Congress established the National Flood Insurance Program in 1968. It’s a reliable way for homeowners to get flood insurance when private insurers won’t offer it.
It’s administered by FEMA, and covers almost 5 million Americans. Practically every community in California participates in the program. But, with the government shutdown, no new policies will be issued, and existing policies cannot be renewed. This is expected to have a big impact on real estate transactions in flood plains and other flood-prone regions.
A spokesperson from the Insurance Fairness Project says this “adds fuel to an already escalating insurance crisis driven by climate change.”
Policies that began before the shutdown will last for another year. But the amount of money the NFIP can borrow from the Treasury to pay claims has been reduced from more than 30 billion dollars to just one billion. That means if there is a natural disaster, those who are already insured might not get paid out as much as they’d expect.
