The clock is ticking on the federal flood insurance program, and Florida real estate could take the biggest hit if Congress fails to act.
The National Flood Insurance Program, which covers nearly 1.8 million Florida policyholders, is set to expire Sept. 30 unless lawmakers strike a deal to keep the government funded, the Palm Beach Post reported. If the program lapses, existing claims would still be paid, but no new policies could be written, a major problem for closings in flood-prone areas where mortgage lenders require coverage.
That could derail sales across the state’s high-risk coastal zones at the height of hurricane season. Florida has more NFIP policyholders than any other state, thanks to its low elevation and more than 8,400 miles of coastline.
While Congress has let NFIP technically expire 33 times in the past eight years, it has always been renewed. Still, some industry insiders say this round feels different, given rising political dysfunction.
The program’s borrowing authority would also be capped at $1 billion during a lapse, raising the risk of delayed claim payments.
For Florida homeowners, the private market is hardly a fallback.
“If you’re in a [flood zone rated as high risk], then you have to go to the private market, and it’s going to be much more expensive,” Fort Lauderdale insurance broker Andy Kasten told the Post.
Citizens Property Insurance, the state’s insurer of last resort, has already started requiring all policyholders to carry flood insurance, further ratcheting up costs.
Mortgage pros warn the impact could ripple through housing affordability.
“Just supply and demand tells me prices will go up,” said Bradley Greenleaf, a Fort Lauderdale loan officer, who noted that many buyers are already struggling. The National Association of Realtors estimates 1,300 home sales nationwide could be disrupted each day if NFIP lapses.
Yet most industry veterans still expect Congress to kick the can, citing flood insurance’s systemic importance.
“It will probably still be around forever, because that’s the bank’s protection,” said Arden Insurance’s Robert Norberg.
— Holden Walter-Warner
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