Hurricane Harvey resulted in Tropical Storm and Hurricane warnings along the Texas coast with meteorologists promising substantial rainfall and flooding. Devastating flooding and storm surge has many homeowners reviewing their insurance policies and taking action to protect their property. Unfortunately, Hurricane Harvey also highlights important insurance program deficits and complexities that often complicate claims. Let’s look at some of the deficits and how they could affect you.
Federal Insurance Program Deficits
In 1968 the National Flood Insurance Program (NFIP) was created under the administration of the Federal Emergency Management Agency (FEMA). This federal program was designed to help homeowners in flood-prone areas obtain insurance at discounted (i.e. affordable) rates. In the most flood-prone areas, homeowners may only pay as much as one third the cost of flood insurance.
Unfortunately, the funding available under the NFIP has depleted in recent years due to natural disasters. Now, the NFIP program is around $24 billion in debt. This deficit has caused a great deal of concern for lawmakers and homeowners alike, as a lack of funding could impact a homeowner’s ability to obtain insurance and file claims.
Another concern is the fact that many homeowners are choosing to stay in flood-prone areas, rebuilding after disaster using taxpayer subsidy funding. Even if the area or property repeatedly flood, some homeowners are relying on this funding to stay in the same area. To aid in this concern, maps outlining high-risk flood areas need to be updated and insurance policies in those areas adjusted accordingly. So far, however, updating maps has not taken place as the Trump Administration has cut the budget allocated to FEMA for this task by $190 million.
Insurance Premiums Increasing
With such a significant deficit in funding, some lawmakers have proposed overhauls to NFIP program. The Biggert-Waters Act, for example, proposes increasing rates for business properties in special flood zones and areas that experience repeated flooding. This proposal, now on hold, would have prompted a sharp increase in premium rates. Instead, the Homeowner Flood Insurance Affordability Act was passed, which has prompted a slow increase in rates.
To further complicate matters, the NFIP must be reauthorized by September 30, 2017 or it will lapse. If Congress does not balance rates and reauthorize the NFIP, many homeowners may find themselves unable to afford insurance coverage that is desperately needed. For coastal Texan’s, a lapse in coverage could have catastrophic consequences as we are in the midst of hurricane season.
Avoid Flood Insurance Pitfalls
If you have questions about insurance coverage, filing a claim, or resolving a denied claim, contact Daic Law to speak with our insurance recovery attorney. Don’t wait until disaster strikes to protect your property and legal rights. Call us at (713) 808-5246, or fill out our online form.