and premium payments made on or after March 29, 2010, the
NFIP has suggested that the insurance companies hold premium payments for new or increased
policies received during the hiatus. Claim payments for losses suffered during that time cannot
be made until Congress retroactively extends the NFIP authority. However, your insurance
company can proceed with investigating your claim under a “non-waiver” agreement, up to the
point of payment. Under the “non-waiver” agreement, the company would reserve the right not
to pay the claim if Congress does not reauthorize the NFIP.
9. I have a mortgage loan closing early April, and the lender has told me I have to have
flood insurance at closing. What will happen if my premium and application were not
received by my insurance company by March 28, 2010?
If the application and premium payment are dated on or before March 28, 2010, and are received
by the company within 10 days of the date of application and premium payment, the policy will
be issued.
If the application and premium payment are dated on or after March 29, 2010, it is expected that
your premium will be held by your insurance company in order that your policy can go into
effect at the earliest possible date. If reauthorization to issue flood insurance policies under the
NFIP is granted retroactively, your policy will be issued effective as of the date of the closing of
your loan.
10. If my premium was in the mail, with a postmark before March 28, 2010, did I meet the
deadline?
The controlling factor is receipt of the premium by the insurance company, not the postmark.
However, if your premium payment is mailed by certified mail or third-party delivery services
such as Federal Express (FedEx), United Parcel Service (UPS), and courier services and the like
that provide proof of mailing, the premium receipt date is the postmark date or the third-party
receipt date.
11. If I suffer a loss during the hiatus, and I met the March 28, 2010, deadline, will I be
covered for the loss?
If, based on the waiting period rules of the NFIP, your coverage was in effect at the time of the
date of loss, you would be covered. See Question 16 for details about the 30-day waiting period.
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12. What happens if my premium payment for a policy renewal was received by the
company after March 28, 2010, and I suffer a flood loss before Congress reauthorizes the
NFIP? Will I be covered?
If the renewal premium was received prior to the end of the 30-day renewal grace period, the
policy will be renewed without a lapse in coverage and coverage will be in effect at the time of
the loss. (Note: A 30-day waiting period applies to policies for which premium payments were
received after the 30-day renewal grace period.)
For renewal premiums received after the end of the 30-day renewal grace period, the NFIP has
suggested that the insurance companies hold in abeyance renewal premium payments received
during the hiatus. Claim payments for losses suffered during that time cannot be made until
Congress retroactively extends the NFIP authority. However, your insurance company can
proceed with investigating your claim under a “non-waiver” agreement, up to the point of
payment. Under the “non-waiver” agreement, the company would reserve the right not to pay the
claim if Congress does not reauthorize the NFIP.
13. My policy was up for renewal in late March. Was my policy renewed?
If your renewal premium payment was received by your insurance company on or before March
28, 2010, or received prior to or within the 30-day renewal grace period, your policy was
renewed. You should check with your insurance agent to make certain your policy was renewed.
If your renewal premium payment was received by your insurance company on or after March
29, 2010, and after the end of the 30-day renewal grace period, your policy will not be renewed
until Congress extends the NFIP authority. The effective date of the renewal will depend on the
date of the extension of NFIP authority, whether or not the reauthorization is retroactive, and the
application of the 30-day waiting period.
14. What happens if Congress does not make reauthorization retroactive to March 28,
2010?
Policies unable to be issued or renewed under the above provisions that are without a 30-day
waiting period would become effective on the date the reauthorization is effective. Policies with
a 30-day waiting period would become effective 30 days after Congress has reauthorized the
NFIP.
15. What happens if the hiatus is lengthy?
If authorization is not granted within a reasonable period of time, premium payments will have to
be refunded and the NFIP will not be able to issue the policies paid by premiums held in
abeyance.
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16. Is there a waiting period for flood insurance to become effective?
There is normally a 30-day waiting period before flood insurance goes into effect. There are two
exceptions:
1. If the initial purchase of flood insurance is in connection with the making, increasing,
extending, or renewing of a loan, there is no waiting period. The coverage becomes effective
at the time of the loan, provided the application and presentment of premium are made at or
prior to loan closing.
2. If the initial purchase of flood insurance is made during the 13-month period following the
revision or update of a Flood Insurance Rate Map for the community, there is a 1-day waiting
period.
