30-Day Wait on Flood Insurance Policies

Flood Insurance rules are not easy and we still see both bankers and insurance agents that don’t know the Deb11rules. One common instance is regarding the 30-day waiting period for flood insurance. You would think this would be a pretty simple concept but whether there’s a 30-day wait or not depends on various factors.

The 30-day wait does NOT apply to:

1. The purchase of flood insurance when the purchase is in connection with making, increasing, renewing or extending a loan; or

2. The initial purchase of flood insurance in connection with a map change/revision that moves a structure into an SFHA (within a 13-month period).

The 30-day wait DOES apply to a loan where the flood insurance policy has expired. However, a Standard Policy allows for a 30-day grace period after the expiration date to reinstate the policy and keep continuous coverage. Thus, if the borrower pays the premium BEFORE the 30-day grace period ends, there is NOT a 30-day wait before the policy takes effect.

The 30-day wait also applies to Mortgage Portfolio Protection Program (MPPP) insurance. For example, a borrower’s policy expires and the premium is not paid before the 30-day grace period ends – if the Lender force places with MPPP insurance, the 30-day wait applies. A Lender may force place the MPPP insurance after the policy expiration date, rather than waiting until after the 30-day grace period ends to avoid a lapse in coverage. However, the Lender cannot charge the borrower for the insurance until day 46, after the 45-day notification requirement has ended.

Deb Irving

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