President Trump and his administration recently made clear that they want to overhaul the federal flood insurance program, ending coverage federal flood insurance for homes in areas at high risk of flooding. This not only has a drastic effect on homeowners, but could seriously curtail construction plans in those areas.
According to the Insurance Journal, Mick Mulvaney, the director of White House Office of Management and Budget, sent a letter to Congress calling for changes to the taxpayer-subsidized National Flood Insurance Program. The program is currently over $25 billion in debt, and the damage is only getting worse as the world is plagued by ever-worsening storms.
Among other things, the proposal would prevent people who build in floodplains after 2020 from obtaining insurance through the program. Those homes would be able to seek private coverage, but the reality is that private coverage in an area of high-flood risk tends to be obscenely expensive, if it’s even offered at all. This creates a real problem for residents.
The proposal also looks to give the Federal Emergency Management Agency the authority to cut-off coverage for properties that flood repeatedly.
The proposal does allow for the government to continue the insurance for homes that already exist within the 100-year floodplain, but would not allow any new homes to be added to the program.
It is important to note that lawmakers have also asked Congress to forgive $16 billion that the program owes the U.S. Treasury has part of their relief package for the hurricanes that devastated Puerto Rico, Florida and Texas.
The proposal will require action by Congress before the December 8th deadline. Unfortunately, congress has a history of failing to make radical changes to the program. Many people, like the National Association of Home Builders, hope that this time is no different.