In addition to the two basic exceptions, the FEMA Mitigation Directorate has issued a policy
decision specifying the following four exceptions:
1. The 30-day waiting period will not apply when there is an existing insurance policy and an
additional amount of flood insurance is required in connection with the making, increasing,
extending, or renewing of a loan, such as a second mortgage, home equity loan, or
refinancing. The increased amount of flood coverage will be effective as of the time of the
loan closing, provided the increased amount of coverage is applied for and the presentment
of additional premium is made at or prior to the loan closing.
2. The 30-day waiting period will not apply when an additional amount of insurance is required
as a result of a map revision. The increased amount of coverage will be effective at 12:01
a.m. on the first calendar day after the date the increased amount of coverage is applied for
and the presentment of additional premium is made.
3. The 30-day waiting period will not apply when flood insurance is required as a result of a
lender’s determining a loan that does not have flood insurance coverage should be protected
by flood insurance. The coverage will be effective upon the completion of an application and
the presentment of payment of premium.
4. The 30-day waiting period will not apply when an additional amount of insurance offered in
the renewal bill is being obtained in connection with the renewal of a policy.
17. How will I know when the NFIP has been reauthorized?
FEMA will notify NFIP stakeholders so they can pass the information on to their customers

NFIP Reauthorization
Information for WYO Companies and Agents
April 1, 2010
NFIP Reauthorization
• Congress did not reauthorize the NFIP by midnight of the last day of effective
authorization, which was March 28, 2010. Therefore, the Program is experiencing a
hiatus – a period without authority to:
o issue new policies for which application and premium payment dates are on or
after March 29, 2010, or
o issue increased coverage on existing policies for which endorsement and premium
payment dates are on or after March 29, 2010, or
o issue renewal policies for which the renewal premium is received by the company
on or after March 29, 2010, and after the end of the 30-day renewal grace period,
until Congress reauthorizes the Program.
• The hiatus period is expected to end soon after Congress reconvenes on April 12, 2010.
During the hiatus, most of the nearly 5.6 million flood insurance policyholders
nationwide will not be affected.
New Policies
Applications and premium payments made on or before March 28, 2010, the last day of effective
Program authorization
• New policies for which the application was completed on or before March 28, 2010, and
the application and premium payment were received within 10 days of the application
date, will be issued for coverage and will become effective on the requested effective
date, in accordance with the applicable waiting period rules.
• For loans closing prior to the first day of hiatus, when the application is dated on or
before closing and the premium payment is from the escrow account (lender’s check),
title company, or settlement attorney, and is received within 30 days from the closing
date, the policy can be issued effective the date of the closing.
• For loans closing prior to the first day of hiatus, when the application is dated on or
before closing and the premium payment is not part of the closing (i.e., the applicant or
applicant’s representative check or credit card) and the application and premium were
received within 10 days of the application date, the policy can be issued effective the date
of the closing only if the presentment of premium was on or before the closing date. If the
presentment of premium (check or credit card date) was on or after March 29, 2010, the
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policy cannot be issued, even though the application and closing occurred prior to the
hiatus.
• For loans closing on or after the first day of hiatus, when the application is dated prior to
the hiatus and the presentment of premium is prior to the hiatus, the policy may be issued
effective at closing so long as premium is received within 10 days of the closing date.
• As always, the starting dates of NFIP coverage depend on the applicable flood insurance
waiting period.
Claims
• Policies that are in force before midnight of the last day of effective Program
authorization will remain in force, and claims under those policies are to be processed
and paid as usual afterwards (once hiatus begins).
• Claims for covered losses occurring during a hiatus, on existing policies and on policies
issued effective after the last day of effective authorization, are to be processed and paid
as usual.
• WYO Companies may investigate claims under a reservation-of-rights letter or a nonwaiver
agreement, up to the point of payment. Under either, WYO Companies would
reserve the right not to pay the claim if Congress does not reauthorize the NFIP while
continuing the investigation of the claim.
• If reauthorization is granted retroactively, WYO Companies can issue policies effective
as of the date they receive payments (subject to applicable waiting periods), and claims
for covered losses can be processed.
Determining Payment Receipt Dates
New Policy Premiums, Renewal Policy Premiums, Added Coverage Endorsements
• The controlling factor in determining payment receipt dates for new policy premiums,
renewal policy premiums, or added coverage endorsements is when the insurance
company receives payment, not the standard mail postmark.
o However, proof of mailing receipts or third-party receipts that WYO Companies
receive through certified mail or from entities such Federal Express (FedEx),
United Parcel Service (UPS), and courier services do serve as payment receipt
dates.
o There will be no interruption in coverage if a customer mails the premium and the
WYO Company receives it on or prior to midnight of the last day of effective
Program authorization. See the exception listed below under Hiatus Scenarios,
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where the WYO Company is allowed to issue or renew policies even if the
premium is received after a hiatus begins.
