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Canceling Flood Insurance in Texas

How Do I Cancel Flood Insurance in Texas?

To cancel a flood insurance policy, submit a Cancellation/Nullification Request Form with proper documentation to your insurer. After submitting, provide the insured and all interested parties with a notice of cancellation/nullification. Interested parties include any additional policyholders, additional lenders, trustees, loss payees, or disaster assistance agencies. A policyholder can cancel their flood insurance policy at mid-term or full-term by cancelation or nullification. In addition, a policyholder may be entitled to a full, partial, or no refund upon cancellation. Contact your licensed insurance agent to learn more about the policy cancellation process and guide you through the process.

When Should I Cancel my Flood Insurance Policy?

In a situation where you are torn between canceling your flood policy and continuing with it, there are some factors to consider. If your property is in a flood zone, canceling your flood insurance may not be a good idea. However, if your building is located in a low-risk area, then canceling your flood insurance may be reasonable, but note that floods can happen anywhere, flood zone or not. An alternative to canceling your flood insurance is lowering the cost of your flood insurance by increasing your deductibles, elevating your building, and getting equipment that makes flood damages have a milder impact.

In addition, consider that with flood insurance, you do not have to worry about your house being flooded unexpectedly, leaving you with expensive repairs that you will have to pay for alone. Contact your licensed insurance agent to evaluate your options and decide which is best for you.

Is it Bad to Cancel Flood Insurance Policy?

Yes. Canceling your flood insurance policy is not a great idea because if your house gets flooded and the floods result in excessive damage, you will have to bear the repair or replacement costs out of pocket or from your savings. Consider that even one inch of flood can result in damages worth up to $25,000. Even if you earn $3,500 monthly (which is significantly above minimum wage in Texas), it will take you about eight months to gather up the cost of repair or replacement for your building or personal belongings damaged in the flood. This would have been easily avoided if only you still had your flood insurance, which costs $700 on average in Texas.

Instead of canceling your flood insurance, you can discuss with your licensed P&C insurance agent ways to lower your flood insurance costs.

Can I Cancel Flood Insurance without Penalty?

Yes. You can cancel your flood insurance policy wwithout any penalty, except if your property is financed and you are on a mortgage plan. In this case, you may not be allowed to cancel your flood insurance policy if your mortgage provider mandates that you keep it.

Do I Get a Refund of Unused Premiums if I Cancel Flood Insurance Coverage?

A policyholder who has canceled their insurance policy must process the return premium on its terms. If a return premium request covers more than two policy terms, the policyholder may submit the request and documentation to FEMA for processing. The policyholder must include the following in the documentation:

  • A policy cancellation request and the premium refund calculation for each policy term.

  • The policyholder’s statistical records or declarations pages for each policy term and evidence of premium payments if these documents are not available from their records.

  • Photographs proving ineligible risks.

Policyholders may send requests and documentation to FEMA by email to NFIPUnderwritingMailbox@fema.dhs.gov. FEMA informs the policyholder of the premium refunded and the Expense Allowance due to the NFIP. After filing your documentation, ensure you keep it as part of your underwriting files. FEMA will return rejected refund requests.

How Can I Reinstate Canceled Flood Insurance?

Once you have canceled your flood insurance policy from the NFIP or a private insurance company, you will be required to reapply for a new flood insurance policy. This will entail you submitting a new application to your insurance carrier with full payment. After that, you will have to undergo a 30-day waiting period before your flood insurance policy becomes effective. Hence, if you have a flood claim during the 30-day waiting period, you cannot file a claim, and the loss resulting from the flood will not be compensated.