If you want to make changes to your flood insurance policy – like reducing the amount of coverage on your structure (home) or personal property (contents), or switching to private flood insurance – then you should not wait until your policy renewal date to do this. About 90 days before your policy renewal date, you should communicate with your insurance agent and lender, in writing, that you are planning to make changes to your insurance and that you do not want your bank to pre-pay and renew the policy. It might be smart to have them acknowledge this in writing too.
When your renewal notice arrives in the mail, there’s a good chance your bank has already received it too. It is important to talk to your insurer and lender in advance because, through our pilot program, we have seen instances where the bank simply gets the invoice and simply pre-pays it. Unfortunately, once the check is cashed by FEMA or the insurer, it is incredibly hard – if not impossible – to make changes or cancel the policy. The best thing to do if you want to change your flood insurance is to plan and communicate with your bank and lender. If you want to make sure your bank doesn’t accidentally pre-pay, you can also tell your insurance company that you want the renewal notice sent directly to you – not your lender – but then you’ve got to make sure you have a new policy in place by renewal, otherwise you could pay penalties or risk losing valuable subsidies.