FEMA issues flood insurance update
The seven-page memo issues instructions to private insurers who issue flood insurance policies on FEMA’s behalf.
The overriding message for homeowners and buyers: Be patient. They may not receive the lower rate under the new law immediately. Homeowners facing a high bill are advised to pay it and wait for a rebate rather than go without flood coverage.
If you currently have a flood insurance policy in effect and it’s time to send in a renewal payment, “under no circumstances should you allow that policy to lapse” while waiting for clarity on how the new flood insurance law will impact it, advises Lisa S. Jones, a flood insurance specialist with Carolina Flood Solutions and consultant to the National Association of Realtors® (NAR).
“FEMA is working with Congress, the private Write Your Own insurance companies (private companies that act as intermediaries selling flood insurance policies) and other stakeholders to implement these Congressionally mandated reforms,” says Dennis Kuhns, FEMA’s director of the Risk Insurance Division.
However, Kuhns also says, “It is not possible for changes to happen immediately. While the new law does require some changes to be made retroactively – applying to certain policies written after July 6, 2012 – other changes require establishment of new programs, processes and procedures.”
It’s the “programs, processes and procedures” that will take time, and FEMA offers no solid dates, only that more information “will be forthcoming.”
However, FEMA echoes Jones’ advice for homeowners: Pay your flood insurance bill even if it’s still over-priced rather than wait for clarity on the lower rates authorized by the new flood law.
“FEMA does NOT recommend cancelling a flood insurance policy,” Kuhns said in the letter. “Cancelling flood insurance policies now will leave policyholders unprotected during spring flooding, and may cause policyholders to lose important discounts on their rate if they reinstate in the future.”
The complete FEMA letter and memo is posted online in Florida Realtors Flood Insurance Toolkit.
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