Lauren Bunting

Lauren Bunting

(Sept. 11, 2020) The National Flood Insurance Program’s authority to provide flood insurance is currently scheduled to expire on Sept. 30.

The National Association of Realtors is making every effort to secure a long-term reauthorization of the program and is urging the longest extension possible, while Congress continues working toward a five-year NFIP reauthorization measure.

If there was a lapse in NFIP’s ability to provide flood insurance, here is a list of what would happen:

• NFIP cannot sell new or renew flood insurance policies after 11:59 p.m. (Eastern) on Sept. 30.

• Existing NFIP policies will remain in effect until their expiration date (i.e., the renewal date plus a 30-day grace period), and claims will continue to be paid as long as FEMA has the funds on hand.

• Renewal policies are generally issued as long as the application is received prior to a lapse and the premium is received within the 30-day grace period. Other renewals must wait for reauthorization.

• During a lapse, property buyers can assume existing/renewal policies. Assignment of policies allows insurers to substitute the buyer’s name for the seller’s without having to reissue the policy.

• Private flood insurance backed by a source other than NFIP (e.g., Lloyd’s of London) are not affected.

• The federal requirement to purchase flood insurance is suspended during a lapse, which means it would be up to lenders to decide whether to make loans in special flood hazard areas while NFIP insurance is not available.

– Lauren Bunting is a licensed Associate Broker with Atlantic Shores Sotheby’s

International Realty in Ocean City.

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