At loan closing we had a flood application and a copy of the check for the premium. When the declaration page was provided, it was dated 6 days after closing. We called the insurance agent and she stated that "it had to go to Washington and they had to wait for the check to clear".

Is the date on the declaration page going to be a problem?

Why would it have to "go to Washington"?

Yes, you will have a problem. The only acceptable proof of coverage is a declarations page OR an application with a paid receipt. Copy of the check is not acceptable, the argument is that that you have no way of knowing when they gave the check to the insurance company. The insurance co. should be able to provide you with a receipt showing when they received the payment.

Agents have to submit the application and premium to the NFIP. I can't recall the # of days but if not received within X days of the application the policy goes in effect at 12:01 AM the next day from receipt by the NFIP.

As for waiting until the check clears, I've never heard of this before.

Sounds like the agent was late in sending the application and premium to the NFIP.

If the effective date of the policy is after the loan's closing then that could indeed cause you issues with an examination.

Thanks SM and Dan. I thought the agent's answer was a little "off".

I've never heard "waiting for the check to clear" either. I believe the agent didn't get their check to the NFIP.

To add to GL's post aboce - we do have a fax from the insurance agent, to the lender, of the fax cover page, the application and a copy of the check. Said fax, application and check are date before the loan closed and funded.

There's not much you can do now. Hang on to the documentation to show you did all you could.

As always David, Dan, SMQ you're gems.

We've had a situation arise today that I'm not sure about. We've always waited to receive the dec page for the flood insurance before closing any loan. Is it ok to only have a paid receipt from the agent?

No, you must also have a copy of the application. The application will have the zone listed so you can verify there will be proper coverage.