About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (December 27, 2024)

handle is hein.crs/goveruw0001 and id is 1 raw text is: Con re sY~n I flesedrch Service horujig Aegrliave le a~m 'e1914 Updated December 27, 2024 Issues for Reauthorization and Reform of the National Flood Insurance Program Floods are the most common and costly natural disaster in the United States; however, flood damage is not covered by homeowners insurance, and many flood victims are surprised to discover after a flood that their losses are not covered by insurance. Instead, homeowners and renters must buy a separate flood insurance policy; however, most private insurance companies do not offer flood coverage. Most people who have flood insurance get it from the National Flood Insurance Program (NFIP), which is the primary source of flood insurance coverage for residential properties in the United States. Over 22,000 communities in 56 states and jurisdictions participate in the NFIP, with over 4.7 million policies providing over $1.3 trillion in coverage. The program collects $4.3 billion in annual premium revenue. The 119th Congress will need to consider a number of issues as they consider legislation for long-term reauthorization and reform of the NFIP. Issues that Congress may consider in the context of reauthorization include (1) NFIP solvency and debt; (2) premium rates and surcharges; (3) affordability of flood insurance; (4) increasing participation in the NFIP; (5) the role of private insurance and barriers to private sector involvement; (6) noninsurance functions of the NFIP such as floodplain mapping and flood mitigation; and (7) future flood risks, including future catastrophic events. Reauthorization of the NHP Since the end of FY2017, Congress has enacted 32 short- term NFIP extensions. The NFIP is currently authorized until March 14, 2025. The statute for the NFIP does not contain a comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that generally tie to the expiration of key components of the program. Unless reauthorized or amended by Congress, the following will occur on March 14, 2025: (1) the authority to provide new flood insurance contracts will expire; however, insurance contracts entered into before the expiration would continue until the end of their policy term of one year; and (2) the authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion. Structure ofthe NFIP The NFIP is different from other disaster assistance in that it is not directly funded by taxpayers. The NFIP was designed so that residents in at-risk areas pay some of the recovery costs of a disaster through federal insurance before the event, with individual policyholders funding at least part of their recovery from flood damage. A core design feature of the NFIP is that communities are not required to participate in the program by any law or regulation, but instead participate voluntarily in order to obtain access to NFIP flood insurance. Communities that choose to participate in the NFIP are required to adopt land use and control measures with effective enforcement provisions and to regulate development in the floodplain. FEMA has set forth in federal regulations the minimum standards required for participation in the NFIP; however, these standards have the force of law only because they are adopted and enforced by a state or local government. Legal enforcement of the floodplain management standards is the responsibility of the participating NFIP community, which can elect to adopt higher standards as a means of mitigating flood risk. To this end, FEMA operates a program, the Community Rating System, to incentivize NFIP communities to adopt more rigorous floodplain management standards. NFIP flood insurance policies are sold only in participating communities and are offered to both property owners and renters and to residential and nonresidential properties. NFIP policies have relatively low coverage limits. The maximum coverage for single-family dwellings (which also includes single-family residential units within a 2-4 family building) is $100,000 for contents and up to $250,000 for building coverage. The maximum coverage limit for nonresidential business buildings is $500,000 for building coverage and $500,000 for contents coverage. In a community that participates or has participated in the NFIP, property owners in the mapped SFHA are required to purchase flood insurance as a condition of receiving a federally backed mortgage. This mandatory purchase requirement is enforced by lenders rather than FEMA. Property owners who do not obtain flood insurance when required may find that they are not eligible for certain types of disaster assistance after a flood. As a public insurance program, the goals of the NFIP are different from the goals of private-sector insurance companies. It encompasses social goals to provide flood insurance in flood-prone areas to property owners who otherwise would not be able to obtain it and to reduce the government's cost after floods. The NFIP also engages in many ''noninsurance activities in the public interest: it identifies and maps flood hazards, disseminates flood-risk information through flood maps, requires community land- use and building-code standards, contributes to community resilience by providing a mechanism to fund rebuilding after a flood, and offers grants and incentive programs for household- and community-level investments in flood-risk reduction. Flood Mapp ng and Mitigation The NFIP approaches the goal of reducing comprehensive flood risk primarily by requiring participating communities to collaborate with FEMA to develop and adopt flood maps called Flood Insurance Rate Maps (FIRMs). An area of

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Already a HeinOnline Subscriber?

Log In

profiles profiles most