National Flood Insurance Program Legislation Moves Forward

The National Flood Insurance Program (NFIP) is facing a September 30^th deadline. That is the date the temporary extension runs out on the Flood Program. Unless a bill that reauthorizes the program passes, the NFIP could expire. But this week, the House of Representatives passed H.R. 1309 (The Flood Insurance Reform Act) by an overwhelming majority.

The House bill reauthorizes and modifies the program. The reauthorization extends the program through 2016. The bill also authorizes the program to offer business interruption and ALE (additional living expense) coverage.

Regarding the wind vs. water coverage problem that came to the forefront during Hurricane Katrina litigation, the bill allows insureds to gain access to the engineering reports relied on by the NFIP in determining whether damage was caused by wind or water:

(d) Information Regarding Multiple Perils Claims-

(1) IN GENERAL- Subject to paragraph (2), if an insured having flood insurance coverage under a policy issued under the program under this title by the Administrator or a company, insurer, or entity offering flood insurance coverage under such program (in this subsection referred to as a `participating company’) has wind or other homeowners coverage from any company, insurer, or other entity covering property covered by such flood insurance, in the case of damage to such property that may have been caused by flood or by wind, the Administrator and the participating company, upon the request of the insured, shall provide to the insured, within 30 days of such request—

(A) a copy of the estimate of structure damage;

(B) proofs of loss;

(C) any expert or engineering reports or documents commissioned by or relied upon by the Administrator or participating company in determining whether the damage was caused by flood or any other peril; and

(D) the Administrator’s or the participating company’s final determination on the claim.

The bill now moves on the U.S. Senate for a vote. We will keep you posted on the progress of the legislation as it works its way through Congress.