Unlike other property and casualty policies like home or auto insurance, flood insurance can only be cancelled if you meet very specific requirements and refunds are only issued, in a handful of circumstances, if you meet even more stringent requirements. For example, if you have a successfully received a Letter of Map Change from FEMA and you are in a mandatory flood insurance area, you may cancel your current flood insurance policy and you may then request a premium refund.
However, keep in mind that your lender has the right to require that you keep flood insurance in place. In that case, the Letter of Map Change is still helpful because it also allows you to place a less expensive ‘Preferred Risk’ flood insurance policy.
So, whether your lender allows you to get rid of your flood insurance or not, once the Letter of Map Change has been issued, you will be able to request a premium refund from your flood insurance carrier for the policy premium paid as the result of the ‘mandatory flood insurance’ requirement.
But, you may have to turn around and spend a portion of that refunded premium to put the less expensive flood insurance in place. Sound complicated? It can be and usually is unless you are very familiar with the process.
Congress recently changed the amount of refund given to a property owner for flood insurance premiums paid. These changes are published in the April 1, 2016 NFIP changes documentation provided by FEMA. As indicated, you are due a full refund LESS the Federal Policy Fee, Probation Surcharge and HFIAA Surcharge.
Additionally, unless you received your Letter of Map Change within the last 60 days of the prior policy term, you will only be eligible to receive reimbursement of applicable flood insurance premium for the current policy term.
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