With Irma Bearing Down, Homeowners Face Loss of Federal Flood Insurance
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With Irma Bearing Down, Homeowners Face Loss of Federal Flood Insurance

Coverage for Some Florida Residents Is To Be Canceled as Congress, FEMA and Trump Tangle Over Costly Program

Daytona Beach, Fla., was hit hard by Hurricane Matthew in October 2016.

As homeowners batten down windows and seek shelter from Irma, the Category 5 hurricane, the federal government promises to yank their flood insurance.

The Federal Emergency Management Agency (FEMA) quietly posted notice today that several communities right in Hurricane Irma’s path are scheduled for the suspension of their flood insurance by month’s end due to noncompliance with the floodplain management requirements of the National Flood Insurance Program (NFIP).  Those communities include Daytona Beach, Fla., and surrounding areas in Volusia County. Also in Irma’s and FEMA’s crosshairs are several communities in Chester County, Penn.

FEMA has given these counties until Sept. 29 to comply with the policy requirements. If they do, they can keep their insurance, which enables many property owners to purchase the federal flood insurance otherwise not generally available from private insurance providers. FEMA has provided six-month, 90-day and one-month notification letters to communities of the impending suspension.

Once a community’s federal flood insurance has been suspended, it cannot be renewed. The community may also lose some types of federal assistance, too. For example, communities in flood-prone areas that don’t have this flood insurance won’t receive federal financial aid in construction or acquisition of buildings based on the Robert T. Stafford Disaster Relief and Emergency Assistance Act.

Action Box/What You Can Do About It

Contact FEMA and ask it to keep its NFIP active for those in disaster-prone areas by calling 202-646-2500 or writing FEMA at 500 C Street SW, Washington, D.C.  20472.

Contact the White House and tell Trump protecting homeowners and businesses in hard-hit areas is a top priority and to back this insurance. Call 202-456-1111 or email.

Contact your representatives and senators and ask them to continue supporting those in flood-prone areas with federal insurance plans.

That leaves home owners in a bind in flood-prone areas, such as Florida, which accounts for nearly 2 million of the roughly 5 million homes and businesses covered under the federal plan. Mortgages could be delayed for home buyers and home prices could increase as a result.

Congress and FEMA have been tangling with this issue for several months. The NFIP has been facing a Sept. 30 deadline for some time and Congress has been grappling with different ways to try to fix the issue, which comes down to money.

The National Flood Insurance Program is $25 billion in debt to the U.S. Treasury, mostly from Hurricanes Katrina and Rita in 2005 and Superstorm Sandy in 2012, according to a story in USA Today. As a result, annual interest rates alone cost $400 million—11% of all the premium dollars paid, which isn’t sustainable. FEMA had to borrow an additional $20 million in January just to meet interest payments in March due to heavy floods in the South and Midwest last year. And Trump wants to cut back the program even more, based on his FY ’18 budget proposal, and that could mean defunding the program altogether.

Lawmakers are expected to reauthorize the program, but in the wake of  Hurricane Harvey in Texas and Louisiana and impending damage from Irma in the Caribbean and along the East coast and whatever else the rest of the hurricane season brings, it could be an uphill battle.

In addition to Florida and Pennsylvania, FEMA also added some counties in Kentucky, Iowa, Minnesota and Hawaii to its list of impending insurance suspensions.

September 6, 2017