Financials
• During the NFIP hiatus, the NFIP recommends that WYO Companies hold in abeyance
the following: (1) any premiums for new applications dated on or after the first day of the
hiatus, (2) renewal premiums received on or after the first day of the hiatus and after the
end of the 30-day renewal grace period, and (3) added coverage endorsements dated on
or after the first day of the hiatus.
• NFIP Letter of Credit is available during the hiatus.
Hiatus Scenarios
Policies without a 30-Day Waiting Period
• If the reauthorization is not retroactive to the first day of the hiatus, policies without a 30-
day waiting period would become effective on the date the reauthorization is effective.
This rule applies to loan closings occurring on or after the first day of the hiatus.
Policies with a 30-Day Waiting Period
• If the reauthorization is not retroactive to the first day of the hiatus, policies with a 30-
day waiting period would become effective 30 days after Congress has reauthorized the
NFIP.
Renewals
• If the renewal offer was issued prior to authorization expiration, and the renewal
premium is received before or within the 30-day grace period, the policy can be renewed
even if the renewal premium was received after authorization expiration. The same rule
applies on an underpayment notice issued before authorization expiration.
• WYO Companies are no longer authorized to renew policies if the premium is received
on or after the first day of the hiatus and after the end of the 30-day renewal grace period.
Cancellations
Existing policies can be canceled during the hiatus in accordance with valid NFIP cancellation
reason codes.
Group Flood Insurance Policies, Mortgage Portfolio Protection Program Policies
Follow the guidelines provided above.
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Assignment of Flood Policies
An existing policy can be assigned provided the insured signs and dates the endorsement request.
Action Required by WYO Companies during an NFIP Hiatus
• WYO Companies are to communicate the status of the program to their agents ASAP.
• WYO Companies are no longer authorized to issue renewal offers after the last day of
effective authorization.
• New business applications, renewals, and endorsements adding coverage that do not meet
the criteria listed above cannot be issued.

As Congress continues passing resolutions for short-term extensions of the National Flood Insurance
Program (NFIP), the possibility of an NFIP authority lapse remains. Therefore, FEMA has developed
the attached set of guidelines and recommendations for Write Your Own (WYO) Companies and their
agents to consider.
In the unlikely event that a hiatus occurs, the NFIP will not be able to: (a) issue new policies, (b)
increase coverage on existing policies, or (c) issue renewal policies. Again, the Program is not likely to
lapse, but as reauthorization dates approach, our partners need as much information as possible in order
to effectively make decisions that will have the least amount of impact on their operations and, most
importantly, their customers.
As always, we will keep you informed of NFIP-related activities on Capitol Hill, and we will let you
know when Congress takes any action related to the NFIP’s statutory authority. Finally, we will
continue to do all we can to help WYO Companies and agents operate smoothly through fiscal year
2010 and beyond.
Attachment
cc: Vendors, IBHS, FIPNC, Government Technical Representative
Suggested Routing: All Departments
U.S. Department of Homeland Security
500 C Street, SW
Washington, DC 20472
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NFIP Reauthorization
Information for WYO Companies and Agents
2009
NFIP Authorization
• If Congress does not reauthorize the NFIP by midnight of the last day of effective authorization, the
Program will experience a hiatus – a period without authority to:
o issue new policies,
o issue increased coverage on existing policies, or
o issue renewal policies until Congress reauthorizes it.
• If there is a lapse in NFIP authorization, any hiatus period should be brief, and most of the nearly 5.6
million flood insurance policyholders nationwide will not be affected.
New Policies
Payments received before midnight of the last day of effective Program authorization
• New policies for which premium payment is received by the insurance company on or before midnight of
the last day of effective Program authorization will be issued for coverage and will become effective after
the last day of effective authorization, regardless of the policy effective dates.
• For loans closing prior to the first day of hiatus, when the premium payment is from the escrow account
(lender’s check), title company, or settlement attorney, and the application date is on or before the
closing, the policy can be issued even if the premium and application are received after the last day of
effective Program authorization.
• As always, the starting dates of NFIP coverage depend on the applicable flood insurance waiting period.
Claims for Policies-in-Force
Policies-in-Force before midnight, last day of effective authorization
• Policies that are in force before midnight of the last day of effective Program authorization will remain in
force, and claims under those policies are to be processed and paid as usual afterwards (once hiatus
begins).
