National Flood Insurance Program (NFIP): Reauthorization*

(Article published on March 22, 2018) 

Congress is required to periodically renew the NFIP’s statutory authority to operate. On February 9, 2018, the President signed legislation passed by both houses of Congress that extended the National Flood Insurance Program to March 23, 2018.  Congress must reauthorize the NFIP, which is administered by FEMA, before midnight on March 23, 2018. By the time some of you read this, you will know if the program was reauthorized or not.

FEMA and Congress have never failed to honor the flood insurance contracts in place with NFIP policyholders.  If the NFIP’s authorization lapses, FEMA would still have authority to ensure the payment of valid claims with available funds. However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation. The National Association of Realtors estimates that a lapse might impact approximately 40,000 home sale closings each month.   If flood insurance is not available, home closings, where banks require flood insurance, may be in jeopardy and homes that cannot get flood insurance and suffer losses will have no recourse.

A timely, multi-year reauthorization is critical for insured survivors and businesses affected by the devastating impact of last year’s hurricanes and past events that are still under resolution.  It’s hard to understand the logic in holding home owners and businesses hostage to extending the NFIP for such short time frames.  It’s understandable that the work needed to stabilize the program is complicated and needs lots of research to be sure that changes are implemented fairly.  However, policyholders need confidence not only that FEMA can pay flood insurance claims, but also that the NFIP will be able to sell and renew policies to help them protect against future flooding. Flood insurance – whether purchased from the NFIP or through private carriers – is the best way for Americans to financially protect themselves from losses caused by floods.

On April 28, 2018, I hope you will join SoutholdVOICE at an Information Session on this topic at the American Legion Hall on Main Road in Southold.  Save the date and stay tuned for more details. 

*Source: Information from FEMA and National Association of Realtor’s websites and interviews with subject matter experts.