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May the bank force place flood insurance on the 1st day after a flood policy expires or must the bank send the 45-day notice letter and wait until the 46th day to force place the flood insurance?

A bank may force place the first day after the policy lapses. Please see the following from the ABA Staff Analysis.

Lenders or servicers may force place coverage anytime during the 45-day notice period, although they must place it by the end of the period. Policies may be backdated to the day the policy lapsed.

  • In the example provided in the Final Rule, if a policy expires on June 30th, the policy can be placed as early as July 1, but must be placed no later than on August 15th.
  • As a practical matter, the Agencies suggest that lenders or servicers may choose to force-placing a policy as of the date of lapse of the previous policy but wait until the 45-day notice period has expired to collect premiums for coverage beginning at the date of lapse may help lenders and servicers avoid the administrative burden of refunding premiums for any overlapping coverage.

(May 2018)

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