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NFIP Lapses

March 1, 2010

From Insurance Journal

Flood Insurance Program Closed; No Policies Until Senate Votes

By Andrew G. Simpson
March 1, 2010

The Senate last week failed to vote on bills to extend several federal programs including jobless benefits, COBRA subsidies, transportation project funding and flood insurance before these programs expired Feb. 28.

The article continues, after some political editorializing:

The Federal Emergency Management Association (FEMA), which manages the flood program, issued a bulletin on Feb. 27 with guidelines for insurers and agents participating in the program in the event of a lapse. The agency did say that “any hiatus period should be brief, and most of the nearly 5.6 million flood insurance policyholders nationwide will not be affected.”

New policies for which insurers received payment on or before midnight of Feb. 28 will be issued and will become effective after the last day of effective authorization, regardless of the policy effective dates.

The NFIP recommends that companies writing flood insurance hold any premiums, renewals or added coverage endorsements received on or after Feb. 28.

Eventual reauthorization will likely be granted retroactively, and insurers can issue policies effective as of the date they received payments, according to FEMA.

Policies with a 30-day waiting period would become effective when both the 30-day waiting period has ended and Congress has reauthorized the NFIP.

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One Comment
  1. John Shepard permalink

    After two days of fielding anxious inquiries from homeowners, area insurance agents sighed with relief Wednesday.

    They woke up to news that the U.S. Senate had reauthorized the National Flood Insurance Program after a legislative stalemate halted new policies and renewals on Sunday.

    The Senate approved stopgap legislation late Tuesday night that extended funding for a host of programs, including jobless benefits. North Dakota Rep. Earl Pomeroy pledged to ensure the two-day lapse of the flood program does not affect homeowners, who face a 30-day stretch between the time a policy is purchased and the time it goes into effect.

    “I know there’s strong bipartisan support for holding insurance applicants in North Dakota and across the country harmless,” Pomeroy said. “Given our situation, that two-day window could be critical.

    http://www.inforum.com/event/article/id/270960/

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