Flood insurance program must cover more homes
Congress is trying once again to fix the National Flood Insurance Program, and its persistence on this issue is admirable even though its performance has not been. Lawmakers must find a way to get more homes into the program without raising rates too high to discourage that goal. That’s a tough challenge, but almost anything would be an improvement over the current program. Only about a fourth of all homes have flood insurance, and some of them are in dangerously flood-prone areas.
The latest proposal is to use private-sector data to calculate the flood threat for each home and set costs based on that data. Previously, the main decider was whether a home was inside or outside of the 100-year flood plain. A FEMA spokesman described the change as, “Our new system will determine a customer’s flood risk by incorporating multiple, logical rating variables — like different types of flood, the distance a building is from the coast or another water source, or the cost to rebuild a home.”
The change is warranted. A recent investigation by the Department of Homeland Security’s Inspector General revealed that 58 percent of all FEMA flood maps were inaccurate or out-of-date. That’s unacceptable.
Even with better maps, wary homeowners will have a big question: How much will it cost — and will this be more or less than the old program? Currently, premiums are capped at about $400 per year for most properties. That’s a little more than $1 day, much better than almost any other type of major insurance coverage. Still, participation in the program has been declining since 2009.
One way to reduce the payout losses would be to limit coverage to two claims within a certain number of years. If a property is repeatedly flooded, it’s not in a good place, and other taxpayers should not be responsible for replacing it over and over.
This is a real problem. One study revealed that 2,109 properties across the country have been flooded more than 10 times, and rebuilt each time. One home in Batchelor, Louisiana, had been flooded 40 times and received a total of $428,379 in flood insurance payments. Excesses like this are one of the reasons the program was saddled with a debt that topped $30 billion in 2017.
Other reforms could include requiring flood insurance for some properties in low-lying areas to bring more revenue into the system. If homeowners can be induced, or required, to buy flood insurance when a home is bought, they may be inclined to renew it each year. Federal officials should do more to sell the program instead of just hoping that homeowners will participate.
Climate change is probably going to produce more rainstorms and floods in coming years; in fact, some scientists think that’s already happening. But regardless of how one feels about the issue, unless your home is on a mountaintop, flood insurance might be a good idea. Congress should make that coverage as easy and affordable as possible.