NFIP Lapses...Again!
By Amy Kudlacek
Once again, Congress allowed the National Flood Insurance Program to expire on 2/28/10. Actually, the House passed an extension (only to 3/31/10), but the Senate didn't do the same. Here's what FEMA had to say:
Authorization for the National Flood Insurance Program expired February 28, 2010. If reauthorization takes place after this date, policies that are already in the process of being issued or renewed will be issued when Congress re-authorizes the National Flood Insurance Program. Payments for claims on existing policies will not be impacted; such policies will continue uninterrupted.
The Senate reconvened on 3/2/10 and it's expected they will reauthorize the NFIP, but nothing has occurred yet. FEMA wrote a memo to insurance companies with recommendations and guidance on what to do during the lapse (actually from a 10/27/09 memo). This memo indicates that if Congress allows the NFIP to expire:
The NFIP will not be able to: (a) issue new policies, (b)increase coverage on existing policies, or (c) issue renewal policies.
Here's a story in Consumer Reports from 3/1/10 giving you more details.
Most likely, the Senate will pass an extension soon (possibly today) as has happened when the NFIP has expired in the past. Until then, if you have a loan secured by property in a Special Flood Hazard Area, you cannot close the loan as you cannot obtain flood insurance at this time.