IF YOU LIVE IN A NY COASTAL COMMUNITY AFFECTED BY HURRICANE SANDY, IT IS VERY IMPORTANT TO UNDERSTAND WHY AND HOW FLOOD INSURANCE STARTED IN AMERICA. KNOW & UNDERSTAND THE ACT, LAWS, FEMA , INSURANCE COMPANY TERMS & GUIDELINES AND WHICH ELECTED OFFICIALS UNDERSTAND AND ARE WORKING ON BEHALF OF YOUR INTERESTS A A HOMEOWNER AND RESIDENT IN CANARSIE AND OTHER COASTAL COMMUNITIES.
IF YOU HAVE MADE APPLICATION WITH HURRICANE BUILD IT BACK..
This is part 1 of a series of articles about insurance, flood insurance, FEMA and BIB Program. Hopefully, it will help to better understand flood insurance policy and what can be done to keep premiums reasonable and they may not even be a real need for flood insurance in Canarsie and some of the other coastal communities. Do we really need to pay exhorbitant premiums for flood insurance coverage that we may not really need?
Before 1950 flood insurance was part of the standard homeowners insurance policy. During the 1950’s increasingly high correlation of losses by holders of flood policies of the same company caused many insurance companies to begin excluding flood coverage from standard insurance policies, selling flood insurance separately.
In the 1960’s flood insurance became completely unprofitable and private companies no longer offered flood insurance policies. This meant that the costs of floods were borne by property owners, many of which could not afford such high disaster costs. The government provided public disaster aid to affected property owners.
In 1968, the National Flood Insurance Act established the National Flood Insurance Program (NFIP), which allows property owners to purchase insurance from the U.S. government that covers certain losses from flooding. The intended purpose of the program was to reduce the overall costs of floods by providing incentives for flood risk management, and to pool flood risks nationally to lessen the blow to individuals hit by major floods.
This insurance is not set by the market risk valuation and is less expensive than private insurance company rates. This is accomplished either by the program running a deficit and borrowing money or by subsidies from the national government.
Either way, the property owners with NFIP policies are receive subsidies to live in areas that should never have been developed because they are inhabitable. Inhabitable because of the well know high risk of flooding and yet continue to live in areas with high risk and continue to receive government subsidies to live in these areas. They should not be receiving government subsidies to live in areas with high flood risk.
The loss of property, of life and limb resulting from flood damage was mainly the responsibility of the property owner. Disaster aid and payment for insured losses, which ironically undermines the intent of the NFIP. It seems the flood policy decisions have accelerated property losses. Some contributing factors to increasing demand for aid are:
- Flood insurance for properties in flood prone areas is mandatory only to secure loans, which makes it somewhat more likely that flood prone properties will be owned by seniors who have paid off their mortgages, or investors who have acquired the property for rental income.
- Flood insurance only covers losses for the owner of the property, and claims are subject to caps, which further increases the likelihood that the property will be occupied by renters rather than the property owner.
- Flood prone properties are more likely to be offered for rent because of the owners’ increased risks and/or costs associated with occupying the property themselves.
- Flood prone properties are more likely to be offered for rent at a discount, which attracts lower income groups, seniors, and infirm groups.
According to critics of the program, the government’s subsidized insurance plan “encouraged building, and rebuilding, in vulnerable coastal areas and floodplains.” Stephen Ellis, of the group Taxpayers for Common Sense, points to “properties that flooded 17 or 18 times that were still covered under the federal insurance program” without premiums going up.
- Federal Emergency Management Agency (March 1986). “A Unified National Program for Floodplain Management” (PDF). Retrieved 2014-11-08.
- Holladay JS, Schwartz JA. (2010). Flooding the Market: The Distributional Consequences of the NFIP. Institute for Policy Integrity.
- U.S. Government Accountability Office. (2003). Challenges Facing the National Flood Insurance Program
- Wright, James M., The Nation’s Response to Flood Disasters: A Historical Account. 1 Apr 2000.
- Fema.gov (retrieved Apr. 13, 2016) http://www.fema.gov/loss-dollars-paid-calendar-year#
- National Research Council of the National Academies (2015). “Affordability of National Flood Insurance Program Premiums Report 1”. Retrieved 2015-08-20.
- Uhlenbrock, Kristan (31 January 2014). “Despite Hazard of Sea Level Rise, Senate Halts Flood Insurance Reforms”. ThinkProgress. Retrieved 31 January 2014.
- Ferraro, Thomas (30 January 2014). “U.S. Senate passes bill to delay hikes in flood insurance rates”. Reuters. Retrieved 31 January 2014.
- “S. 1926 – Summary”. United States Congress. Retrieved 31 January 2014.
- hanscom, Greg (13 January 2014). “Flood pressure: Climate disasters drown FEMA’s insurance plans”. Grist. Retrieved 31 January 2014.