Thursday, December 27, 2018

Update: Flood insurance may be available during federal government shutdown

Update: We are seeing reports that NFIP will sell flood policies during the federal government shutdown, a reversal of its earlier announcement. While the FEMA website still says otherwise (see below), we've seen reports that NFIP is selling through its Write Your Own (WYO) partners, which are available from licensed agents and brokers.

Here's our original blog post:

During the federal government shutdown that started Dec. 21, the National Flood Insurance Program (NFIP) will not sell new flood insurance policies. According to the Federal Emergency Management Agency’s (FEMA) website:

“Policies that were in force before midnight on December 21, 2018 remain in force. The NFIP will process and pay claims under those policies as usual from the National Flood Insurance Fund and the National Flood Insurance Reserve Fund until depleting these funds, but will not have authority to borrow any additional funds from the U.S. Treasury. Existing flood insurance policies remain valid regardless of FEMA’s capacity to pay claims. FEMA and Congress have never failed to honor the NFIP’s contracts with policyholders.

The NFIP and its WYO partners (Write Your Own -- read more about what that means) may not issue new contracts for flood insurance during a lapse in authority unless Congress passes legislation reauthorizing the NFIP. During a lapse in authority, the NFIP will have limited ability to issue new policies, issue increased coverage on existing policies, or issue renewal policies.”

What does this mean for homeowners?
According to the Insurance Information Institute, Washington state had approximately 36,831 flood insurance policies through the NFIP as of 2017, the most recent data available.

Some mortgage lenders require homeowners to have flood insurance before they can close on the sale of a house. According to Reuters, it could affect up to 40,000 home sales each month.

While federal flood insurance policies are temporarily unavailable, there may be some flood policies available on the private flood insurance market. The best way to find out is to contact your insurance agent or company to ask if they can help you find private flood insurance.

Washington state Insurance Commissioner Mike Kreidler supports the development of a private flood insurance market, which would give homeowners and business owners more options and coverage choices for insuring their property. That could be one of the focus areas that would be included in a Washington state disaster resilience working group if Kreidler’s bill passes the state Legislature next year.

If you need help with an insurance problem or question, contact our consumer advocates.