What You Need To Know About Flood Insurance

By Anthony SanFilippo

Flooding

Here is all you need to know about the National Flood Insurance Program (NFIP), and the proposed legislation to reauthorize the program once it expires at the end of the year.

  • Every five years, Congress must reauthorize the NFIP to continue selling flood insurance; the next deadline for Congress to act is September 30, of this year, or the program shuts down.
  • The NFIP was created in 1968 following Hurricane Betsy, which became known as “Billion Dollar Betsy” because it was the first storm to cost more than $1 billion in damage.
  • The NFIP chugged along smoothly for nearly 40 years before it started to get into debt when flooding incidents increased and costs began to rise beyond the point of funds available in the program.
  • In 2008, the NFIP was $18 billion in debt and Congress debated how to reform the NFIP without consensus. There were a series of 18 short-term extensions and four program lapses between 2008 and 2012.
  • In 2012, Congress came to an agreement known as the Biggert-Waters Reform Act. It reauthorized the NFIP for five more years and addressed the program’s fiscal solvency.
  • However, a bunch of unintended consequences arose from Biggert-Waters. Subsidies were eliminated when properties built before the creation of flood maps were purchased. Homebuyers were quoted a grandfathered rate and then two weeks before closing were told that would increase by five times the price, and had to walk away.
  • In 2014, the Grimm-Waters Act, also known as the Homeowner Affordability Insurance Relief Act, was passed. It restored grandfathering, capped rate increases and eliminated the point of sale increases.
  • Now, in 2017, the NFIP is $25 billion in debt and repeatedly flooding properties account for 1 percent of NFIP policies but 30% of all claims.
  • The House Financial Services Committee passed seven bills addressing the NFIP in June addressing things such as private flood insurance, changes to the claims process and new flood mapping procedures.
  • House leadership has not scheduled a vote but is expected to combine all seven bills into one bill, with modifications, before the full House of Representations can consider the omnibus measure.

Here is what you need to know about the current legislation.

The National Association of REALTORS® (NAR) supports the legislation, including:

  1. A new five-year reauthorization through 2022.
  2. The Ross-Castor Private Flood Bill that allows for a growing private flood insurance market and provides individual property owners with the same amount of coverage at the least amount of cost.
  3. Strengthens the NFIP solvency.
  4. Allows for $1 billion in property mitigation grants that will help lessen the sting of rate increases for property owners.
  5. Doubles the increased cost of compliance and allows for pre-flood insurance rates.
  6. Improves the rate fairness of the NFIP.
  7. Caps NFIP rates for the first time ever at $10,000
  8. Streamlines the community map appeals process.

*Note: Some Information from Realtor.com was used in this report.

WATCH THE VIDEO:

READ MORE ABOUT FLOODING:

Video: Do You Know What N.F.I.P. Stands For?

If you haven’t heard about the National Flood Insurance Program, you may want to watch this video because what you don’t know can cost you. Big dollars.

Next Steps for Flood Insurance

The National Flood Insurance Program must be reauthorized by Congress every 5 years in order to continue selling flood insurance. That authority is again due to expire at the end of the year unless Congress acts to extend it.

Newly Passed House Bill Will Avert Flood Insurance Disaster

The State of Hawaii has passed House Bill 1418 to clarify our state building laws and avert a disaster in our federal flood insurance coverage.

Quiz: Flood Insurance

Take our quiz and find out how much you know about floods and flood insurance.

Heavy Rains in Hawai’i Can Cause Catastrophic Damage to Property

Heavy rains can happen at any time and can result in flash floods. In October 2004, a flash flood in Manoa, a residential neighborhood in Honolulu, caused $85 million in damage.

Hawai’i Homeowners May Find Themselves Without National Flood Insurance

Hawaiians who rely on the National Flood Insurance Program may soon find themselves without any protection if the state government doesn’t act soon.

4 Steps To Help You Protect Your Home Investment

Whether you plan on staying in your new home for five years or fifty, it’s important to make sure you are protecting your investment.

Gulf Coast REALTORS® to Sponsor Flood-Insurance Conference

Property owners in Mississippi’s Gulf Coast region have suffered a number of hardships over the last 10 years, and the Gulf Coast Association of REALTORS® has been working to help them deal with issues arising from those hardships.

Fargo-Moorhead REALTORS® Search for Flooding Solutions

When flooding occurs on the Red River of the North, you can find members of the Fargo-Moorhead Area Association of REALTORS® on the front lines, helping with emergency responses and efforts to find long-term solutions. Homeowners in the Fargo-Moorhead …

Mississippi REALTORS® Seek Disaster Aid for Homeowners

The Mississippi Association of REALTORS® is advocating for legislation that will provide Mississippi homeowners with important information and resources in connection with natural disasters. This proposed legislation is intended to address some of the …


Related Stories

Don’t Let Tax Reform Become A Tax Increase For Homeowners

Tell Congress you oppose any tax reform plan that would weaken the tax incentives for owning a home, such as the Mortgage Interest Deduction, or increase taxes on homeowners by eliminating the state and local tax deduction.

Send Your Message Now



MORE STORIES