Congress has until September 30 to officially extend its National Flood Insurance Program (NFIP). If no action is taken, then the program will lapse and the NFIP will neither be able to introduce new policies nor renew any existing ones. So how exactly will this affect homeowners? Let’s take a closer look.
Before we discuss the effects of a lapsed National Flood Insurance Program, it’s important to understand how exactly it serves homeowners throughout the country. Basically, this program, managed by the Federal Emergency Management Agency (FEMA), allows business and homeowners to buy federally-backed flood insurance for their property. With the purchase of flood insurance required for most mortgages and federally-backed home loans, nearly 5 million people throughout the country have opted for a policy provided by the NFIP rather than one prepared by a private insurance provider.
If FEMA does not meet the deadline, millions of property owners will therefore be forced to purchase flood policies through private providers. For homeowners located in high-risk flood zones, this could be disastrous, especially as two hurricanes head towards the Southeastern tip of the United States. You see, when you purchase flood insurance there is a wait period between the time you purchase the policy and the time that your policy goes into effect. With most private providers, the wait period is between 10 and 14 days. As the deadline to extend the National Flood Insurance Program quickly approaches, along with potentially catastrophic hurricanes, it’s important for homeowners to ensure that their properties are covered.
For more information about property coverage, or to learn more about home financing, contact one of our mortgage specialists today. We also encourage new or potential homeowners to read up on the various insurance policies necessary to protect your home from damage. Download our new eBook, Transitioning Into Homeownership: Preparing for the New Expenses, today.