Insurance 'hiatus' questioned
January 7, 2003
FEMA answers why flood insurance drought is happening
Inman News Features
The Federal Emergency Management Agency has issued a question-and-answer sheet for homeowners and home buyers who may be puzzled by the current "hiatus" in FEMA's ability to issue flood insurance policies. (Access FEMA's Q&A )
The Q&A explains why the hiatus is occurring and why an act of Congress is necessary before insurance companies can issue flood insurance policies. It also gives homeowners information about new and existing flood insurance policies that may be in limbo.
Answers are provided to such questions as: "What happens if my premium for a new policy or an endorsement for added coverage is received by the company on or after Jan. 1, 2003 and I suffer a flood loss before Congress reauthorizes the program?" "If I suffer a loss during the hiatus would I be covered for my loss?" "My policy is up for renewal in January, how can I make sure that my premium payment gets in by the deadline?" and "What happens if my premium for a policy renewal is received after Jan. 1, 2003, and I suffer a flood loss before Congress reauthorizes the program?"
The Q&A also warns for the first time that "premium payments will have to be refunded and (FEMA) will not be able to issue the policies paid by premiums held in abeyance" if the hiatus turns out to be lengthy.
FEMA last Tuesday stopped writing new policies and renewing existing because the U.S. House of Representatives adjourned Nov. 22 without reauthorizing certain aspects of the National Flood Insurance Program that FEMA operates for the federal government. The U.S. Senate unanimously passed its reauthorization of the program on Nov. 20.
The reauthorization is expected to be a priority when the new Congress convenes on Tuesday, and U.S. Reps. Michael Oxley (R-Ohio) and Barney Frank (D-Mass.) have said they will introduce reauthorization legislation that will be retroactive to Jan. 1. Oxley is chairman of the House Financial Services Committee and Frank is the ranking Democrat member of the committee, which oversees all non-health-related insurance legislation.
FEMA previously said the authorization lapse would have "no effect on the vast majority of flood insurance policyholders, whose coverage will remain in effect during this hiatus."
Copyright: Inman News Service