The National Flood Insurance Program (NFIP) will likely be extended through September 30, 2011 thanks to the passage of the “Flood Insurance Extension Act of 2010.”
The process is not yet complete, as the legislation has only passed the Senate, and still needs a House vote, but it looks quite likely.
If for some reason it doesn’t pass in the House, the program will expire on September, 30, 2010.
The bad news is that the program regularly expires, as it’s a federal program and the legislative process typically takes its toll.
What is the National Flood Insurance Program?
Private insurance companies aren’t willing to insure homes and businesses against flood damage because it would be nearly impossible to make money doing so.
Let’s face it; if an insurer were to insure against a flood, and one actually took place, they’d be on the hook for a lot of money…likely more than they had to pay for resulting insurance claims.
As a result, the only entity who has the money to pay for destructive natural disasters like a flood is Uncle Sam.
And while the government pays the claims, they leave the sales and administrative duties to insurance companies.
In other words, you may have purchased a flood insurance policy from The Hartford…or any other insurance company for that matter, but if there is a flood and any claims are made, NFIP will pay out the money to those who experience losses.
Update: It received the House vote as well, so now it just needs the President’s signature to be extended.