The National Flood Insurance Program (NFIP), which was due to expire at midnight on Friday May 31st, has been extended for two weeks until June 14th.  The two-week reauthorization will allow for the issuance of flood insurance policies and the renewal of existing policies. N.A.R. has been working to avoid a lapse but has not issued a call to action at this time. See N.A.R.’s Update on Flood Insurance Extension(sent out before the extension was passed). 

What about my client’s flood insurance? What can they do now?

Here are the key points made in the N.A.R. update, modified to reflect the Program’s new expiration date:

  • NFIP is authorized to renew/issue new flood insurance policies through Friday, June 14th. Policies take effect immediately in connection with a mortgage loan.
  • Existing NFIP policies will remain in effect until their expiration dates (i.e., the renewal date plus a 30-day grace period), and claims will continue to be paid as long as FEMA has funds on hand.
  • Renewal policies are generally issued as long as the application is received prior to the lapse and the premium is received within the 30-day grace period. Other renewals must wait for reauthorization.
  • Existing/renewal policies may be assigned to/assumed by property buyers during a lapse (see here), Simply changing the name on a policy (from owner to buyer) does not require the NFIP to reissue it.
  • Private flood insurance backed by a source other than NFIP (e.g., Lloyd’s of London) are not affected by a lapse. Click here and herefor some options.
  • It is possible that some lenders will consider making special-flood-hazard-area loans if the federal purchase requirement is suspended. It all depends on whether the bank is willing to accept the risk.

Since 2017, Congress has approved 10 short-term extensions of the NFIP creating uncertainty for policy holders across the country in a never-ending series of stopgap measures. See this article for more information.