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House Authorizes 5-Year Extension of National Flood Insurance Program

by devteam July 17th, 2010 | Share

The House ofrnRepresentatives passed legislation on Thursday which would authorize thernNational Flood Insurance Program (NFIP) for the next five years.  H.R. 5114 would also make a number of changesrnto the NFIP.  The flood insurance programrnhas been operating under a series of temporary extensions for much of the year whilernmore permanent legislation has been stalled in the Senate.  The insurance lapsed completely on June 1 andrnwas unavailable until the Senate passed a temporary and retroactive extension untilrnSeptember 30 earlier this month.  </p

DuringrnJune it was estimated that some 1200 house closings were postponed or cancelledrnevery business day because borrowers could not obtain the required insurance. </p

NFIP is the primary sourcernof reliable, affordable flood insurance coverage for more than five millionrnAmerican homes and businesses. Homes within a flood plain as designated onrna Flood Insurance Rate Map (FIRM) are required by lenders to be covered byrnflood insurance.  Homeowner hazardrninsurance generally does not cover damage done to a property by water once reachesrnground level.  </p

The bill, introduced by Rep.rnMaxine Waters (D-CA) makes a number of changes to the program.  First, it phases in actuarial changes tornproperties that were built before the first FIRM was effective within arncommunity.  It also raises maximumrncoverage limits, provides notice to renters about the availability of insurancernfor their household contents, and establishes a Flood Insurance Advocaternsimilar a model used by the Internal Revenue Service. </p

Floor insurance is also availablernto homeowners who live outside of a designated flood plain and is increasinglyrnrecommended as the U.S. has, in recent years, experienced serious floods inrnareas that have not flooded in the past. rnAs the Federal Emergency Management Administration, which administersrnthe program, has updated flood insurance maps, more homeowners are also becomingrnsubject to the insurance requirements.  H.R. 5114 delays thernimplementation of new rate maps so homeowners in a neighborhood newlyrnclassified as a flood zone will not be immediately burdened with insurancerncosts.</p

Congresswoman Waters said,rn”This legislation addresses the challenges posed to communities nationwide byrnthe imposition of new flood maps. I saw these challenges in my home cityrnof Los Angeles, and earlier this year, I was able to assist homeowners in thernPark Mesa Heights area of Los Angeles who had been mistakenly placed in a floodrnzone. In this case, FEMA acted quickly to respond to new data and correct thernmistake. However, there are thousands of homeowners nationwide who now findrnthemselves in flood zones and subject to mandatory purchasernrequirements. H.R. 5114 will protect them.”</p

Permanent extension of thernprogram is still pending passage in the Senate.

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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