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National Flood Insurance Program: What You Need to Know

NFIP stands for the National Flood Insurance Program, which was created to help homeowners receive compensation for flood damages. As stated on the FEMA website, “The national flood insurance program aims to reduce the impact of flooding on private and public structures (…) by providing affordable insurance to property owners.” However, there are a few indicators that the NFIP may not come through for the people of Texas.

Coverage Types

This affordable insurance comes in a variety of coverage types depending on the insurance a property owner wants. Claim amounts are adjusted according to the type of property owned, as well as applicable risk-factors (likelihood of flooding, age of the property, etc.) In fact, some insurance types have a higher pay-out quota than others. Insurance owners who have properties considered at risk for “repetitive loss” represent 1% of the population who own flood insurance through NFIP, while representing 25% of NFIP's paid claims.

This means that if NFIP had only 100 insurance claims a year, 1 claim would be getting 25% of the available claim money, while 99 claims would receive the 75% left over.

The Debt of NFIP

From 2012 to 2016, the NFIP gained $3 billion in debt, pushing the NFIP debt total to $23 billion. If the program had not been granted debt forgiveness, it would have exceeded a total of $30 billion in debt. However, the senate voted on erasing two-thirds of the NFIP debt total two weeks ago, bringing the calculated total to $6 billion (not including the uncalculated Harvey damages). Once the Harvey damages have been taken into account, it is likely that the NFIP will exceed $10 billion in debt.

The senate has forgiven $16 billion for NFIP, yet the program still stands to be $10 billion in debt. This raises suspicion about NFIP’s ability to pull themselves out of debt, while also suggesting that insurance holders may not see their coverages fulfilled any time soon. This suggestion is substantiated by the fact that as of October 23, there are still 2,247 claims from Hurricane Sandy that have yet to be paid for by the NFIP.

This means that of the 19,459 claims that were made during Hurricane Sandy, after 3 years, 11.5%of those claims have still not been paid.

Property Owners Have to Be Mold Excavators to Obtain Full NFIP Insurance

Per FEMA, families who are under NFIP insurance have the responsibility to “minimize growth and spread of mold as much as possible.” This means that if a policyholder does not do everything that he or she can to minimize the spread of mold within the house, NFIP will then no longer insure them for mold damage.

The NFIP does have a stipulation that homeowners are not responsible for mold in homes that are “impeded” by floodwater. However, the word “impeded” is very broad in usage.

Property Owners Will Not Be Compensated by NFIP for Additional Living Expenses

Homeowners who are relying on NFIP insurance must be aware that policyholders are personally responsible for any additional living expenses they may face due to a flood. This means that if a family needed to fly out to a friend’s house to have a roof over their head, NFIP insurance would not cover such an expenditure.

If a family were to go and sleep in a hotel while they waited for their property to drain, NFIP insurance will not cover such an expense. Say a family must rent a car to get to safety away from flood waters, NFIP would not cover the cost of the car. These expenses, and many others, are not covered by NFIP despite being costs that directly stem from flooding.

What Can I Do?

If you are worried that NFIP insurance will not cover the damages that you have received, please contact our Hurricane Harvey insurance claim lawyers immediately. Arnold & Itkin attorneys are aware of various options that might be available to you.

Call (888) 400-2101 for a free case evaluation concerning your flood claim. Arnold & Itkin is committed to giving you every option available to you! Call now to receive peace of mind concerning your NFIP claim.
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