FEMA says that canceling flood insurance coverage can be terminated at any time. Still, they make it really hard to do so because of the federal law that requires flood insurance for any property with a mortgage.
As flood nerds, we know how to help you cancel a policy (although we recommend you keep some kind of coverage unless you sell the property). Most agents don’t know how to, and sometimes the best path is to just let the policy expire and not pay the premium the following year because NFIP makes it so difficult it could take some time months, and frequently policies expire before the cancel request is approved. Less headache to just let it run its course.
We need to discuss refunds if you can successfully cancel your flood insurance policy. Again most of the time, the refund is so minor compared to the amount of time it will take for you to acquire all the required documents, so the best course of action is to just let the policy expire.
If you paid for a policy for a loan closing and that loan didn’t close, you just need to provide documents that say that the property didn’t transfer to you, and you will likely get a full refund.
So the private flood policies have a 25% fully earned clause, so basically, 3 months of coverage, so if you are going to cancel. You are doing it within the first to the third month of the term. You should keep the coverage until the 25% earned is done. That way, you still have coverage (God forbid something to happen, which sometimes does). And then cancel if you still desire the 3rd month, and if done right, you will get 75% of the premium back.
Some underwriters are better at sending out a refund check promptly; some will send it to the client directly, and some will send it to the agent a month after the approved cancel request, so you will have to be a little patient.
If you are getting a refund, the most important detail has an appropriate address to which the check should be mailed. You would be surprised (or not) how many people sign that the address on the cancel request is the address they want the check to go to and don’t even consider that the address is a structure they do not live in anymore. So please check your mailing address and ensure it is the best palace to receive your refund.