Congress Convened Before Passing Bill to Reauthorize NFIP
According to a bulletin I just received from Travelers Insurance Company regarding the National Flood Insurance Program (which pertains to all companies that write policies with the National Flood Insurance Program):
Congress has adjourned without passing a bill that would reauthorize the National Flood Insurance Program (NFIP) beyond March 28, 2010. This means that the program WILL EXPIRE at midnight on March 28, 2010.
The Senate is not due to vote on the bill to extend the NFIP until at least Monday, April 12, 2010. This means we will be faced with a lapse in statutory authority to issue or renew flood insurance policies pursuant to the NFIP. Based on past experience, this lapse means that we are unable to issue any new or renewal flood policies, or make coverage changes on existing flood policies.
FEMA has advised us to pend premium transactions received after March 28, 2010, until, and if, Congress and President Obama pass and sign the bill that re-authorizes the NFIP. New and renewal policies or coverage changes will go into effect at the earliest date, which is consistent with the receipt of premium and waiting period rules of the NFIP and the expected extension of authority for the NFIP. For applications made in connection with a mortgage loan, if the extension of the authority to issue flood insurance policies under the NFIP is granted retroactively, new policies will be issued effective as of the date of the loan closing. Additionally, if Congressional extension is granted retroactively, any claim for insurable losses suffered from the effective date for the policy term will be honored by the NFIP, even if the authority is granted after the date of such losses.
Please note that policies or coverage changes will only be effective if the extended authorization of the NFIP becomes law, which is expected. If Congressional extension is not granted within a reasonable period, premiums will be refunded. In this event the requested coverage will not be provided and no protection of flood insurance existed during this period.
At this point in time the team at Van Beurden Insurance Services, Inc. is currently trying to decipher what this will mean for our current clients as well as our new customers who will be hoping to close escrow on homes located in a designated flood hazard area. Stay tuned. We are on the job even though Congress has decided not to be!