Continued uncertainty for flood insurance program

June 28, 2010 4:08:23 PM PDT
With a tropical storm in the Gulf of Mexico, a lot of homeowners are paying attention to the National Flood Insurance Program. The program has not been funded by Congress, so if a flood happens, some policy holders could be stuck with the bill.

We have been telling you about this problem for several weeks. The National Flood Insurance Program must be funded by Congress to cover flood losses, and for weeks Congress has passed on chances fund the program.

It does not take a hurricane to flood Houston, but when a tropical storm hits the Gulf, flood insurance becomes a top priority. It certainly is for homeowners who are finding out the flood insurance program is on hold.

"There are a lot of people who are concerned and a lot of people trying to close on houses who have to lie and wait to see what the government is going to do," said Nina Friedman.

It is important to remember that if you have a flood insurance policy right now, claims will be paid if you have a flood. However, insurance companies are no longer authorized to issue renewal notices until Congress reauthorizes the program. And those who need a new policy or want to increase coverage cannot until Congress acts.

Insurance agents are still telling clients to buy flood insurance and to pay their premiums, but claims for new policies will not be paid until Congress acts.

"We have had clients who had $150,000, $200,000 claims during just storms, not even during a hurricane, and that's a lot of money," Friedman said. "Normally you'd be out of pocket $1,000 if your deductible is $1,000, so who can come out of pocket $150,000?"

Again, claims will be paid to those with current flood insurance policies, but homeowners who tried to get a policy in June are without coverage until the program is funded by Congress.

Realtor Penny Paegel has a client waiting to move into a home right now, but flood insurance has the deal on hold.

"So they cannot get the house without flood insurance. We have been trying. They went under contract after the first of June, after all this started," said Paegel.

The latest effort to fund the flood insurance program was blocked and Texas senators are not happy about it.

"Allowing the National Flood Insurance to lapse is unacceptable at any time, but failure to extend it as we face an active hurricane season is unthinkable," said Sen. Kay Bailey Hutchison.

A lot of viewers want to know who to blame for this. Last week, the House of Representatives sent a flood insurance funding bill to the Senate, but we're told that Democrats blocked it. However, in the last couple of days, the flood legislation was tied to bills the Senate Republicans did not like and the measure failed to get enough votes to clear the Senate.

If we do get flooding, not all homeowners will be out of luck. Again, if your policy is in place right now, you will be covered if there is a flood. For those trying to get the insurance for the last few weeks, your damage will likely be paid after the program is funded.


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