OCTOBER 2021 RISK RATING 2.0 NFIP FLOOD INSURANCE MANUAL 2 • 17
2. Before You Start
connection with making, extending, increasing, or renewing a loan secured by the insured
property but must confirm timely receipt of the Application Form (or endorsement request)
and full amount due. If a loss occurs during the first 30 days of the policy or additional or
increased coverage, the insurer must obtain documentation of the loan transaction (such as
settlement papers) to validate that a loan transaction occurred before paying the loss.
Table 10 shows how to determine the effective date of a new policy or endorsement to add
or increase coverage that may be eligible for the loan exception. If the effective date is the
date and time of the loan closing, the declarations page should state the effective date and
specify that the coverage is effective “at the time of loan closing” (versus 12:01 a.m.). The
insurer only needs to obtain documentation of the specific time of the loan closing if a loss
occurred on the loan closing date, to determine whether the loss occurred after the new,
additional, or increased coverage began (see additional guidance in the NFIP Claims Manual).
Table 10. Effective Date When Potentially Eligible for the Loan Exception
RECEIPT DATE EFFECTIVE DATE EXAMPLE
If the lender, title company, or settlement attorney pays the premium
If the policyholder requests the policy (or
additional or increased coverage) on or
before the loan transaction closing and
the insurer receives the Application Form
(or endorsement request) and full amount
due within 30 calendar days from the
closing (closing date plus 29 days)
The effective date will
be the date and time
of the loan closing.
If the loan transaction date is on
April 3 and the application date is
April 3; and the insurer receives the
Application Form (or endorsement
request) and full amount due, paid
by the lender, title company, or
settlement attorney on April 20; then
the policy effective date is April 3 at
the time of loan closing.
If the policyholder requests the policy
(or additional or increased coverage) on
or before the loan transaction closing,
and the insurer receives the Application
Form (or endorsement request) and full
amount due after 30 calendar days from
the closing (closing date plus 29 days
or more)
The effective date will
be 12:01 a.m. (local
time) on the 30th
calendar day after the
insurer’s receipt date.
If the loan transaction date is on
April 3 and the application date is
April 3; and the insurer receives the
Application Form (or endorsement
request) and full amount due, paid
by the lender, title company, or
settlement attorney on May 10; then
the earliest policy effective date is
June 9.
If the policyholder or another party not listed above pays the premium
If the policyholder requests the policy (or
additional or increased coverage) on or
before the loan transaction closing, and
the insurer receives the Application Form
(or endorsement request) and full amount
due within 10 calendar days from the
loan transaction closing (closing date plus
9 days)
The effective date will
be the date and time of
the loan closing.
If the loan transaction date is on
April 3, the application date is April
3, and the insurer receives the
Application Form (or endorsement
request) and full amount due paid by
the policyholder on April 7, then the
policy effective date is April 3 at the
time of loan closing.
If the policyholder requests the policy (or
additional or increased coverage) on or
before the loan transaction closing, and
the insurer receives the Application Form
(or endorsement request) and full amount
due after 10 calendar days from the
closing (closing date plus 9 days or more)
The effective date will
be 12:01 a.m. (local
time) on the 30th
calendar day after the
insurer’s receipt date.
If the loan transaction date is on
April 3, the application date is April
3, and the insurer receives the
Application Form (or endorsement
request) and full amount due paid
by the policyholder on April 15, then
the earliest policy effective date is
May 15.