Federal Flood Insurance Program Closed for Weeks

As insurance and real estate agents and homeowners feared, Congress left Washington without extending the federal flood insurance program.

Congress adjourned until April 12 after failing to agree on an unemployment benefits bill that included a provision with an extension of the National Flood Insurance Program.

As a result, the federal flood insurance program’s authority to write new policies ends on Sunday, March 28 at midnight. After that time, insurance agents will not be able to provide new or renewal flood insurance policies, which are required by lenders to close on some real estate sales.

Senator Tom Coburn, R- Okla., blocked the Senate from voting on the bill to extend the jobless benefits arguing that to do so would add to the deficit. Democrats argued that the measure qualified as emergency spending.

A similar impasse occurred at the end of February and the NFIP was closed for several days until Congress renewed it on March 2.

But this time the hiatus will be longer.

Congress could reinstate the NFIP and other affected programs retroactively when it returns on April 12.

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.

While no new policies can be issued during a lapse in NFIP authorization, consumers with current flood insurance policies remain covered. Claims payments are not affected.

The NFIP has issued guidance for operating during an interruption.

FEMA is expected to issue updated guidance soon.