FEMA Cancellation Reasons: Category #4 - Not Eligible for Coverage

We have talked about canceling your FEMA flood policy due to Category #1, Category #2, and Category #3 which are No Insurable Interest, Establish Common Expiration Date, and Duplicate Coverage respectively.

Today, we want to talk about the dreaded scenario when buying flood insurance and also may fall into the cancellation of your flood insurance policy with the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP): Not Eligible for Coverage.

Let's talk about this and what category number it falls into with the updated federal flood insurance cancellation reasons.

Category #4 - Not Eligible for Coverage

When it comes to flood insurance, homeowners and business owners alike are expected to follow a standard when it comes to insuring their property. With regards to the federal flood insurance, the SFIP always takes effect on properties looking to get flood insurance from FEMA and the NFIP.

The Standard Flood Insurance Policy (SFIP) contains a list of reasons why you may not be eligible for coverage against floods from FEMA and the NFIP. Generally, you can expect that if your property doesn't meet FEMA's and the floodplain management's regulation, you won't be able to get coverage for that property (i.e. mobile homes).

Now, when it comes to policy cancellation, either the insured or insurer can cancel the property because it doesn't follow necessary expectations to meet the eligibility for flood insurance coverage.

With FEMA and the previous version of the NFIP, this used to be written in Reason Codes #06, #27, and #29. Let's talk about the conditions that will cancel your policy per Reason Code.

Cancellation Reason Code #06 simply entails that a property will not eligible if it either (1) doesn't meet the structure code for to meet the definition of a "building", (2) the contents aren't located in the building/property, (3) the property is not in a NFIP participating community, (4) the property is located in the Coastal Barrier Resources System (CBRS), and (5) the building is declared a 1316* prior to the flood insurance application.

*1316 declared building is any property that does not meet floodplain management regulations.

What's Changing?

When it comes to the cancellation update and changes, this Reason Codes will be removed and will be categorized under FEMA Cancellation Category #4.

This means that if your property, by any chance, can't receive flood insurance coverage, you or your insurance agent will have to cancel the policy under Category #4.

You see, when it comes to flood insurance, it's a good thing that a lot of people already applies for a flood policy ahead of time to maximize the coverage time. However, we see a lot of homeowner and mostly business owners who will find out that they're not eligible.

In order to avoid having your resources go to waste, we really encourage that you communicate with your insurance agent first before getting a flood insurance for your home or business. A great insurance agent will help you check if you're eligible for FEMA flood insurance before they even help you apply for one.

Not being eligible for flood insurance, regardless if it's from the federal or private market, can really be a disappointing experience.

If you want to get help understanding  your eligibility for flood insurance, not only with FEMA and the NFIP, but also with the private insurance carriers, reach out to us, how flood insurance work and how your FEMA policy can be canceled, where to buy flood insurance, understanding your risk of flooding, or anything related to floods, click below to access our Flood Learning Center.

You can also click my picture below to call us for your flood insurance concerns.

Remember, we have an educational background in flood mitigation which lets us help you understand your flood insurance, how it can be managed, flood risks, and mitigating your property to preserve its value long-term.