T
he National Flood Insurance Program (NFIP) is set to expire on December 20, putting 22,600 participating communities at risk for homeowners. To prevent disruptions in coverage, NAR and other stakeholders are urging Congress to extend NFIP's authority to write insurance.
Mabél Guzmán, a broker at Coldwell Banker, and Jeff Jackson, assistant administrator of the Federal Emergency Management Agency (FEMA), discussed the implications of NFIP reauthorization during an interview. They emphasized the need for reforms to improve consumer education on flood risk and insurance issues.
The new NFIP Direct to Customer Quoting Tool, available at floodsmart.gov, aims to provide consumers with more information on a 24/7 basis. Jackson notes that people are increasingly doing their research online before consulting agents, making it essential to have accurate and up-to-date data available.
FEMA will regularly update the floodsmart.gov site with current data, and Guzmán suggests creating a feedback loop between NAR and FEMA to address client concerns. The new resource is expected to increase transparency and information-sharing on flood risks.
A lapse in NFIP coverage can have significant consequences, as seen in 2010 when over 40,000 home sales were impacted, leaving 1,300 homeowners per day exposed to uninsured flood losses. Since its inception in 1968, the NFIP has received over 2.6 million claims and currently insures about 4.6 million properties nationwide.
Flood maps are limited to high-risk areas along coasts and major rivers, but heavy rainfall can cause flooding inland. In fact, more than one-third of NFIP flood insurance claims come from outside these high-risk areas. FEMA warns that relying solely on flood maps for insurance risk analysis can be misleading or inaccurate.
A standard homeowner's insurance policy typically does not cover flooding, and FEMA aid is rarely enough to cover damages. An NFIP policy offers substantial protection, with up to $250,000 of building replacement cost coverage and $100,000 for lost belongings. Guzmán emphasizes that flooding is not just a coastal issue, citing historic floods in the mountains of North Carolina as an example.
NAR and FEMA are working together to promote consumer education on flood risk and insurance issues, highlighting the importance of using accurate data and consulting with insurance agents or using the new direct-to-consumer tool for valid rate quotes.
