What is a prerequisite for coverage to be effective under a flood policy?

For a flood insurance policy to be effective, it is essential that the premium is paid. The payment of the premium is a foundational requirement that signifies the policyholder's commitment to the insurance contract. In essence, without the premium payment, the insurer cannot provide coverage, as there is no financial consideration exchanged that forms the basis of the contract.

While completing the application provides necessary information for underwriting, it does not by itself initiate coverage without premium payment. Additionally, while some policies may have a waiting period, particularly after the initial application, this waiting period typically begins after the premium has already been paid. Inspection of the property may be a step in some underwriting processes but is not a prerequisite to activate a flood policy. Therefore, the payment of the premium is the crucial first step to ensure that coverage is in effect.