Flood Insurance Extended But Only Until Friday

Dated: 12/03/2018

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Flood insurance extended – but only until Friday

WASHINGTON – Nov. 30, 2018 – Congress pushed back its deadline to deal with the National Flood Insurance Program (NFIP) by at least a week, passing yet another short-term extension of the program late Thursday.

A deadline to avoid a lapse in the federal program had been looming at midnight on Friday. The short-term deal is the eighth temporary extension for the program since it first came up for periodic renewal more than a year ago.

Louisiana Sens. Bill Cassidy and John Kennedy had pushed for a six-month extension of the program, putting off a deadline until the spring and giving new incoming leadership in the House of Representatives time to get to work on a comprehensive overhaul of the program.

Both the House and Senate passed a week-long extension on Thursday evening. The Senate also passed the six-month deal, meaning the House could come back Friday or next week and pass the longer extension as well.

No long-term deal over the beleaguered flood insurance program – which is mired in billions of debt from payouts for past hurricanes – is expected in the coming weeks. But lawmakers will need to strike an agreement on just how long to extend it.

Lawmakers have remained deadlocked for more than a year over long-term reforms to the program.

Politicians from flood-prone areas have insisted on measures that keep premiums affordable for homeowners, while critics of the program have targeted what they see as overly generous subsidies that encourage development – and repeated payouts – in high-risk areas.

"For the past week, I've been working hard to convince my colleagues in the Senate that a lapse in the NFIP would be a disservice to families across this country, not just in the coastal states. I'm glad my colleagues came around," Kennedy said in a statement. "I am frustrated with the inefficiency in Washington that is causing us to extend the program again without long-term reforms, but families deserve to be protected."

"A short-term extension is frustrating but necessary to achieve our longer goal," said Cassidy. "We must create a more accountable, affordable and sustainable system that is good for Louisiana and good for taxpayers."

If the week-long extension remains the agreement (without a six-month extension), then Congress would face its next decision on flood insurance at the same time it's facing a showdown over spending bills essential to keeping the federal government operating.

President Donald Trump has threatened to shut down the government if Senate Democrats don't agree to include billions in funding for his proposed wall along the U.S.-Mexico border.

Flood insurance's fate in the near-term could then likely be tied to the outcome of that fight since the bills would likely be wrapped together.

Homeowners with NFIP policies would remain covered during a lapse in the program, and destruction from any floods that occur during a lapse would be paid by NFIP. Policies that expire during a lapse can't be renewed, though Congress could – and in the past has – made coverage retroactive for any policyholder caught in a lapse.

But a lapse would cause chaos in the real estate markets. No new flood insurance policies could be issued during a lapse. Since federally backed mortgages – which most homebuyers rely on – require NFIP coverage for any property in high-risk flood zones, would-be homebuyers wouldn't be able to close on sales during a lapse.

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