Force Placement Education

We've attended many Flood webinars but somehow we struggle with the force placement of flood insurance and with the differences in NFIP and MPPP and Private and when there can or can't be one or two policies. Is there anything out there that can educate us just on these differences? I really hate to have my education come at the hands of our examiners next time they come. Anyone have any ideas?

You could check the Banker Store for any archived flood training. David Dickinson's flood webinars are AWESOME!

Other than that, here's what I know about the stuff you specifically talked about in your post:

NFIP policies are written through FEMA. The write your own (State Farm, Allstate, Nationwide, USAA, Travelers, etc) companies use these policies. You can only have one NFIP policy per structure. If you have more than one, only the first policy is valid, all subsequently issued policies will be denied in the event of a loss claim. Haven't experienced it, but I'm sure if there are multiple NFIP policies on a structure, loss claim payouts would probably be delayed until they could sort out the mess of the multiple policies.

MPPP is the Mortgage Portfolio Protection Program and only uses NFIP policies. Like above, you can only have one....so if you are forceplacing through MPPP on a borrower who has an NFIP policy (let's say they don't have enough coverage and refuse to increase their borrower policy), any policy forceplaced through MPPP will be useless as there can only be one NFIP policy per structure. The only real difference between NFIP and NFIP policies issued through MPPP are the rates (MPPP is much higher) and you have to follow special rules on your notifications during the 45-day notification period.

Private policies are a special animal. In order for you to accept them, they must be as broad and inclusive in coverage as an NFIP policy, and must benefit the property owner. As far as whether or not you can have multiple policies, it will depend on your contract with your provider. We use private policies, and during some research with our provider, I learned that we could in fact issue a policy even if there was an NFIP policy on the structure (think about the example I gave in the MPPP paragraph), BUT we had to have a special concurrent coverage rider added to our policy. That concurrent coverage rider works like coordination of benefits with health insurance, where the private policy company would coordinate with the NFIP policy to figure out who would pay what up to the maximum payout available (ie-the lesser of the maximum available under NFIP or the insurable value of the structure).

Hope that makes some sense.

Thanks! That helps a lot and we are already signed up for a BOL webinar on the subject.

Wow Dani - nice job. That is the most succinct and clear explanation that I think I have ever read. I'm going to copy that one into my archives.

Thanks Randy!