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Hawai’i Homeowners May Find Themselves Without National Flood Insurance

By HOM Editorial Team
September 2016
Lower Twin Falls
Photo: Severely swollen Lower Twin Falls after a tropical rainstorm. The flash flood blocks the path to the Upper Twin Falls.

For most Hawai’i homeowners the idea of living on the island without flood insurance is unthinkable. Being surrounded by water, and vulnerable to tropical storms, means that flood insurance is an important and necessary safety measure. In fact, approximately 109,5822 acres of island land are in a Special Flood Hazard Area (SFHA).

However, homeowners on the Islands who rely on the National Flood Insurance Program (NFIP) to protect their property from flood-related damage may soon find themselves without any protection if the state government doesn’t act soon.

The State of Hawai’i and its four major counties are considered “Participating Communities” in the NFIP. Participating communities are required to enter into an agreement with the Federal Emergency Management Agency (FEMA). This agreement requires that Hawai’i adopt and enforce floodplain management ordinances that meet or exceed the minimum regulations set by the federal government.

Though this agreement with FEMA sounds straightforward enough, the island is running into a problem. Construction requirements were recently revised in order to provide permit and building code requirement exemptions for certain types of agricultural buildings. This change means that Hawai’i is now in conflict with FEMA’s floodplain management regulations. As a result, the island now has until July 31, 2017 to resolve the issue or risk losing access to NFIP protection.

Should the state and FEMA fail to reach agreement, the impact would be significant. There are currently 60,199 NFIP-backed policies in the state, with insurance coverage exceeding $13 billion.

And the consequences for Hawai’i if they lose the NFIP extend far beyond just flood insurance. State and local participating communities are eligible for Federal Disaster Assistance in the event of a Presidential Disaster Declaration.

However, if the State of Hawai’i is no longer participating in the NFIP, certain forms of Federal Disaster Assistance may not be available to government, businesses, and individuals to aid in recovery. This would be a devastating loss of support since it estimated that Federal Disaster Assistance has been made available to the State of Hawai’i since 1980, and has totaled over $400 million dollars.

Hawai’i Association of REALTORS® (HAR) Government Affairs Director Myoung Oh spoke to the seriousness of this issue, “If Hawai’i no longer has the shoulder of the Federal government, it will be devastating for current and new homeowners as they will be without flood insurance. In cases where flood insurance is mandated by the mortgage, it may likely be a forced placed insurance or skyrocketed premiums through private insurers.”

The state’s Department of Land and Natural Resources will be proposing amendments to relevant statutes in order to ensure that federal flood insurance and federal disaster assistance will continue to be made available in the State of Hawaii.

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