How the Government Shutdown Impacts Insurance

As I write this, it appears the members of the Senate and House of Representatives have come to their senses and agreed to fund the federal government for at least 17 more days or until February 8. Who knows what will happen by then! Regardless of who’s at fault, I thought it would be interesting to look at how such a shutdown impacts individuals and insurance.

Federal Employees: When the federal government shuts down, non-emergency federal employees may be furloughed until the government resumes operation. The longer they are furloughed, the greater the financial strain and impact they’re under. Bills may go unpaid including car and home insurance and this isn’t good for anyone. Gaps in insurance can make resuming coverage even more expensive for these policy holders.

Flood Insurance: I began receiving emails from all my flood providers early today stating the National Flood Insurance Program (NFIP) will not issue any new flood policies or renewing existing policies. This delays closings on new homes where flood insurance is required and could subject existing policy holders to a gap in coverage. Most mortgage companies in a prolonged shutdown would have to consider replacing policies that didn’t renew with forced place coverage which is more expensive and doesn’t protect the homeowner adequately.

FEMA will continue to operate and respond to any new disasters that arise during a shutdown. NFIP will continue to make payments on existing flood insurance claims from Harvey, Irma, and Maria.

The good news is both parties came to an agreement on Monday, January 22nd and provided enough funding for operations to continue through February 8th. It’s good that an agreement was put together, but the question remains can they work out the details separating them to keep another shutdown from happening? We can only hope so!

What do you think? Share your thoughts, experiences and questions with me. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

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