Flood Insurance

While Awaiting Congressional Reauthorization, Property Owners Located In Flood Prone Areas May Be Left Unprotected As Hurricane Season Approaches

Insurance companies issue flood policies as part of the National Flood Insurance Program (NFIP) run by the Federal Emergency Management Agency (FEMA).   The NFIP operates under authority from Congress that has to be renewed periodically.  While there have been several lapses in authority for the NFIP and Congress has in the past reauthorized the program retroactively, there is currently uncertainty and confusion within the industry. 

On April 15, 2010, Congress approved legislation reinstating NFIP until May 31, 2010, retroactive from March 28, 2010, when the fourth temporary extension since the program’s authorization originally expired on September 30, 2008.   As of June 16, 2010, NFIP remains in limbo with the Senate having voted down the bill which would have extended the program through December 31, 2010. 

NFIP is currently experiencing yet another hiatus – a period without authority to issue new policies; increase coverage on existing policies or renew policies for which application and premium dates are on or after June 1, 2010, causing concern to property owners who need to renew their flood insurance policies or who are required to purchase flood insurance as a condition for obtaining mortgages. 

FEMA has issued a Memorandum dated May 28, 2010 stating that the hiatus period is expected to end soon and setting forth guidance during the hiatus period and a national insurance agent group is urging Congress to stop the havoc of short-term NFIP extensions and address a long-term solution.  There are currently three bills before Congress for consideration; one granting NFIP a five-year reauthorization rather than the current practice of renewing the program every couple of months; another adding wind perils to NFIP flood insurance policies which appears to be opposed by the industry; and HR 4213 (the “Tax Extender Bill”) renewing the NFIP through the end of this year, which has been and continues to be tied up by bipartisan squabbling.  

Information of changes to the reauthorization status is available at http://www.fema.gov/business/nfip/index.shtm, or from your insurance agent.

   –Frances T. Mezzatesta, Certified Paralegal

NOTE UPDATE: the President has signed the National Flood Insurance Program Extension Act of 2010, H.R. 5569, which Congress passed on June 30, 2010 extending the NFIP through September 30, 2010, making it retroactive to cover the lapse period from June 1, 2010, to the date of enactment of the extension.  

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One Response to Flood Insurance

  1. Hussain July 9, 2010 at 4:34 pm #

    Thank you. Good article.

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