National Flood Insurance Program set to expire in less than a month

The National Flood Insurance Program, or "NFIP," is a program of the Federal Emergency Management Agency ("FEMA") that issues standard flood insurance policies, mostly through private insurers.

Originally set to expire last fall, on October 1, 2008 President Bush signed legislation that extended the program until March 6, 2009. That was a compromise bill as the House and Senate were unable to agree on certain provisions. The House version included windstorm coverage, and President Bush had said he would veto the bill for that reason. The Senate version would have forgiven $17.5 billion that NFIP borrowed in recent years as a result of increased damages from hurricanes.

I called FEMA to find out whether we can expect Congress to further extend the program and, if so, with what changes. Ed Pasterick, a Senior Policy Advisor at FEMA, stated that thus far Congress is not actively considering the issue. He expects that the program as it currently stands will be again extended until the end of September, 2009. He stated that FEMA itself is not interested in including windstorm coverage in the program.

In a future post, assuming that NFIP is extended, I'll discuss how NFIP insurance differs from other types of insurance.

Shout out to the Insurance Library

Boston has a wonderful resource for anyone researching insurance issues: the Insurance Library at 156 State Street. I have occasionally used the Insurance Library for many years but recently, during a spate of intense research, I finally became a member. It was a great investment that gives me access not only to the library's excellent books, but also to its librarians, who are unfailingly helpful.

Layoffs Done Right

Interesting op-ed piece from HR Guru Roberta Chinsky Matuson on the impact of layoffs on the employer's reputation.

Roberta makes some great points. Some companies are good at managing their employment relationship. Others... Not so good.

How to read an insurance policy: the known loss doctrine, part 3

In previous posts I have discussed the known loss doctrine here and here. The insuring agreement typically defines when a loss is deemed to have been known to have occurred as the earliest of when:


--An insured reports a loss to any insurer; or


--An insured receives a written or verbal demand or claim; or

--An insured becomes aware by any other means that a loss has occurred or has begun to occur.


Those definitions are important not only for the known loss doctrine, but also because insureds are required to report losses to their insurers immediately ("as soon as practicable") and their failure to do so could result in denial of coverage for the loss. (I will discuss in a future post when an insurer can get away with denying coverage as a reult of late notice).


Insureds often fear to report claims because the mere reporting of a claim may result in their premiums going up. Although I am not an expert in this subject (and any of you who are should feel free to chime in here), my understanding is that reporting a single potential claim that never materializes into an actual claim typically does not affect premiums. On the other hand, failing to report a potential claim that does materialize could substantially affect your right to insurance coverage for that claim.


The lesson: Report to your insurer any claim as soon as you learn of it.