• Claims for covered losses occurring during a hiatus, on existing policies and on policies issued effective
after the last day of effective authorization, are to be processed and paid as usual.
U.S. Department of Homeland Security
500 C Street, SW
Washington, DC 20472
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New Policy Premiums, Renewal Policy Premiums, or Added Coverage Endorsements
Received on or after NFIP Authorization expiration (during possible hiatus)
Financials
• If there is an NFIP hiatus – Congress does not reauthorize the Program by midnight of the last day of
effective Program authorization – the NFIP recommends that WYO Companies hold, in abeyance, any
new policy premiums, renewal policy premiums, or added coverage endorsements received on or after the
first day of the hiatus. See exceptions listed below “Determining Payment Receipt Dates.”
• If the renewal offer was issued prior to authorization expiration, and the renewal premium is received
within the 30-day grace period, the policy can be reinstated even if the renewal premium was received
after authorization expiration. The same rule applies on an underpayment notice issued before
authorization expiration.
Claims
• For any new policy premiums, renewal policy premiums, or added coverage endorsements received on or
after the first day of the hiatus, claim payments for losses suffered during a hiatus cannot be made until
Congress retroactively extends NFIP authority. See exceptions listed above, under “Financials.”
• WYO Companies may investigate claims under a reservation-of-rights letter or a non-waiver agreement,
up to the point of payment. Under either, WYO Companies would reserve the right not to pay the claim if
Congress does not reauthorize the NFIP while continuing the investigation of the claim.
• If there is an NFIP hiatus, eventual reauthorization will likely be granted retroactively, and WYO
Companies can issue policies effective as of the date they receive payments (subject to applicable waiting
periods).
Determining Payment Receipt Dates
New Policy Premiums, Renewal Policy Premiums, Added Coverage Endorsements
• The controlling factor in determining payment receipt dates for new policy premiums, renewal policy
premiums, or added coverage endorsements is when the insurance company receives payment, not the
standard mail postmark.
o However, proof of mailing receipts or third-party receipts that WYO Companies receive through
certified mail or from entities such Federal Express (FedEx), United Parcel Service (UPS), and
courier services do serve as payment receipt dates.
o For policies to be renewed, WYO Companies must receive payments on or before midnight of the
last day of effective Program authorization, as per payment receipt date determination factors
listed above.
o There will be no interruption in coverage if a customer mails the premium and the WYO
Company receives it on or prior to midnight of the last day of effective Program authorization.
See exceptions listed above where the WYO Company is allowed to issue or renew policies even
if the premium is received after a hiatus begins.
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Hiatus Scenarios
The 30-Day Waiting Period, Renewals
Policies without a 30-Day Waiting Period
• In the unlikely event of a hiatus and reauthorization is not retroactive to the first day of the hiatus, policies
without a 30-day waiting period would become effective on the date the reauthorization is effective. This
rule applies to loan closings occurring on or after the first day of the hiatus.
Policies with a 30-Day Waiting Period
• Policies with a 30-day waiting period would become effective when both the 30-day waiting period has
ended and Congress has reauthorized the NFIP. The same rule applies for those applications and
premiums made prior to the first day of the hiatus, and received on or after the first day of hiatus. The 30-
day waiting period would be calculated from the application date and not from the NFIP reauthorization
date. However, the policy cannot be effective before the reauthorization date.
Renewals
• In the unlikely event of a hiatus, for renewal payments received after midnight of the last day of effective
authorization, the renewal policy will go into effect at the earliest date consistent with both the terms of
the expiring policy and the extension of the NFIP’s authority. Such renewal policies will only become
effective if a new NFIP authorization becomes law, which is expected. If this does not occur, premiums
will be refunded.
• WYO Companies are no longer authorized to renew policies if the premium is received on or after the
first day of the hiatus, with the following exceptions:
o Renewal Effective Dates Prior to the first day of the hiatus – If the premium is received on or after the
first day of the hiatus, but the premium receipt date is within 30 days from the policy expiration date,
the policy can be renewed.
o Renewal Effective Dates on or after the first day of hiatus – If the renewal offer was mailed prior to
the first day of hiatus, and the premium is received within 30-day grace period, the policy can be
renewed even if the premium receipt date is on or after the first day of the hiatus.
Action Required by WYO Companies during an NFIP Hiatus
• WYO Companies are to communicate the status of the program to their agents ASAP.
• WYO Companies are no longer authorized to issue renewal offers after the last day of effective
authorization.
• New Business applications and renewals not meeting the criteria listed above cannot be issued.