As the federal government shutdown nears the one-month mark, more New Jersey residents are starting to feel the impact and the insurance industry hasn’t been immune.
Many homeowners in flood-prone areas of the state are required to obtain flood insurance to get mortgage approval. Unlike the previous long-term shutdown in 2013, FEMA is not issuing new policies or renewing those that lapse while the government is shutdown.
The government shutdown comes at an inopportune time for the garden state’s agricultural producers who are planning for the upcoming planting season and making their considerations of crop insurance and loan programs. Due to the shutdown, the USDA is not currently processing new loan applications. Farmers can turn to banks, but banks typically require crop insurance certification to issue loans to agricultural producers and due to the shutdown, many USDA offices that process and administer crop insurance are closed. Farmers can turn to private insurance for help, but the private sector relies on crop reports from the USDA to help underwrite their risk on crop insurance.
For federal government workers, the shutdown has brought hardship not in just the inability to receive a paycheck, but also the inability to make necessary changes to their health coverage. Due to the shutdown, federal employees have had difficulty adding or changing family members, such as new spouses, newborn babies, or adopted children to their exiting health plans. Some of these employees may be facing large health care bills while not receiving a paycheck to cover those costs.
The Bright Spot
The insurance market is largely regulated on a state level and the New Jersey Department of Banking and Insurance has reached out to help. NJ DOBI issued Bulletin 19-01 which instructs insurance division-regulated entities and individuals to assist affected policyholders consistent with prudent insurance practices, including:
- Relaxing due dates for premium payments
- Extending grace periods
- Waiving late fees and penalties
- Allowing forbearance regarding cancellation/non-renewal of policies
- Allowing payment plans for premium payments
Authors: Shawn Gillon| [email protected] and Devin Desmond, CPA | [email protected]
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