National Flood Insurance Program is caught in Senate wrangling

Will you be able to get insurance for your flooded basement this spring when snows start to thaw? 

At this very moment, the National Flood Insurance Program, the government-run program that provides most flood insurance for residents and businesses nationwide, is officially out of money. Funding for the program ran out last night. The House Financial Services Committee voted to extend the program through March 31. But in the Senate Banking Committee, an extension of funding for flood insurance and several other, more prominent programs, was blocked today by Sen. Jim Bunning, R-Ky., who said they would add to the deficit.

Here's what the Federal Emergency Management Agency, which oversees the flood program, said today:

Authorization for the National Flood Insurance Program expired February 28, 2010. If reauthorization takes place after this date, policies that are already in the process of being issued or renewed will be issued when Congress re-authorizes the National Flood Insurance Program. Payments for claims on existing policies will not be impacted; such policies will continue uninterrupted.

In all likelihood, a bill will be passed to extend the coverage and make it retroactive to Feb. 28th, says John Priple, vice-president of government affairs for the Independent Insurance Agents and Brokers of America. In the intervening days, however, you won't be able to buy flood insurance.

Once it's available again, however, consider getting it. As Consumer Reports Money Adviser outlines, flood insurance fills in gaps not covered by private insurance, protecting your home and belongings not only from overflow of nearby bodies of water, but from other types of water-related damage, such as mudslides and basement seepage from saturated gardens and yards. At www. floodsmart.gov, you'll learn of some insidious perils that only flood insurance will cover.

FEMA estimates that a quarter of all its flood claims come from low- and medium-risk areas that don't expect flooding. Premiums for homes in those areas is relatively inexpensive. The agency requires a 30-day waiting period after purchase before the coverage will kick in. Generally you buy it through an insurance agent.

Priple says that FEMA has never defaulted on claims payments through the flood program, and probably won't in the future.—Tobie Stanger