As flooding in the United States continues to escalate, so do the costs associated with the phenomenon. Recent flooding of the Mississippi River, for instance, has resulted in catastrophic damage to countless homes and businesses. Although much of the recent damage has occurred in southern states, such natural disasters can be found all over the country. In fact, Pennsylvania has claimed more losses under the National Flood Insurance Program (NFIP) than most other states.Today, the federal government, through the NFIP, subsidizes the vast majority of flood insurance policies. Private insurance companies generally only sell and administer these policies. To be clear, insurance companies can, and often do, write flood insurance policies. Even in such cases, however, the Federal Emergency Management Agency (FEMA) still pays the claims through the NFIP.

Since the creation of the NFIP in 2008, Congress has extended the program ten different times, each on a short term basis. Congress has even permitted the NFIP to expire twice, including once in June 2010. Although Congress retroactively renewed the NFIP late last summer, the government had temporarily stopped issuing new policies. As a result, it became nearly impossible for home and business owners to obtain flood insurance during that time.

Unless Congress once again extends the program, the NFIP will expire in September 2011. In mid-July, the House of Representatives approved legislation to extend the NFIP for five years. It is still unclear whether the Senate will pass the bill, and thus the future availability and reliability of flood insurance policies is equally unclear.