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Congress agrees to incremental flood insurance fix


 

WASHINGTON – Jan. 15, 2014 – An omnibus budget bill expected to pass Congress and become law includes language that offers a bit of flood insurance relief for some homeowners, and a ray of hope for all owners impacted by rapidly rising premiums for flood policies issued under the National Flood Insurance Program (NFIP).

Because the current change is part of a largely bipartisan budget bill, it’s expected to pass the House and Senate, and be signed into law by Pres. Obama.

The law doesn’t help anyone trying to sell a flood-zone home. In those cases, a buyer must immediately pay the higher actuarial rate for flood coverage, forcing some owners to sell for less or making a sale impossible.

The law does help some current flood policy homeowners – owners of older homes built to code at the time of construction who voluntarily bought flood insurance. Sometime after construction, new flood maps issued by FEMA moved these owners into a higher-risk zone, but the program, so far, has subsidized their flood insurance rates to a level below their actuarial level. These owners were supposed to see their rates start to rise incrementally this year, but the expected law delays any increase for 10 months.

Still, the expected law raises homeowners’ hopes: It includes a mandate that the Federal Emergency Management Agency (FEMA) has 60 days to issue a report on ways to make flood insurance more affordable.

Homeowners would see greater relief from an unrelated bill currently moving in the Senate, though its passage – approval by the Senate, the House and signed by Pres. Obama – is less assured. If the current version becomes law, it would provide a four-year delay in flood insurance rate hikes. During that time, the National Academy of Sciences would conduct an affordability study and FEMA would certify the accuracy of its floodplain maps.

While this second bill could get a full Senate vote within the week, its future in the House is less clear.

As a result, the bill currently expected to pass “is only a partial solution and there is still work to be done,” says Sen. Bill Nelson, D-Fla.

© 2014 Florida Realtors®

Related Topics: Property insurance