Extending the financially strapped federal National Flood Insurance Program for another five years while phasing out subsidized coverages for some properties should occur tomorrow.
President Barack Obama is expected to sign a compromise measure into law on July 6 that gradually would increase rates for commercial properties, second homes and repetitively flooded properties by 25 percent over the next four years until reaching actuarially sound levels. The measure also requires federal officials to complete flood insurance rate mapping while creating a reserve fund to help pay damages from large-scale floods.
The National Flood Insurance Program was scheduled to expire on July 31 and provides up to $250,000 in flood insurance coverage for homes and other properties located in federally designated flood plains and is administered by private insurers. While frequently stalled during the past couple years, claims continued to be processed and paid through the National Flood Insurance Program, but new policies could not be issued, causing problems for people trying to renew flood insurance policies are trying to close on a home in need of flood insurance protection. A recent halt in the National Flood Insurance Program delayed closings on about 1,200 home sales each day and 180,000 across the United States, according to the National Association of Realtors.
The National Flood Insurance Program has been about $19 billion in debt since the highly destructive Hurricanes Katrina and Rita mauled much of the Gulf Coast in 2005, and a recent federal report indicated the rates currently charged through the flood insurance program amount to taxpayer-subsidized flood insurance protection for about 25 percent of the about 5.6 million homes and other properties insured through it.
The National Flood Insurance Program was established in 1968 to provide flood insurance protection for homes and properties located in federally designated flood zones, where purchasing flood insurance from private insurers can be difficult. The program sustained itself with insurance premiums and deductibles until 2005, when Hurricanes Katrina and Rita struck the Gulf Coast and inflicted some $17 billion in National Flood Insurance Program claims.
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