Tuesday, July 3, 2012

National Flood Insurance


Information from Kansas City Association of Realtors

Earlier this afternoon, both the United States House and Senate overwhelmingly passed a long-term, five-year reauthorization of the National Flood Insurance Program (NFIP).  Once the President signs the bill sometime in the next few days, this will ensure that flood insurance will continue to be available for your clients over the long term horizon.  Under this bill, Congress will not need to reauthorize the program again until September 2017.

Most importantly, the passage of this bill puts the program back on solid ground and ensures that over 46,000 real estate transactions per month will not be cancelled or delayed due to the unavailability of flood insurance coverage.  Having said that, the bill did make several key changes to the flood insurance coverage provided by the program, including the following:
Deletes a proposed mandate that all home owners who live behind levees and other flood control structures must purchase flood insurance;
Allows the Federal Emergency Management Agency (FEMA) to increase flood insurance premiums up to 20 percent annually to cover increased flood insurance claims;
Mandates that rates for second and vacation homes, properties with repetitive flood claims and commercial properties will go up 20 percent over the next five years;
Allows FEMA to purchase private reinsurance coverage to backstop the program’s losses; and
Requires lenders to accept private flood insurance coverage if that coverage meets all the same requirements as NFIP-backed flood insurance policies.