National Flood Insurance Program

I have been waiting to write a blog on the importance of flood insurance until the National Flood Insurance Program (NFIP) Extension Act of 2010 was signed into law.  Congress passed the bill on June 30th and the President has signed it into law.  This is welcome news although the current law only reauthorizes the NFIP until September 30th, 2010.  Congress originally created the NFIP in 1968 (after Hurricane Betsy in ’65) but the program has had several lapses in authority.  In this most recent lapse, the NFIP has been unable to issue new or renewal policies since it was shut down May 31st, although it continued to pay claims.  It is the fourth time in the past year that the program has been interrupted due to the failure of Congress to reauthorize for an extended period.  One would think that Congress, given that it created the NFIP, would enact a long term extension of the program rather than have individuals and businesses experience additional hiatuses where flood insurance policies can’t be issued or renewed.  At least that’s my opinion.

Flood insurance is important but a lot of people don’t take advantage of it.  A recent Mason-Dixon Poll indicated that 51% of people surveyed in hurricane vulnerable Gulf and Atlantic coastal states within 30 miles of the coast don’t have flood insurance and another 8% were not sure if their policy covered flood damage.  Given these tough economic times and the mixed messages from Congress, I can understand why many people either don’t get flood insurance or have failed to renew their flood policies.  But not carrying flood insurance in a state like Florida that is so vulnerable to tropical systems and heavy rains is not wise.

Most homeowners’ insurance policies do not cover flood damage.  Without flood insurance, homeowners are responsible for the entire cost of repair for flood damages.  According to data from the National Flood Insurance Program, about 25% of all flood insurance claims come from moderate-to-low risk areas.  For homes and businesses in these moderate-to-low risk areas, lower-cost policies are available for as low as $119 per year.  It is important to note that there is typically a 30-day waiting period between the time you write a check for the flood policy and the day that policy goes into effect. 

A wealth of information on how to prepare for floods and how to purchase a flood insurance policy can be found at FloodSmart.gov.  After doing a little research at that web site, I encourage people to contact their agent who carries their homeowners or business insurance and ask about flood insurance.  Don’t wait until it is too late.  Hurricane season is also flood season.

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