As Hurricane Irene bowled through the east coast, it left behind a path of destruction caused by its high winds and rains, with initial estimates for the damage ranging from $2 to $7 billion. That said, much of the bill for rebuilding will be covered by taxpayer dollars.
The reason for this additional cost to taxpayers is that the majority of home and business owners in the Northeast don’t have coverage for flooding caused by hurricanes, and the federal insurance program is already facing a debt worth billions of dollars.
An important example of this issue is in Vermont, where some of the worst flooding in the state’s history has occurred – according to insurance data from a 2010 analysis – but where there are only approximately 3,600 federal flood insurance policies. Therefore, individuals seeking to rebuild will need the assistance from Federal Emergency Management Agency payouts, and Small Business Administration subsidized loans.
However, experts are saying that it is unlikely that those payouts and loans will be able to fully cover the rebuilding expenses.
According to Mississippi insurance commissioner, Mike Chaney, who has been asking for National Flood Insurance Program reforms, the end result of this financial disaster is that the taxpayers will need to foot the bill “due to the number of folks in the Eastern Seaboard that did not have flood insurance for this catastrophic event.”
Even among the states that have hundreds of thousands of policies and were hit by Irene, such as New Jersey and New York, the payouts from the National Flood Insurance Program over the next few months will likely be sourced from taxpayer dollars through some kind of bailout.