As Hurricane Irene works its way farther north, many East coast and Midwest residents can’t help but worry. Since homeowners are powerless to stop this natural disaster, the smartest thing they can do is insure themselves against the damages that Irene may produce.
According to the National Association of Realtors (NAR), water damage created by floods is not covered in a typical insurance policy. In the northeast part of the country, only 30 percent of homes are insured against floods, and this includes areas which are considered high-risk. NAR suggests that the National Flood Insurance Program (NFIP), which is currently set to expire on September 30, 2011, be renewed for another five years.
The NFIP allows homeowners to purchase insurance through private lenders. Without this program, homeowners must choose between insuring through the Federal Emergency Management Agency (FEMA) or remaining uninsured and hoping for the best. Because FEMA is a federal agency, the insurance regulations which restrict all private insurance agencies do not apply. Therefore, FEMA is free to price insurance policies based on expectations of costs, and are not required to provide any explanations of pricing.
According to the NFIP, insurance policies take a 30 day waiting period before going into effect. Homeowners are not advised to wait until they are in the midst of a natural disaster before purchasing flood insurance. Going uninsured is a gamble made especially unsafe by the oncoming storms.
The House Financial Services Committee has unanimously voted to renew the NFIP until September of 2016. However, the Senate has yet to take action on this renewal. Without fast action on the part of the Senate, the NFIP will expire at the end of September and many homeowners will be faced with destructive storms without protection. NAR wants to remind Congress that the NFIP currently provides affordable flood coverage to over 5 million Americans. Without the NFIP, the sense of security that homeowners (and business owners too!) are able to feel will be washed away along with the storms.
NAR wishes to avoid a repeat of Hurricane Katrina’s aftermath. Many homes were lost completely and insurance companies were not able to provide compensation. Insurance policies that cover wind damage and not flooding–as many policies do–were unsure how to proceed when the cause of the damage could not be determined. NAR suggests that more insurance policies include coverage against both wind and water damage to avoid confusion. With the renewal of the NFIP, flood insurance should be much more manageable for the typical homeowner.
Information found at http://www.e-wisdom.com/news/insurance/nar-urges-reauthorization-of-national-flood-insurance-program-110230084/