Questioning the National Flood Insurance Program (NFIP)

November 7, 2017 4:03 pm

With the recent hurricane disasters in Texas, Florida, Puerto Rico, and the U.S. Virgin Islands, the National Flood Insurance Program (NFIP) is in the public spotlight. The program is currently set to expire on December 8, 2017 after being given a three month extension by the President and Congress in September. It is unclear whether the program will in fact be extended, as not all people agree on the program’s worth.

Why is it controversial?

The NFIP no longer takes in as much money in premiums as it pays out in claims and other expenses. Therefore the government and taxpayers are in the position of covering the costs of flooding disasters. One of the reasons for this discrepancy is many high risk properties are paying less money in premiums than is sufficient for their risk. Some of these properties are “grandfathered,” meaning they pay lower rates even after their hazard zone is upgraded to a higher risk status. Additionally, paying low flood insurance premiums encourages homeowners to stay in areas that are essentially high risk, and these homeowners often rebuild after a flood, even when not prudent.

NFIP reform has been discussed for years, by various groups, and has become a political fight. No one wants to pay more for insurance, and this tends to draw battle lines between regions. Also some politicians do not want to continue supporting a program which is not financially sustainable. Some reform has been attempted, such as the 2012 Biggert-Waters Insurance Reform Act. The Act proved short lived, as affected residents were very unhappy with rising premiums and it was basically ended by Congress in response. Currently there is no serious reform on the horizon and the Program’s future is still in question.

For more information about the NFIP visit


Special Flood Hazard Area (FEMA –Zones A and V) is a California mandated disclosure in Natural Hazard Disclosure Reports.


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