Even government has to shut down sometimes, but the series of impacts on flood insurance won't.
In this video, we'll cover what it means a federal government shutdown happens and how it can impact your flood insurance policy.
A government shutting down means that a lot of departments may start to close as well. So, if you're buying a house this would definitely impact your loan.
First, it's important to note that flood insurance policy mostly comes from the federal government or through the National Flood Insurance Program (NFIP) and Federal Emergency Management Agency (FEMA). Generally, at the time of writing, these policies basically have a requirement that you can only go through them if you have FHA, VHA, or SBA loan in order for you to get the right coverages.
Impacts of Shutdown
In times where the government stops functioning, your flood insurance and its coverages won't be completed until these establishments get back up and running again. This can also impact your flood insurance applications since if they shut down, even if it's a partial shutdown, despite locking in the documents needed then it could still mean that you won't be able to complete the flood insurance.
This can be really difficult for homeowners with houses that require flood insurance since they're in a high-risk flood zone. This can also impact businesses equally since some commercial communities require flood insurance with the property. Now, let's say you can't get flood insurance through the federal government, what should you do?
Going Private
Well, in this case, if you're doing a conventional loan that allows you to get flood insurance through other insurance markets, we highly recommend that you go through the private flood insurance market.
Now, you don't really have to be scared of private flood insurance since this can provide you the same coverage and the government acknowledges it as valid flood insurance if you're required to get one for your property. The good thing as well is that the waiting period for private flood insurance is significantly shorter compared to the National Flood Insurance Program (NFIP flood insurance). Usually, you and your property will only have to wait five to fifteen days for the application, claims, and policies to be completed compared to the waiting period in the federal government which is 30 days which is almost a month.
Another private flood insurance benefit is how they determine the flood risk for your property. Now, the National Flood Insurance Program (NFIP) and FEMA are most likely to ask you for additional documents like sending photos of each side of the property and an elevation certificate which is something to take into account when it comes to the process.
Private flood insurance, on the other hand, have different means to determine your flood risks and each insurance provider has a different approach to determining the damages needed to be mitigated for your property. Additionally, certain extensions of your main property may be included in private flood insurance policies whereas the federal flood insurance usually excludes this or will require separate flood insurance for them to have coverage.
If you have questions on how to get into private flood insurance, what to do when your policy is impacted by the government shutting down, and anything about the flood, please feel free to reach out to us by clicking on the link below.
