Congress' $9.7 billion Sandy relief law targets flood claims

Congress on Friday approved $9.7 billion in disaster relief for Sandy. So now what?

The money will go to increasing the borrowing limit of the National Flood Insurance Program, through which the federal government underwrites virtually all the flood insurance policies in this country.

So far, the program has seen almost 140,000 claims related to Sandy - more than 70,000 in New Jersey alone. And early estimates from the Federal Emergency Management Agency were that those claims would cost from $6 billion to $12 billion.

At the time of the storm, that far exceeded the program's ability to pay. Congress had set the flood program's borrowing limit at $20.8 billion, and with debts still on the books from Hurricane Katrina and other storms, the program had only $3.8 billion available when Sandy struck in late October, said Don Griffin, a vice president with the industry group Property Casualty Insurers Association of America.

On Wednesday, FEMA officials warned that if the limit were not extended, they would run out of money by next week and insurance checks would come to a standstill - as happened for a brief period following Katrina.

Now the borrowing limit has been extended to more than $30 billion. The expectation is that that will allow FEMA to pay off the rest of the Sandy claims - $1.7 billion has been paid out so far - and cover claims from winter storms, spring floods, and whatever else Mother Nature has in store until the next mega-storm hits.

Jersey Shore officials have complained that Sandy insurance settlements have been too slow in coming. There's hope that an increase in the borrowing limit will cause a surge in payments. Whether that will happen depends on whom you ask.

Mike Chaney, Mississippi's commissioner of insurance, who tangled with FEMA after Katrina struck, was optimistic. "I think they will," he said. "They have money to send out now."

If not, those along the Shore waiting for flood insurance checks could have still longer to wait.

FEMA has up to 90 days from the date of the claim to make a settlement offer. And if the claimant feels the offer is too low, negotiations with insurance representatives can stretch the time line even further.