With flooding disasters wracking much of the Mideast and Southern U.S. more attention is being aimed at flood insurance. As more homeowners seek out the coverage they are finding that it can be quite expensive, especially for those living in places of high risk as designated by FEMA. The high cost of location-sensitive policies can put insurance coverage out of the financial reach of many. For these people, the National Flood Insurance Program can serve as a safety net between them and being uninsured. The program, however, is failing.
To date, the program is more than $18 billion in debt. Much of the program monetary deficit was accrued after Hurricane Katrina, a disaster that lingers in the minds of many. The program was meant to offer flood insurance to those that could not afford coverage from private insurance companies and was often the last place people living in high-risk areas could find coverage. While the aims of the program were wholly altruistic, its design was faulty, allowing many to take advantage of the program’s low insurance rates.
By the end of this month, if it does not receive support from Congress, the National Flood Insurance Program will be shut down. The shutdown will happen in spite of legislation passed by Congress earlier in the year that would keep the program running for another 5 years. Two legislations are currently hovering in the Senate, one which raises the rates of the program’s insurance policies, and one that absolves the program of its debt.