FEMA is updating Policy Reformation guidance for policies issued on an incorrect policy form (e.g., Dwelling, General Property, or RCBAP form).
  • When insurers reform policies issued on an incorrect policy form, the maximum coverage amount can be equal to the amount of coverage on the incorrect policy, subject to coverage limits under the correct form.
  • If additional premium is due, the insurer must send an underpayment notice for the additional premium. Insurers must receive the additional premium within 30 days of the underpayment notice prior to processing the policy at the restored coverage amount or prior to processing any claim. FEMA will allow the insurer to deduct the additional premium due from the claim settlement.
Premium Receipt Date Guidance for Invalid Payments
Premium Receipt Date for NSF payments –Upon notification of the NSF/non-negotiable/reversal status of a premium payment, the insurer is to cancel/nullify the transaction associated with that payment back to the transaction’s effective date immediately. The insurer will send notification to the policyholder, agent, and lender(s), if applicable, of the cancellation/nullification of the transaction for invalid payment due to NSF/non-negotiable/reversal status. If the insurer receives a new payment, the insurer must process the transaction based on the premium receipt date of the new payment. The effective date of the transaction is subject to the effective date rules based on the new payment receipt date.
Policy Reformation for Use of Incorrect Standard Flood Insurance Policy Form
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