Tuesday, June 8 2010 5:46 PM EDT2010-06-08 21:46:38 GMT
It was a rude awakening for homeowners who wanted flood insurance last week. Congress let the national program lapse, causing confusion and potential big problems.More >>
By Andrew Freiden - bio | email Posted by Terry Alexander - email
RICHMOND, VA (WWBT) – It was a rude awakening for homeowners who wanted flood insurance last week. Congress let the national program lapse, causing confusion and potential big problems.
You may buy flood insurance from your broker, but the program is backed by taxpayers. Congress started it in 1968 because private insurers wouldn't insure some development on the coast and in flood prone areas. And on the same day hurricane season began one week ago-- Congress let funding lapse.
This hiatus comes at a bad time for people who want to buy insurance, especially those in a flood zone who can't get a mortgage without it.
"Homeowners that were set to close and need flood insurance are kind of stuck in the mud right now," said insurance agent Josh Sojda with Weller and Associates.
If your application and payment went out before June 1, your policy will be processed, but not if you applied after that. Sojda says this is nothing new. It's happened four times in the last year.
"Because the policies are administered by Congress, nothing can be done until Congress decides to act on this," said Sojda.
2005 brought record claims from Katrina and Rita-- and the subsequent political wrangling over how to adequately fund or fix the program. But if you have insurance, and suffer damage during the program's break-- you're fine.
"During the hiatus, all claims operations are still in effect as long as you have an active policy. That's in place, if you do incur a flood claim, it will be processed as normal and payment will be issued," Sojda said.
But for those who want to buy new policies -- it's a waiting game. Waiting for Congress to act and waiting to see what hurricane season will bring.