Flood Insurance rules are not easy and we still see both bankers and insurance agents that don’t know the 
rules. 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.
Published
2015/03/19
Deb Irving
Deb joined Banker’s Compliance Consulting with twenty years of experience in the banking industry. Her past positions include teller, credit review analyst, assistant financial officer, BSA Officer, Compliance Officer, and Director of Compliance. She has worked for both a small community bank and a large billion-dollar bank.
Deb has Associate Degrees in Business Management and Accounting. She is a graduate of the American Bankers Association National Graduate School of Compliance Management, an honors graduate of Schools of Banking Compliance School, and a graduate of Schools of Banking Advanced School of Banking. Deb’s considerable knowledge and experience make her a valuable member of the Banker’s Compliance Consulting Team. Deb is a Certified Regulatory Compliance Manager (CRCM) and a Certified Anti Money-Laundering Specialist (CAMS).
Deb loves to spend her free time cycling, running, kayaking and weight lifting with her husband. Between them, they have three adult children and six grandchildren. Other interests include anything outdoors and anything she hasn’t done or seen yet!