Irma Victims Get Three Extra Months to Pay Insurance Premiums

Victims of Hurricane Irma won’t have to worry about their federal flood insurance coverage lapsing or losing their subsidy status if they can’t make payments on their policies until January 2018.

That’s because the Federal Emergency Management Agency extended today the grace period for policy renewals by 120 days for Irma victims in federally declared “major disaster” zones in Florida, Puerto Rico, and the U.S. Virgin Islands. FEMA runs the National Flood Insurance Program, which is responsible for about 98 percent of all residential flood insurance.

Irma's flooding

“Without the extension, the renewal grace period is 30 days to avoid a lapse in coverage. If policyholders have a lapse for either more than 90 days, or twice for any number of days, they may no longer be eligible for the subsidized premium,” a FEMA spokesperson told Bloomberg BNA today in an email.

These subsidized rates are often based on out-of-date flood risk maps and allow property owners to pay sometimes significantly lower premiums than what the cost to actually insure the property is based on modern flood maps. Policyholders are allowed to keep the lower subsidized rates because their properties were built up-to-code based on the flood maps available at the time of construction.

“Many of these policyholders have been disrupted by the storm by evacuations, post office closures, and disruptions to the businesses that service their policy,” the FEMA spokesperson said.

Many consumers get NFIP coverage through their primary insurance company such as Allstate Insurance Co., American Family Insurance Co., and Farmers Insurance Group, which participate in the NFIP’s Write-Your-Own (WYO) program.

Policyholder Improvement Initiative

In addition to observing the 120-day renewal grace period, FEMA directed these WYO insurers to pay from $5,000 to $20,000 to policyholders in advanced payments depending on whether the victims make a claim with or without photographic proof of damages, according to a Friday FEMA press release. Private insurers selling NFIP policies are also directed to waive the requirement for policyholders to submit an initial proof-of-loss form to advance their claims process.

FEMA instituted a number of changes after Hurricane Sandy to improve the policyholder claims process.

Policyholder improvements include “creating the Office of the Flood Insurance Advocate (OFIA), an independent office that advocates for the fair treatment of policyholders and property owners, developing a new appeals process, and increasing advanced payments for policy holders in declared flood disasters,” a FEMA spokeswoman said in a Sept. 13 email.