The National Flood Insurance Program Has Been in the News: Here’s What You Need to Know

The National Flood Insurance Program (NFIP) covers about five million policyholders nationwide… and it’s set to expire on July 31. Yes, right in the middle of hurricane season. It is no secret that the government-run flood program needs help. In 2017, the United States experienced a lot of extreme weather which resulted in billions of dollars in losses. The severity of storms such as Hurricanes Harvey, Irma and Maria exposed the vulnerabilities of the NFIP.

Originally the NFIP was set to expire in September 2017. Congress voted to push this deadline back with a temporary extension. This extension was part of the $1.3 trillion omnibus spending bill signed by President Donald Trump on March 23, 2018. Now, with July 31 fast approaching, Senators John Kennedy and Bill Cassidy of Louisiana added an amendment to the Senate farm bill (titled the Agriculture and Nutrition Act of 2018) to reauthorize the NFIP for the next sixth months. On June 28, the Senate passed their version of the farm bill, which should ensure this program will not lapse, for now.

With this subject heavily in the news these days, it is important to not overlook the importance of flood insurance coverage. Ann Cairns writes a column called Your Money Adviser for the New York Times. Recently, she wrote an column on this very subject. We agree with her statement:

“Both insurance officials and consumer advocates recommend that homeowners not let the political debate over renewal of the flood program delay their purchase of coverage.”

There is often a 30-day waiting period for new federal flood insurance policies, so it definitely makes sense to buy a policy as soon as possible. In the case of a lapse, the NFIP would not be able to write any new policies after the deadline or renew existing policies until the program is reauthorized. The NFIP would still be able to process and pay claims, as long as funds are still available.

All too often, people do not realize that flood insurance is not included under their homeowner’s policies. As the United States’ most common natural disaster, areas considered to be high risk and non-high risk have experienced flooding in recent years. Policies cover up to $250,000 in damages to the home’s structure and up to $100,000 for its contents. It is important to review policies carefully to learn what is covered and what is not. Extra coverage may be bought from private insurers. Rose & Kiernan can help you navigate through your personal insurance needs.

This same statement applies to business and commercial property owners. Many commercial property packages typically do not cover or restrict coverage for flood or surface water damage. Flood insurance is critical for businesses located near a river, ocean, or bay, or in areas where major storms are common. The NFIP’s General Property Form covers commercial policyholders for up to $500,000. There are also opportunities to purchase additional coverage through private insurers for amounts in excess of this maximum. Rose & Kiernan can also help you navigate through your business insurance needs.

We will continue to follow this story for any further updates to the NFIP in the future. The topics of reforming the National Flood Insurance Program and also expanding private flood insurance have both been topics discussed in Congress.

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