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Flood Insurance Reform


The National Flood Insurance Program was created in 1968 by Congress. Flood insurance had become a huge risk for individual insurance companies as flooding became more common. Flooding was becoming more common to an increase in development of land, especially land near water or other floodable areas. Congress decided that since flood insurance was a necessary aid for home and landowners, they would create a national program. This program is not wholly run through the federal government. Instead, private insurance companies offer flood insurance in return for government subsidization of the policies. This allows insurance companies to receive money from the government in the case of claims that are beyond their own ability to pay. The National Flood Insurance Program covers both floods and mudslides.

Since the introduction of the National Flood Insurance Program, flood insurance has undergone a number of reforms. Many of these reforms have been acts meant to minimize the possibility of severe flooding, including the Coastal Barrier Improvement Act of 1990. Others directly changed flood insurance. For example, the Flood Insurance Form Act of 2004 changed the statutes of flood insurance. Today, those who have experienced severe flooding causing damage over $1,000 multiple will not be reimbursed for a third or further flooding. In 2014, the Homeowner Flood Insurance Affordability Act was passed. This bill delays increases in homeowners’ insurance premiums.

Flood Insurance Rates Reforms

The Affordability Act of 2014 fixed flood insurance rates across the country. Primary homeowners and renters pay a surcharge of $25 yearly while owners of non-primary/non-residential buildings are required to pay a surcharge of $250. Insurance rates are expected to increase up to 25% yearly until they reach their full-risk rate, which depends on the area and building. Talk to an insurance agent in your area for more information about your rates. The Affordability Act prevented agencies from changing rates to the full-risk rate immediately, giving home and business owners more time to adjust to paying heightened rates. This primarily affects people living in lower risk areas, as most high-risk buildings were required to pay the full risk-rates already.

Flood Mapping and Insurance

FEMA and the Technical Mapping Advisory Council work together to appraise and map possible flood damages. The flood maps are the basis for flood insurance rates in the area. Each property owner is notified that a new map has been made when appropriate. The public is then allowed 30 days to comment on or appeal the maps. Communities are not charged for map changes caused by habitat restoration, dam removal or other changes beneficial to the environment. This mapping process was started with the Biggert-Waters Flood Insurance Act of 2012.

Flood Insurance Advocate

Legislation recently created the post of flood insurance advocate. This is meant to educate property owners about their flood risks and how to reduce rates by taking effective action. The flood insurance advocate is also responsible for outreach and education, including helping others understand rate maps and rate information. This office is still in the process of being created. In the meantime, contact Floodsmart or FEMA to learn more.