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State Farm discontinues new flood insurance policiesPosted On Wed, June 9, 2010
Insurance giant State Farm has announced that it will stop selling new flood insurance policies, saying that a number of factors contributed to the company's decision.
The company will still service existing flood insurance policies and its agents will still help those customers with the policies to get more from the National Flood Insurance Program directly, it told the Insurance Journal. A company spokesman said the decision to no longer sell its own coverage was based on recent disruption in NFIP plans, such as the existing moratorium on writing new policies.
The Journal said State Farm had just over 800,000 flood insurance policies in place and, when disruptions like the current ones occur, the paperwork becomes too much for the company to handle. The spokesman said that even if the government lifts the moratorium, it is unlikely to begin offering the policies again.
A recent article in the Suffolk (Virginia) News-Herald said that flooding is the most dangerous aspect of any major hurricane for homeowners, and that flood insurance is separate from normal homeowners' insurance. The article said it costs about $550 a year, and should be purchased well in advance of a coming storm.
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