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Hazard Insurance Policy and NFIP

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Question: 
Is it true that the NFIP will only pay out if the borrower has hazard insurance in place on the property? Our bank's practice is to get hazard insurance at closing, but doesn't monitor for it after that. If the hazard insurance policy has expired and there is a flood, will the NFIP pay out?
Answer: 

There is absolutely no relationship between the two types of policies, they insure totally different risks.

First published on 02/14/2021

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