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Step 1: House Approves National Flood Insurance Program (NFIP)

By July 14, 2011April 15th, 2018General Updates

The first step towards extension of the National Flood Insurance Program (NFIP) has been achieved. With the expiration of the NFIP looming in the near future (Sept. 30th, 2011 to be exact), the House of Representatives has made the first leap towards reauthorization of the flood program by passing H.R. 1309. Step 2 would be approval by the Senate and Step 3 would be the final authorization by signature of President Obama. The future of the program is hopeful as the bipartisan bill was accepted by House Republicans and Democrats alike with the overwhelming vote of 406-22. This is great news for the 5.6 million policyholders who rely upon the NFIP for their protection against floods and may incur losses as a result of flooding.

What does this mean?

If the NFIP extension makes it through all three steps of approval, the program would be extended until Sept. 30th, 2016 and other much needed measures would be in effect to reform the financial stability of the program. Last year, the NFIP lapsed four times, leaving homes and businesses vulnerable and in a state of uncertainty of when and if their flood coverage could be purchased or renewed. During these lapses, taxpayers are also exposed to the threat of costly relief efforts should a major flood occur. According to Judy Biggert, the House Representative who approved the authorization of the NFIP, “Homeowners and communities that rely on the NFIP are the clearest winners in today’s vote, but with these reforms, the taxpayers will finally get the protection they deserve.” Extension of the flood program would eliminate lapses in coverage until Sept. 30th, 2016.

Who is effected by this issue?
All NFIP policyholders and American taxpayers are effected by this issue. Because the program operates with a large debt of $18 billion and it effects so many people in this country, it has been a topic of national concern and debate. However, the program extension includes measures to resolve the program’s current debt which may be the reason behind the unanimous popularity of H.R. 1309.

What reforms are addressed in the bill?
(Insurance Journal)

  • Risk-mapping standards
  • Mitigation assistance
  • Annual premium increases- the cap is raised from 10% to 20% which may help transition properties newly mapped into flood zones
  • Phases out subsidies for certain properties, such as high-risk buildings subject to repeat claims
  • Phases in risk-based premiums
  • Maximum coverage limits- indexed to inflation
  • Expand NFIP options- business interruption and additional living expenses coverage

Were you effected by last year’s lapses in the NFIP? What are your thoughts on the extension of the National Flood Insurance Program, or the program in general? Leave a comment below and get the conversation started…

On another note, we hope you have found this Mackoul blog article useful and please let us know if you have any questions on your flood insurance or other policies and we would be glad to help.

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