Flood Insurance Reform 2018 - Will the NFIP Lapse?

[Robert Murphy]

People with Bigger pockets that have active deals going and are buying in a flood zone that requires the purchase of flood insurance.

In the unlikely event that the NFIP does lapse, you should be aware how it will affect your deals. 

As of Friday, January 19, Congress has not acted to reauthorize the National Flood Insurance Program. The NFIP authority is set to expire tonight at 11:59 pm. Should reauthorization not occur prior to 11:59 pm tonight, the program will fall into a lapse period. Here are several important factors to keep in mind if the program lapses:

•New business policies for which application and premium payment dates are on or after January 20, 2018, may not be issued

•Endorsements to increase coverage on existing policies for which effective and premium payment dates are on or after January 20, 2018, will be not be processed

•Renewal policies with effective dates of January 20, 2018, and later, for which renewal offers were issued prior to the lapse in authority, for which premium payment has not been received within the 30 day grace period will not be processed

•Renewal offers for policies with renewal effective dates of January 20, 2018, and later that have not already been sent as part of standard the renewal processing schedule will not be sent until Congress has reauthorized the program

•Renewals with effective dates that fall during the lapse period which have already been sent as part of the standard renewal processing schedule and for which premium payment is received by The Hartford before the end of the 30 day grace period will be processed and remain in force

•Policies in force as of 11:59 pm January 19, 2018, will remain in force, and claims for covered losses under those policies will be processed and paid as normal

•Existing policies may be canceled per the insured’s request during this lapse period in accordance with valid NFIP cancellation reasons as outlined in the Flood Insurance Manual

There is a silver lining here and that is that there is a strong and growing private flood market. For those of you who have already shopped the private market (I know a guy that can help you if you want his contact to reach out). You can use the last bullet here to cancel the existing policy midterm!

I do hope that none of your deals fall through because of our dysfunctional government but if they might let me help you get some options. Keep up the Bigger Pockets! And on.