Friday, September 21, 2018

Flood Insurance Program Still Threatened

If you buy a property in the flood plain, your lender will require flood insurance. The National Flood Insurance Program (NFIP) was scheduled to expire July 31, 2018. Trump delayed its expiration through November 30, 2018. Gee, do you think that date has anything to do with hurricane season and mid-term elections? After that, Congress has to reauthorize it. If they don't, you won't be able to buy flood insurance, so you won't be able to buy or sell a house in the flood plain unless you pay cash.  

This Wikipedia article discussed the history and problems of NFIP.

These two statements from the Wikipedia article on NFIP are particularly disturbing:

The cost of the insurance program was fully covered by its premiums until the end of 2004, but has had to steadily borrow funds since (primarily due to Hurricane Katrina and Hurricane Sandy), accumulating $25 billion of debt by August 2017. 

Another criticism is that FEMA doesn't administer all policies, instead outsourcing many policies to private insurance companies. When a disaster occurs, FEMA makes payments to those private insurance companies to offset their costs. However, there is little oversight and few rules as to how the money should be distributed. As a consequence, private insurers have been known to use FEMA payments to hire attorneys that fight policyholders in court. One law firm is estimated to have received US $29M from FEMA payments to fight Hurricane Sandy claims. 

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