The National Flood Insurance Program, after months of industry frustration and frequent lapses in service, is extended for one year -- creating a property/casualty industry-wide sigh of relief.
The House of Representatives passed a bill that simply changes the end date of the program, the same bill that had been suddenly introduced and passed in the Senate earlier in the week. Now, the industry will consider future work on how to get the program more permanently updated before its new Sept. 30, 2011 expiration.
Industry Reaction
According to the statement below on its website the "National Association of Professional Insurance Agents (PIA) applauds the House for following the Senate in passing S. 3814, extending the NFIP to September 30, 2011,” said PIA Director of Federal Affairs Mike Becker. “This extension means that property owners across the country who need flood insurance coverage will continue to be able to obtain it while the NFIP reform process proceeds.”
Taking Congress to Task
"It is reprehensible that Congress has not taken action sooner to reauthorize this essential program," said Florida Insurance Commissioner Kevin McCarty in a statement on the Florida Office of Insurance Regulation website. McCarty continued, "Congress' inability to develop a long-term solution to insuring the peril of flood has created instability in Florida's already fragile housing market, and consequently, negatively impacted our economy."
Flood Insurance Coverage Basics:
Flood insurance protects two types of insurable property: building and contents. The first covers your building, the latter covers your possessions; neither covers the land they occupy.
Building coverage includes:
- The insured building or home and its foundation,
- The electrical and plumbing system,
- Central air conditioning equipment, furnaces, and water heaters,
- Refrigerators, cooking stoves, and built-in appliances such as dishwashers, and
- Permanently installed carpeting over unfinished flooring.
Contents coverage includes:
- Clothing, furniture, and electronic equipment,
- Curtains,
- Portable and window air conditioners,
- Portable microwaves and dishwashers,
- Carpeting that is not already included in property coverage, and
- Clothing washers and dryers.
The two most common reimbursement methods for flood claims are:
- Replacement Cost Value (RCV) and
- Actual Cash Value (ACV).
The RCV is the cost to replace damaged property. It is reimbursable to owners of single-family, primary residences insured to within 80% of the building’s replacement cost.
The ACV covers the cost of the value of the damaged item at the time the damage occurs. If a furnace that is 10 years old is damaged in a flooded basement, the insured may only be covered for half its replacement value if that furnace has an expected life of 20 years.
For additional information:
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