Renewals are handled similarly; offers to renew a policy cannot be made during the lapse in authority. If a renewal is offered before the lapse in authority and premium payment is received before 30 days have passed, then the policy may be renewed. The same applies if underpayment was made as long as the difference is made up within 30 days. If payment is received beyond the 30 days, the policy may not be renewed. If the renewal requests increased limits that are within the inflation factors on the bill or the next higher Preferred Risk Property (PRP) or a newly mapped limit, it is processed the same as policies with premiums received within or after the 30-day grace period, whichever applies. If the renewal requests a higher limit than the inflation factor or PRP or newly mapped limit, the amount above the existing coverage amount must be handled as if it was a new policy or a request to increase coverage as discussed earlier.

 Endorsements that increase coverage are handled the same as new policies or requests to increase coverage, as described above. Endorsements not increasing coverage are handled using existing NFIP rules, and policies may be assigned during the lapse. Cancellations may be handled normally.

 Policies that are in force before midnight of the last effective day of authorization will remain in effect until their expiration date, and any claims filed will be handled as usual. If a policy is in force after the last day of authorization, claims on those policies are handled as usual as well. If a claim occurs under a policy that was not issued due to a lapse, it can still be investigated under a reservation-of-rights letter or a non-waiver agreement, up to the point of payment. Payment will not be made if the NFIP is not reauthorized. If the NFIP is reauthorized retroactively, then the policy will be issued and the claim paid as appropriate. If the reauthorization is not retroactive, and the NFIP is authorized with a lapse, policies without a waiting period, which are the loan closings, would become effective the date of the reauthorization. Policies with a 30-day waiting period would become effective 30 days after the date of reauthorization. For example, the date of the lapse is September 30, 2023. The NFIP is reauthorized October 30, 2023 with a lapse; the reauthorization does not go back to September. Policies that involve loan closings will be effective the date of reauthorization, October 30. Policies with a 30-day waiting period will be effective November 30. When reauthorization is not retroactive to the first day of the lapse, policies with a 1-day waiting period become effective one day after the effective date of the reauthorization. If reauthorization is effective October 30, the policy is effective October 31.

During the shutdown in 2018 the NFIP made a number of recommendations to carriers while the program was lapsed. All premiums for changes or policies effective on or after the first day of the lapse should be held in abeyance, as should applications. Since the acceptance of applications and premiums gives the impression that a contract is in force, carriers should advise applicants in writing that insurance is unavailable by law, pending reauthorization. The NFIP provided a sample letter for carriers to use to notify applicants of the situation.

Last revised 2018