As the deadline to renew the National Flood Insurance Program looms over Congress, many are left wondering what they will do if it ends. While the NFIP is the primary source of flood insurance coverage, it is not the only provider.
The National Flood Insurance Program received a last minute extension and is now set to expire on December 7th. There was concern that millions of Americans would be forced to search for alternative flood insurance options.
“My hope is that we will permanently extend it with reforms that will allow the program to survive long-term, but we have to get this extension done and we’re working very hard to make that happen," says Florida U.S. Senator Marco Rubio.
Still, if congress doesn’t reauthorize the NFIP by Friday, it will stop selling contracts and will be unable to renew current policies once they reach the end of their term. This means that those who had contracts with the NFIP would have to turn to private flood insurance. Florida’s Private Flood Insurance industry has been rapidly growing since 2012 and had a combined 110 percent increase in policies last year. David Thompson is an instructor at the Florida Association of Insurance Agents. He says prices depend on the property, but private insurance tends to be less expensive.
“You’ll get replacement cost coverage instead of what we call actual cash value depreciated value. Replacement cost is new for old and the NFIP doesn’t provide very much of that," says Thompson.
Florida has more than 1.75 million direct and underwritten policies in the federal flood insurance program. That’s more than any other state. There are 29 private flood insurance providers in Florida, and more have applied. Thompson says the process to get approval to offer policies can be daunting.
“A company can’t just jump in the market and start writing this insurance they got to have—Typically, their policy coverage forms and their rates have to be approved by the Florida insurance regulator and that’s a months and months and months long process,” Thompson says.
Historically, flood insurance through the NFIP has been low, but that has changed in more recent years. Still, Florida Chief Financial Officer Jimmy Patronis says NFIP remains popular with consumers.
“I think historically for years I mean one, if you consider how broad of a base of applicants or policy holders we have in the United States the volume in numbers helps make it possible for to make it more affordable,” says Patronis.
And he worries consumers could take the hit if the federal program goes away.
“So there are areas of—In the state of Florida and other parts of the United States which are not eligible for flood insurance...So we do have a robust you know, private sector solution when it comes to flood insurance, but you know, I think when all things being said and done the NFIP is an available option and the coverage that it provides is enough to protect your dwelling that’s going to be the insurance of choice,” says Patronis.
While the NFIP’s future may currently be uncertain, officials urge home-owners to purchase flood insurance and to review their policies with an insurance agent.