The National Flood Insurance Program (“the Program”) was created by Congress in 1968 to mitigate the financial impact of floods on residents and communities. It also encouraged smarter planning choices [and discouraged some development] in areas with an unacceptable risk of flooding. The NFIP is controlled by the Federal Emergency Management Agency (“FEMA”).
Since the insurance premiums were subsidized by the federal government [i.e. us, the taxpayers] the cost was relatively tolerable for homeowners located in high risk areas. On July 6, 2012, the Bigger-Waters Act was passed. It implemented a number of changes to the Program, but the most significant for sellers, buyers and their real estate agents is the phase-out of flood insurance subsidies for certain property owners. The rationale for the phase-out was twofold: (a) To bring in more revenue for FEMA; and (b) To make the cost of flood insurance more accurately reflect the actuarial risk. [To continue, go to Q-Law Articles, here.]
