Flood insurance is quickly becoming an essential policy for most Americans across the country. Unfortunately, for many it took a rather rude awakening for them to realize how essential a good flood insurance policy is. Even more unfortunately, it looks like Congress is not yet on the same page.
The National Flood Insurance Program (NFIP) is set to expire on July 31, 2018. It’s future is very much still up in the air. This expiration comes after Congress decided to grant a four month extension to the program back in March. Clearly, this is not a good way to run a service that is so vital to so many Americans.
FEMA released a statement about the impending situation, saying that “FEMA and Congress have never failed to honor the flood insurance contracts in place with NFIP policyholders. In the unlikely event the NFIP’s authorization lapses, FEMA would still have authority to ensure the payment of valid claims with available funds.”.
That means that even if the NFIP funding lapses, FEMA will be able to honor valid claims. It also means that if your coverage is lapsing or if you are looking to get a new policy, that you will not be able to until the funding situation gets resolved—if it ever does. This could be a huge problem for anyone in the midst of buying a home, particularly if the property is in a floodplain. “Nationwide, the National Association of Realtors estimates that a lapse might impact approximately 40,000 home sale closings per month,” said Fema.
GNO Inc. president and CEO Michael Hecht penned a letter to the editor to NOLA.com about some of the reasons behind delaying the reauthorization of the NFIP. According to Hecht, “Some inaccurate narratives have taken hold and delayed progress. One of these is that NFIP is widely abused by ‘rich people for their beach homes…The reality is quite different: 98.5 percent of all NFIP policies are in parishes or counties with a median household income below $100,000, and 62 percent of all NFIP policies are in parishes or counties with a median household income below the national average of $53,889.”.
The reality of the situation is that if Congress does not get their act together to address the National Flood Insurance Program, a lot of Americans are going to find themselves in a very tight, and potentially wet, spot. Flood insurance is no longer a nice to have for many U.S. citizens, it’s an essential. This is certainly an issue worth keeping a close eye on.