Recent flooding along the Missouri River has prompted a good number of insurance claims, many of which will be denied because the flooding occurred within the 30 waiting period mandated by flood insurance policies. FEMA voided a number of these claims after determining that the ongoing flooding was a “flood in progress” and had been since June 1.
Boiled down, that means the a flood insurance policy had to be in effect before that date in order for the policyholder to collect on any damage incurred as a result. Because flood policies require a thirty day waiting period, coverage would have had to have been bought by the first of May in order to be considered active.
A current proposal before Congress would remove the “flood in progress” rule but keep the 30 day waiting period, allowing owners who bought a policy after May 1st to be able to collect as long as their damage occurred after the thirty day wait.
This proposal was one of a slew of amendments added to the reauthorization of the National Flood Insurance Program by the House Of Representatives. The legislation was approved and now goes to the Senate.
The National Flood Insurance Program is already hemorrhaging red ink, and this proposal means that even more money would be flowing out of it. Currently the program is $18 billion in debt and looking for a government bailout in order to proceed.
Most of that debt comes as a result of claims filed in the wake of 2005’s Hurricane Katrina, but also because Congress has pushed the agency to keep flood insurance premiums on the low side.
Opponents of the bill say that while it is regrettable that some people will not be able to get coverage for their damaged property, it encourages people to take unnecessary risks, putting off getting the required coverage until the damage is done and it is too late. Too many people decide against paying out for flood insurance, choosing instead to buy the coverage when disaster seems likely and hoping nothing will happen before the thirty day wait is over.
If you are one of the millions of Americans who do not have any sort of flood insurance, be forewarned: flooding is not covered by your normal homeowners’ policy. Coverage can be obtained at an additional premium. Make sure your community participates in the National Flood Insurance Program (NFIP) and take the steps necessary to protect your property in the event of a flood. It is always advised to do so now, while the skies are clear and there is no imminent threat. Thirty days is a long time to wait and a lot can happen before the waiting period is up.
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