New legislation seeks to address problems with insurance coverage
New legislation in Alabama could have a major impact on flood insurance throughout the state. Currently, homeowners throughout the state must rely on the National Flood Insurance Program in order to find the protection that they need. The program, however, is riddled with debt and has come under fire for its inability to pay claims effectively. Moreover, coverage through the federal program is becoming significantly more effective for many people throughout the country. The problems with the federal program have lead many states to take flood insurance into their own hands.
Legislation to address flood insurance reform issues
The legislation is meant to rectify the problems introduced by the Biggert-Waters Food Insurance Reform Act of 2012. This aimed to make serious reforms to the federal insurance program, but has thus far lead to insurance rate increases for homeowners throughout the country. In states like Alabama, rates have been rising at an alarming pace, causing financial strain for homeowners and raising concerns regarding the housing market.
Bill to offer protection to homeowners against higher insurance rates
The legislation aims to introduce further reform to flood protection. The bill, called the Homeowner Flood Insurance Affordability Act of 2013, will slow down the pace at which insurance rate hikes are given to homeowners throughout the state. While rates will continue to rise under the law, homeowners will be provided with sufficient time to acclimate to higher rates in order to mitigate any financial impact that more expensive coverage could cause. The legislation will also provide some protection against FEMA’s changing flood maps. This will help ensure that insurance costs remain modest.
Federal program continues to struggle under massive debt
The National Flood Insurance Program is currently estimated to be more than $25 billion in debt. Much of this debt comes from Hurricane Katrina and Hurricane Sandy. The program has not been able to handle the claims payouts associated with recent natural disasters, which has place the federal government under a significant deal of financial pressure. Homeowners are feeling the brunt of financial strain, however, as they are the ones having to pay more for coverage.