TWIA Agent Bulletin: Flood Insurance Requirement Change

Under the Dome HeaderRecently, TWIA and the Texas Department of Insurance (TDI) received important feedback about the flood insurance requirements from policyholders and the agent community. The feedback centered on the interpretation of TDI Rule 28 Texas Administrative Code (TAC) §5.4904, that any repairs which required a certificate of compliance (WPI-8) would then trigger the flood insurance requirement. That requirement has changed.

TDI communicated to TWIA a new/clarified interpretation of TDI Rule 28 TAC §5.4904 this past Friday, July 22, 2016.

TDI’s new/clarified interpretation of TDI Rule 28 TAC §5.4904 is, “the Insurance Code §2210.203(a-1) and 28 TAC §5.4904 do not require policyholders to obtain flood insurance following replacement of a damaged roof or any other repair activity, even if the repair requires a certificate of compliance (WPI-8).”

This new/clarified interpretation of the TDI Rule is the only aspect of the flood insurance requirement that has changed.

The law initiating the flood insurance requirement went into effect on September 1, 2009. The requirement therefore applies to structures that have been constructed, altered, remodeled, or enlarged on or after September 1, 2009, that required the applicant to obtain a certificate of compliance (WPI-8) through TDI’s Windstorm Inspection Program and that meet the conditions set forth below.

The flood insurance requirement is triggered when all of the following conditions exist:

1.  All or any part of the property is located in one of the designated National Flood Insurance Program (NFIP) flood zones (V, VE or V1 – V30).

2. Flood insurance is available for the property from the NFIP.

3.  The structure is being constructed, altered, remodeled, or enlarged, all of which require a certificate of compliance (WPI-8), beginning on or after September 1, 2009.

Q. Can my TWIA policyholder cancel their NFIP flood insurance policy?

A. You should review the terms and conditions of the NFIP policy and the policyholder’s mortgage loan to determine whether to cancel the policy. If the condition that triggered the purchase of flood insurance was a repair (as defined by 28 TAC §5.4904(c)(1)) that required a WPI-8 , the flood insurance policy is no longer required to be eligible for TWIA coverage.

Please note this is only a change in TDI’s interpretation of their Rule 28 Texas Administrative Code §5.4904. There have been no changes to the statutory requirements (the law) for flood insurance, Insurance Code §2210.203(a-1) : Properties located in flood zones V, VE, or V1 – V30 that were constructed, altered, remodeled or enlarged on or after September 1, 2009, and that can obtain flood insurance through the National Flood Insurance Program, must continue to provide proof of flood insurance in order to be eligible for a TWIA policy.

For your reference, TWIA’s website provides more important information.

TWIA realizes that changes such as this can translate into frustration for agents doing business on the coast. That is why they wanted to make you aware of this change as soon as they could and acknowledge that the flood insurance requirements information previously communicated by TWIA are no longer applicable.

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