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Policy Issuance 4-98

Subject: NFlP Premium Refund Rules

Background: Policy Issuance 4-95 dated September 12, 1995, clarified the misrating refund rule and set forth the situations when the NFIP multiple year refunds are authorized. Included in Policy Issuance 4-95 was a provision that a return of premium is allowed back to the inception of the policy subject to the six-year statute of limitations, where the NFIP policy was issued and it is later discovered that the risk is not eligible for coverage. Also, Policy Issuance 4-95 required that refunds beyond the current and one prior year be processed by the NFIP Bureau and Statistical Agent (the Bureau).

Policy Statement: The Mitigation Division has recently reconsidered this six-year limitation and has decided it is appropriate to allow the return of premium back to the inception date of the policy in such cases so long as the insured can provide documentation of the premium paid. The statute of limitations is hereby waived for those cases where the NFIP policy was issued and it is later discovered that the risk is not eligible for coverage under the NFIP rules.

Also, Mitigation Division has reconsidered the requirement that refunds for more than two years be processed by the Bureau, and has decided that requests for refunds for more than two years may be processed by the writing company or may be sent to the Bureau following the processing procedure outlined in Policy Issuance 4-95. WYO companies who choose to process refunds more than two prior years must submit the appropriate policy transactions required under the Transaction Record Reporting and Processing Plan on all applicable policy terms.

Last Modified: Wednesday, 11-Aug-2010 12:30:39 EDT