ORLANDO, Fla. — The clock is ticking for Congress to reauthorize the National Flood Insurance Program (NFIP) and it has many of us, but specifically members of the Real Estate Industry, very well concerned about what the future will bring.
The reason why the National Flood Insurance Program is so important is that regular homeowner’s insurance does not cover loss due to floods and most homeowners have no idea what qualifies as a flood. Everyone understands what constitutes a river, lake or tidal flooding. However, a flood can be water from a rogue summertime thunderstorm that puts water into two or more houses or inundates two acres or more of normally dry land. For instance, a summertime afternoon thunderstorm in Florida that produces 5 inches of rain in an hour on a road with a clogged drainage ditch could flood several homes. If this scenario occurs, the homeowners will need flood insurance. Even in a hurricane, water surges are not covered by homeowner’s insurance — just the wind-driven water damage above the flood line.
This has become a familiar for millions of Floridians who depend on the NFIP for peace of mind during hurricane season, and to stabilize the housing market all of the time.
As it turns out, the deadline to make this decision by members of Congress is July 31st and the National Association of Realtors is running a campaign urging Congress to act on time because a lapse of such program at the peak of a hurricane season could leave millions of Americans at risk, and could mean that over 20,000 communities across the United States would face severe disruption. Also, a lapse on the program will slow down the recovery process for property owners in Florida, as well as other affected states like Texas, Louisiana and the U.S. territory of Puerto Rico. One year after, yet entering another hurricane season, many of these locations are still rebuilding homes (and businesses) affected by hurricanes Maria, Irma and Harvey.
The National Flood Insurance Program works differently from your regular homeowner’s policy. It is a separate policy that you can normally buy from your insurance agent. The price of the insurance depends on where your home is placed on the FEMA flood maps and the elevation of your home. A homeowner whose house is in a flood zone can get an Elevation Certificate from a surveyor, which can help with the cost of flood insurance.
In an attempt to force a long-term resolution, the NFIP was separated from the rest of the federal budget earlier this year. The idea was that by making the NFIP stand on its own, Congress would be forced to come up with a better plan for a program facing $20 billion in debt.
The problem is a difference in philosophical approaches. Some lawmakers want stringent economic reforms that could unjustly cause insurance rates to skyrocket in coastal states such as Florida. Others want the emphasis on mitigation programs with gradually escalating rate increases. And there are people on both sides adamantly opposed to yet another temporary reprieve.
FACT: Due to its large coastline, Florida has poured far more money into the NFIP than it has gotten back in the last 40 years. From that perspective, Floridians have helped keep the NFIP afloat while states such as New Jersey, Mississippi, Louisiana and Texas have benefited. DOWNSIDE: For us who live in Florida we would continue to pay our fair share, but do not deserve to carry the brunt of unrealistic rate increases what makes many believe the highly sought reform is necessary and imminent.
The National Flood Insurance Program works differently from your regular homeowner’s policy. It is a separate policy that you can normally buy from your insurance agent. The price of the insurance depends on where your home is placed on the FEMA flood maps and the elevation of your home. It has coverage limitations of $250,000 and does not cover replacement cost — just value. There is also flood insurance for personal property, which can cover up to $100,000. Your insurance agent can provide you with rates and coverage limitations for your property. With flood insurance being a government-backed program, it is usually affordable unless you are in a high-risk zone. A homeowner whose house is in a flood zone can get an Elevation Certificate from a surveyor, which can help with the cost of flood insurance.
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