Congress last week agreed to continue the National Flood Insurance Program for the next five years, saving a vital program that’s the sole source of affordable flood insurance for many homeowners.
NFIP protects property owners in more than 21,000 communities where you can’t get a federally related mortgage unless you purchase flood insurance.
More than 5.6 million property owners use the NFIP program. That’s not surprising if you know that flood-related disasters claim more lives and damage more property than any other type of natural disaster. Floods are also the natural disaster most likely to occur because they happen anywhere rain or snow falls — including every state in the U.S.
Private market insurance companies offer flood insurance on high-value homes, but not policies for the typical American home. Federal flood insurance saves money even for those who don’t need it because without it, we’d all pay for more extensive, expensive federal disaster relief for flood victims.
Long-term flood insurance security bolsters economy
In the past few years, the program has expired twice and was extended for short time periods 17 times as Washington worked on solutions.
During one of those lapses in June of 2010, more than 40,000 home sales were delayed or cancelled because flood insurance wasn’t available, according to data collected by the NATIONAL ASSOCIATION OF REALTORS®. That’s why NAR repeatedly asked Congress over the past few years to approve a long-term reauthorization of the program.
Last Friday, Congress listened and passed the Biggert-Waters Flood Insurance Reform Act of 2012 as a part of H.R. 4348, the Surface Transportation Conference Report. President Obama has said he’ll sign off on the bill later this week.
A five-year extension means homeowners and home buyers will have reliable access to affordable flood insurance and that less taxpayer money will have to go toward federal disaster insurance over the next few years.
Just as uncertainty about the future of flood insurance undermined home buyer and investor confidence in the 2010 housing market, the passage of this five-year extension should help bolster economic confidence.
And that’s a win for all of us homeowners and homeowners to be.