NFIP Renewal Extended
The National Flood Insurance Program’s authorization to operate was to expire on Dec 8th 2017 after being extended back in September 2017. As reported in a prior post, the extension in September was needed due to the circumstances and uncertainty related to the recent hurricanes and storms at the time.
The history of the program and causes for the $24.6 billion of debt (before claims for this seasons’ storms are included) were examined in that post. Proposed solutions were also discussed in the prior post.
The President signed legislation passed by the House and Congress to extend the NFIP authorization for an additional two weeks. Congress now has until Dec 22, 2017 to reauthorize the NFIP. The NFIP has been extended 17 times and lapsed 4 times between 2008 and 2012. It is time to quit kicking the can down the road and find a long term solution.
While one can remain hopeful that Congress can reform and modernize the program to include more mitigation activities and create a better solution for repeatedly flooded properties, it seems unlikely that those provisions will be decided before Dec 22.
Flood insurance is vital coverage for millions of families and property owners. Valid flood insurance claims from the impacts of the most recent storms; Harvey, Irma and Maria would still be honored in the even the NFIP authorization lapses.
However, new policies and existing policies would not be able to be issued or renewed. As a result, property owners who are required to have flood insurance as a condition to their mortgage would find it difficult to comply. There are few private insurers for flood Insurance. This would also impact issuance of new mortgages where there is a flood risk.
Flood insurance is required for a mortgage in the 100-year floodplain, but without access to the NFIP, buyers simply couldn’t get a mortgage or vital protection from the No. 1 cause of loss of property and life: flooding.
The National Association of Realtors’ estimate that the impact from a lapse to the NFIP would delay or cancel 40,000 home sale closings per month across the United States. This would be a serious disruption to the real estate markets.
Read this detail explanation of the flood map updates for Dare and Currituck County on the Outer Banks. The preliminary flood map, released June 2016, shows 15,970 buildings in Dare County that are categorized as a lower risk compared to the prior effective map.
County wide the number of properties in the V zone was reduced by 3,720 down to 1,731. This will reduce new construction costs, as well as reducing development standards on remodels. Many homeowners will have a lower flood insurance premium or no longer be required to carry flood insurance.
The NFIP encourages communities to implement flood plain management policies and provides affordable insurance based on flooding risk as determined by the flood insurance rate maps. Flood maps are revised every 10 years.
Outer Banks communities have been pro-active in managing the flood plains to minimize damage due to flooding. In recognition of the effort, many residents in these communities receive a discount on the flood insurance premiums by reducing the risk.
Southern Shores for example, has a rating of class 6 in the community rating program and qualifies for a 20% discount on flood rates.