An NFIP lapse could put a halt to home sales in flood plains. (Credit: Steve/Adobe Stock)
The National Flood Insurance Program could lapse in a few days if Congress doesn’t act soon.
A short-term reauthorization of the program, passed by Congress six months ago, will expire at midnight on Sept. 30. The deadline is happening as a divided Congress is busy arguing over the federal budget, which could lead to a government shutdown if an agreement isn’t reached by Oct. 1.
The NFIP covers 4.7 million Americans. If the program lapses, the Federal Emergency Management Agency would still pay valid claims from existing policies. But no new policies would be sold, and homeowners with expiring contracts wouldn’t be able to renew.
Real estate transactions in floodplains would also come to a halt. About 1,300 property sales per day and about 40,000 closings per month would be affected, according to the National Association of Realtors. NFIP supports about 500,000 home sales annually.
The NFIP’s borrowing authority would also be reduced. Without a reauthorization, the program would only be able to borrow $1 billion – down from $30.4 billion – from the U.S. Treasury, which could impact its ability to pay claims following a natural disaster.
Both the insurance and real estate industries are urging Congress to act quickly and reauthorize the program.
“Congress must act swiftly to prevent any lapse in the NFIP, particularly as we enter the height of hurricane season,” said New York Assemblywoman Pamela Hunter, president of the National Conference of Insurance Legislators, in a statement. “A long-term reauthorization is overdue, but in the meantime, we cannot risk leaving families, businesses and communities vulnerable. The NFIP provides critical stability for policyholders and insurers alike, and it is essential that Congress comes together to deliver lasting reforms and ensure continued protection for those who need it most.”
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