Louisiana Department of Insurance Issues Guidance on NFIP Expiration

The National Flood Insurance Program expired Wednesday after Congress did not pass a federal budget ahead of an Oct. 1 deadline. The lapse means no new federal flood policies will be sold, and expiring policies will not be renewed.

The Louisiana Department of Insurance issued guidance to policyholders in response to the expiration of NFIP. Louisianans hold 9% of all NFIP policies, and there are currently about 419,000 NFIP policyholders in Louisiana.

• The NFIP cannot issue new or renew existing flood insurance policies. Consumers who have a pending flood policy application or renewal should confirm with their agent that they will have coverage.
• NFIP policies currently in force will continue until the end of the current one-year policy term.
• The NFIP will continue to adjust and pay claims for its policyholders using available funds. If those funds are depleted, claims payments would be delayed until additional funds become available as the NFIP collects premiums or Congress provides for additional borrowing authority.

• Residential and commercial property owners are required to purchase flood insurance if the property is in a Special Flood Hazard Area (SFHA) and is in a community that participates in the NFIP. Without flood insurance, real estate transactions in an SFHA might be delayed or prevented until coverage is available.
• Private flood insurance may be available to meet the requirement to purchase flood insurance for a real estate transaction. Consumers should contact a property insurance agent for assistance in identifying an insurance company that may provide flood coverage.

Related: Update: National Flood Insurance Program Expires

The lapse of NFIP could impact home and commercial real estate in Louisiana. Flood insurance if often required for homeowners and business owners in high-risk areas who have a mortgage through a federally regulated or insured lender.

Louisiana Insurance Commissioner Tim Temple participated in a Federal Emergency Management Agency (FEMA) Review Council meeting on NFIP Wednesday, where he spoke in favor of reforming the program.

“Louisiana knows firsthand the devastating impact of floods and hurricanes, and we also know the importance of having affordable, reliable insurance coverage,” said Temple. “Reforming FEMA and the NFIP is not just necessary—it is overdue. On behalf of our state, I was grateful for the opportunity to collaborate with the FEMA Review Council and my fellow insurance commissioners on building a more resilient future.”

Topics Louisiana