Newman Crane Flood Insurance:
Homeowners and potential home-buyers in flood-prone areas of the country received some good news last week, when legislation that would extend the National Flood Insurance Program handily passed through a Senate committee hearing.
The program lapsed four times in 2010 and is due to expire again September 30th. This would mean big trouble for new home buyers trying to get approved for a mortgage, as lenders in areas like Palm Beach and Miami will not approve a loan without proof of flood insurance. Many are afraid that without an extension of the program, home sales in flood-prone regions will once again stall.
Even if the legislation passes however, homeowners may still face significant problems. Several provisions in the bill allow for dramatic increases in premiums, up to a 15% rise per year. Once these increases are compounded, a policyholder’s rate could double in just five years. Government officials are concerned that without these hikes, the program has little to no chance of recovering from its $18 billion debt. Many in the Senate would likely refuse to pass any legislation that would fail to allow for major increases as well as the elimination of possible subsidies.
What is obvious right now is that given the serious flooding occurring in several parts of the country in recent weeks, it is vital that no home or business be left without coverage. Extension and long-term stabilization of the National Flood Insurance Program is necessary. Now it’s up to lawmakers to decide how and when this will come to fruition.