An extension of the National Flood Insurance Program (NFIP) was signed into legislation by the President and passed by both houses of Congress on February 9th, 2018. This extension guaranteed that FEMA would retain its ability to provide new federally backed insurance policies as well as renew policies for millions of properties across the country.  Once again faced with a deadline, Congress must reauthorize the NFIP no later than 11:59 p.m. on March 23rd, 2018.

While a lapse in NFIP authorization is rather unlikely, it is important to identify potential implications should it occur. In the event of a lapse, FEMA would retain the ability to ensure the payment of valid claims on existing policies with the program’s remaining funds. A non-renewal, however, would end the NFIP’s ability to sell and renew policies around the country. Banks and other lending institutions would, potentially, be hesitant to approve mortgages since they will not have the security of federally backed insurance. An estimate by the National Association of Realtors places the number of home closings impacted by an NFIP lapse at somewhere around 40,000 per month.

The burden would then be transferred to the private market to fill the void, which carries its own set of potential risks. First and foremost, it would end up taking money away from the NFIP whenever it did get renewed. Less NFIP policies means less money in the system which could make it even harder for the program to pay claims. Private market insurance also carries with it the potential risk of higher insurance premiums as well as being less regulated than the NFIP.

One of the best ways to protect yourself is to ensure you have an accurate, certified, and insured MyFloodStatus Flood Determination. Knowing your true flood risk will enable a homeowner to properly insure themselves if an NFIP lapse does occur. Flooding will happen, but incorrect determinations should not. Learn how our low-cost, structure-based reports help you confirm, challenge, KNOW the true flood status.