House Authorizes 5-Year Extension of National Flood Insurance Program

The House of Representatives passed legislation on Thursday which would authorize the National Flood Insurance Program (NFIP) for the next five years.  H.R. 5114 would also make a number of changes to the NFIP.  The flood insurance program has been operating under a series of temporary extensions for much of the year while more permanent legislation has been stalled in the Senate.  The insurance lapsed completely on June 1 and was unavailable until the Senate passed a temporary and retroactive extension until September 30 earlier this month.  

During June it was estimated that some 1200 house closings were postponed or cancelled every business day because borrowers could not obtain the required insurance.

NFIP is the primary source of reliable, affordable flood insurance coverage for more than five million American homes and businesses. Homes within a flood plain as designated on a Flood Insurance Rate Map (FIRM) are required by lenders to be covered by flood insurance.  Homeowner hazard insurance generally does not cover damage done to a property by water once reaches ground level. 

The bill, introduced by Rep. Maxine Waters (D-CA) makes a number of changes to the program.  First, it phases in actuarial changes to properties that were built before the first FIRM was effective within a community.  It also raises maximum coverage limits, provides notice to renters about the availability of insurance for their household contents, and establishes a Flood Insurance Advocate similar a model used by the Internal Revenue Service.

Floor insurance is also available to homeowners who live outside of a designated flood plain and is increasingly recommended as the U.S. has, in recent years, experienced serious floods in areas that have not flooded in the past.  As the Federal Emergency Management Administration, which administers the program, has updated flood insurance maps, more homeowners are also becoming subject to the insurance requirements.  H.R. 5114 delays the implementation of new rate maps so homeowners in a neighborhood newly classified as a flood zone will not be immediately burdened with insurance costs.

Congresswoman Waters said, "This legislation addresses the challenges posed to communities nationwide by the imposition of new flood maps. I saw these challenges in my home city of Los Angeles, and earlier this year, I was able to assist homeowners in the Park Mesa Heights area of Los Angeles who had been mistakenly placed in a flood zone. In this case, FEMA acted quickly to respond to new data and correct the mistake. However, there are thousands of homeowners nationwide who now find themselves in flood zones and subject to mandatory purchase requirements. H.R. 5114 will protect them."

Permanent extension of the program is still pending passage in the Senate.