August and September are the most active months for tropical storms and hurricanes. In fact, almost 80% of all named-storms develop in these two months.
Because of this, I am sometimes asked these two questions:
- Can I wait until a hurricane is approaching to purchase flood insurance?
- Can I purchase flood insurance for the months of August and September, and then cancel the policy?
While good questions, the answer is usually No.
The 30 day waiting period
To prevent people from purchasing flood insurance only when a storm is approaching, the National Flood Insurance Program (NFIP) has implemented a 30 day waiting period from the date the policy is purchased. So if you have been considering flood insurance, the time to buy is well before the storm season starts, not when a storm is approaching. There are a few exceptions to the 30 days rule, some of which include:
- Your mortgage company requires flood insurance in order to obtain financing.
- Additional insurance is required as a result of a map revision.
- Additional coverage is being requested at the renewal of a policy.
Prior to 1994, the waiting period was only 7 days. Some people successfully secured flood insurance when tropical waves formed off Africa and had the coverage in force in time for the approaching storm. Now that the waiting period is 30 days, it’s much harder to be a speculative flood insurance buyer.
The Cancellation Provisions
The NFIP also will not allow a person to cancel their policy in the middle of the policy term (or after hurricane season is over, unless the policy expires). There are a few exceptions:
- You sell your property (proof of sale will be required)
- Your mortgage company required flood insurance and you paid off the mortgage
- Your flood zone changes from a high risk zone to a lower risk zone
Why are these rules in place?
These rules help keep premiums lower for everybody. With out these rules, claims would increase due to more people buying insurance only when the odds of needing it are increased. The increase in claims combined with reduced premiums (due to short term policies) would result in larger premiums for everybody else. Besides, the best insurance plan is the one that protects you year round, no matter when or if a storm will come.
With the peak of hurricane season approaching, please contact us to review your flood insurance needs!