Insurance Space

A House bill to reauthorize the National Flood Insurance Program through September 2015 falls far short of reform the program needs for financial solvency, experts and politicians testified during a congressional subcommittee hearing Thursday.

NFIP’s instability was the main reason cited by those who oppose U.S. Rep. Gene Taylor’s proposal to offer optional wind coverage. Taylor, D-Miss, was joined by Rep. Steve Scalise, R-La., in advocating wind coverage through NFIP. Both talked about the inherent conflict in having private insurance companies adjust their own wind claims, along with NFIP claims, after hurricanes.

The president signed a bill Thursday that extends funding for the National Flood Insurance Program, which had been allowed to lapse March 28.

Funding will be restored through May 31 under the legislation.

The lapse had threatened to complicate home closing on the Outer Banks because flood insurance is required by federal law on any bank-owned or government-backed mortgage loan, such as Fannie Mae, Freddie Mac, VA and USDA.

The federal agency charged with minimizing flood damage is drawing up new flood insurance maps for Plymouth and Bristol counties, a region where coastal flooding is a fact of life for many.

State officials in charge of coordinating Federal Emergency Management Agency map-making activities with local communities are holding six meetings next week, four of them in regional towns, to discuss the new maps and get local comment on them.

Thousands of residents in this area live in floodplains, areas defined by the government as having a 1 percent chance of a flood in any given year. But that figure can be misleading: These areas have a 26 percent chance of flooding over the life of a 30-year mortgage, officials say.

It doesn’t take a Katrina-style coastal disaster to bring flood damage a homeowner’s way. Snowmelt repelled by frozen ground can cause flooding. New development can leave less soil surface to absorb water, making formerly safe homes suddenly vulnerable.

Yet a typical homeowners insurance policy won’t cover those perils. A homeowner will need separate flood insurance says Consumer Reports, which ranges in cost from several hundred to several thousand dollars a year, depending on coverage and risk levels.

In recent disasters involving both wind and flood damage, some insurers have tried to pin the blame on floodwaters (not covered by their policies) rather than wind (covered) and used that distinction to deny homeowners’ claims.

MADISON, Wis. – About 50 Wisconsin communities, including flood-damaged Lake Delton and La Valle, have dropped out of the federal flood insurance program, making residents ineligible for federal aid, state and federal officials said.

Residents in communities lacking the insurance won’t receive federal disaster assistance even if a federal disaster is declared in their area, said Philip Clark, a spokesman for the Federal Emergency Management Agency regional office in Chicago.

But, communities can rejoin the program within six months of a disaster declaration, allowing residents to file claims for past damage, said Roxanne Gray, state hazard mitigation officer with Wisconsin Emergency Management.