Flood Insurance Lapses

03/29/2010

Citing budgetary concerns, Senator Tom Coburn recently blocked the passage of a bill that would extend the National Flood Insurance Program through the end of 2010.

The program, scheduled to expire on March 28, will lapse until Congress returns from vacation on April 12. During that period, NFIP, which is operated by the Federal Emergency Management Agency, will not be able to issue or renew policies.

In addition to inconveniencing homeowners, the impasse could prevent real estate transactions from closing, according to a recent report by InsuranceJournal. Those who already had insurance were not affected by the lapse.

In addition to extending NFIP, the legislation would offer COBRA and jobless benefits. Passage of a similar bill was delayed at the end of February, causing a brief lapse until March 2.

"The NFIP expiration last month caused headaches for insurance agents and their customers as well as delays for some consumers waiting to close on the sale of a property within a flood hazard area," the report said.

Policies purchased through NFIP have a 30-day waiting perod. Recent information from the National Weather Service showed that one-third of the country may face flood risk this season.

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