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What to Expect from Pending Changes the National Flood Insurance Program

New changes to the way risk is calculated under the National Flood Insurance Program (NFIP) could cause flood insurance premiums to rise and property values to reduce in values in most flood-prone areas, according to a recent report by Bloomberg. The proposed changes to identifying flood risk for properties across the country has been met with skepticism, particularly as an increase in natural disasters and flooding have spiked as a result of global warming. Flooding is the leading natural cause of property damage in the United States, and records show that the average flood claim amounts to nearly $42,000.

Traditional, flood insurance terms were dictated on whether or not a home or business lied either in or outside established 100-year flood plains. Now, the Federal Emergency Management Agency has proposed plans to utilize private-sector data and other contemporary research to better identify flood risk —and set insurance costs on that new data.

While the move is expected to be one of the first major advances in calculating flood risk since the establishment of the NFIP in 1968, critics such as those at the National Association of Home Builders predict it could hurt communities at the greatest risk of flood damage. 

A vast majority of United States homeowners with flood insurance —approximately five million homes as of 2018 —receive coverage through the NFIP. Yet in 2019, the NFIP is expected to begin congressional reauthorization due to the fact that the number of policies under the program’s auspices has fallen by about half-a-million coverages since 2009.

Congress had first attempted to overhaul the program in 2012, but cut short the effort in the wake of loud public protest against the process of increased premiums. FEMA spokespeople have claimed that this most recently proposed overhaul is not intended to indescretionately raise premium costs, but to better help homeowners identify their flood risk with more exacting data so they can be provided more accurate rates based on their unique flood risk. 

Increasing the cost of flood insurance tends to depress home values for two reasons. Firstly,  higher flood insurance premiums raise the overall cost of owning a home; secondly, they can act as a warning —and yellow flag not to buy —to potential buyers about the likelihood that a house will flood.

When you work with the professionals here at Aspen Claims, will work with you face-to-face to answer your flood insurance questions together, not only to review disputes and you and your property’s viability for the NFIP,  but also not other routes of underwriting are overlooked. Contact us today to stay on top of proposed and newly established changes flood insurance programs so that you, your loved ones and your property can stay adequately protected.

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