What The Government Shutdown Means For Lowcountry Real Estate Closings That Require Flood Insurance

In our area, the number of properties requiring flood insurance is very high! After all, we are an island!

In an effort to help answer Flood questions for my Buyers and Sellers, I have compiled some basic answers and information. As I write today, the lapse in funding the FEMA Flood program continues. This lapse will disrupt new home closings that involve properties with scheduled FEMA Flood policies.

The current short term funding of the FEMA Flood Insurance program expired at midnight 1/19/18 and Congress has failed to enact a Resolution to avoid a government shutdown.

While no clear resolution of the impasse has been identified, congressional leaders seem focused on limiting the shutdown, including the FEMA Flood Insurance lapse, to a period of days or even hours. Many observers envision resolution before the end of the weekend. We will continue to monitor this progress and alert you of any change.

The FEMA Flood Insurance lapse has no impact on filing, adjustment and payment of claims on existing Flood policies. The lapse does impact the ability the issuance of new and renewal flood policies.


How does the National Flood Insurance Program (NFIP’s) lapse effect FEMA Flood Policies?

  • May not issue for flood insurance during a lapse.

  • Cannot issue new policies including those obtaining mortgages from federally regulated lenders

  • Cannot on existing policies

  • Cannot issue policies including property existing mortgages

  • Cannot issue

Has this lapse in Congressional authority for FEMA Flood ever happened before?

  • Yes, there have been several lapses in FEMA Flood. In most of those cases, Congress reauthorized the Flood Program retroactively.

If I purchased flood insurance coverage as part of a mortgage loan closing that occurs prior to a lapse, will my policy be issued?

  • Yes, your insurance company will issue your policy, becoming effective on the date of your loan closing.

If I purchased flood insurance coverage before a lapse in authority, but not in connection with a mortgage loan closing, will my policy be issued?

  • Yes, your insurance company will issue the policy if you applied for coverage prior to a lapse AND your flood insurance company receives application and premium payment within 10 days from the application date.

Renewal Policies. My flood insurance policy is set to expire on the day after the lapse in authority. I received my renewal notice already from my insurance company and sent my payment to my insurance company before the lapse in authority. Will my insurance policy be renewed?

  • Yes. As long as your insurance company sent the in authority and the insurance company received your payment before the end of the 30-day renewal grace period, the company may renew your policy. However, NFIP insurers may not issue new renewal notices during a lapse in authority.

I have a loan closing scheduled after the lapse in authority and my lender told me to purchase flood insurance before my settlement dates. Will I be able to purchase a new flood insurance policy?

  • Insurance companies may not issue new NFIP insurance policies for loans closing during a lapse of authority unless, thein authority AND premium payment is received within 10 days (if payment made by policyholder) or 30 days (if payment made through escrow, title company, etc.) of the closing date. FEMA does not prevent insurance companies from receiving and holding new applications and premium payments during a lapse, but insurance companies may not act upon those new applications during a lapse.

My policy is up for renewal days before the lapse in authority. Was my policy renewed?

  • If your renewal premium payment was received by your insurance company received prior to or within the 30-day renewal grace period, your policy should be renewed. Check with us or the carrier to make certain your policy was renewed.

Solutions to a new Home Closings:

Private Flood – new private flood carriers are not subject to the government shutdown. They are indeed writing new policies for new home closings. This can be a more expensive option than a FEMA Flood policy, but can help with a home closing. Contact us for the details of what options might be available.

<Brought to you by Carolina Heritage Insurance>

If you have any questions regarding real estate purchases in Hilton Head Island, Bluffton, or Okatie call, email or text me ANYTIME. Kim France kfrance@kw.com 513-476-2658 kimfrancehhi.com

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