Popular Flood Insurance Law Is Target of Both Political Parties

A major flood insurance bill was a rarity when it passed what is widely derided as a do-nothing Congress in 2012, but a year and a half later, there is now an enthusiastic bipartisan effort to gut it.

This week the Senate is expected to approve a measure that would block, repeal or delay many of the key provisions of the Biggert-Waters Flood Insurance Reform Act, which was sponsored by Representative Judy Biggert, an Illinois Republican, and Representative Maxine Waters, a California Democrat.

Tucked into broader transportation legislation, the bill had enthusiastic support across the political spectrum, from liberal environmentalists to fiscal conservatives.

But Ms. Waters is now leading an effort in the House to gut the legislation she sponsored. And this week, the Senate is expected to pass a measure that would stymie the law, an effort that has support from across the political spectrum, from prominent liberals like Senator Elizabeth Warren, Democrat of Massachusetts, to conservatives like Senator Marco Rubio, Republican of Florida.

It appears to be another Washington story of unintended consequences, and a warning, environmentalists say, of the rising costs of climate change. Most important, the bill may be a preview of the fights to come over who will pay those costs.

The Biggert-Waters measure sought to reform the nation’s nearly bankrupt flood insurance program, ending federal subsidies for insuring buildings in flood-prone coastal areas. Over the past decade, the cost to taxpayers of insuring those properties has soared, as payouts for damage from Hurricanes Katrina, Irene, Isaac and Sandy sent the program $24 billion into debt.

The aim of the measure was to shift the financial risk of insuring flood-prone properties from taxpayers to the private market. Homeowners, rather than taxpayers, would shoulder the true cost of building in flood zones.

Change Insurance Companies if you can.

I think we should be able to build a house any place we want to. I also think insurance rates should reflect the risk of building in that area. I do not think insurance rates in a low risk area should be affected by the risks of those that build in potential flood zones. The disasters of Katrina in New Orleans and Sandy in New York and New Jersey are perfect examples of building were you should not. They would not have built there if the insurance rates reflected the risk of flooding. I feel compassion for those in New Jersey and New York that lost much and in some cases all. Why in the hell should I as a tax payer be responsible for their decisions. My home is in Central Texas and is 755 feet above sea level. However, part of my premiums reflect the risk of those on the Gulf Coast of Texas.

Anytime that the government is involved it is a simply stealing from Peter to pay Paul. Unfortunately Mr. Cripplecreek you are Peter, Paul thanks you. Just for the record, I am also Peter.

I deal with flood zones quite often in my job.

First of all - suggestions to change insurance companies probably won’t help. It is usually the lender that imposes the requirement to have insurance, to include flood insurance.

As to why you are now in the flood zone. The previous set of flood maps were made in the 1980’s, or even earlier. This is what banks and insurance companies used. Then in the mid-2000’s, FEMA started doing new ‘flood studies’ and publishing new maps. The new flood studies extend over a much more extensive area than the old ones, bringing new properties into the flood zones. Also, development upstream of you that paved over a lot of new areas in the last 25 years may have also contributed.

What can you do?

LOMA ‘Out as shown’: The people looking at the new maps, who work for the banks and insurance companies, are sometimes lazy and/or unqualified to determine who is in the zone. It is possible that just a small portion of your property is in the flood zone, but not the actual house. If it is visually obvious, from an aerial map of the house and the flood zone overlaid, that the house itself is not in the zone, you are eligible for this. Also sometimes called an ‘MTEZ’. Your city/county appraiser website may have such information on a mapping website. Or, the FEMA website has something called ‘Firmettes’ - you have to find your map, and then you can print out a small portion of it for free.

LOMA - C: These used to be semi-common. Essentially, the old flood maps were so crude, that it was visually obvious that there was a mistake. For example, the flood study says the water is at 950 ft, and maps show your house at 995 ft, yet still in the zone. I have only seen this happen once with the new maps, but it still does occasionally happen.

LOMA - F: Essentially this happens when you argue that FEMA’s flood models are flawed. When you file a LOMA F, you are saying FEMA is wrong, and you (your engineer that you have hired) is right. This is very unlikely today, with the new maps...but, if several homes on are this reservoir and band together to hire an engineer, he can take a look at the spillway. He may find FEMA has made a mistake (we recently had a case where FEMA flat out neglected the storage capacity of a large lake, which makes a huge difference. And also, it may turn out that the engineer determines that a minor change to the spillway would change the water elevation and get everybody out of the zone.

Other things to consider:

Basement: The rules are different for existing vs new construction, and sometimes insurance companies and banks don’t understand this. For new construction, the basement is the ‘lowest’ part of the house that determines need for insurance. But for old construction, it is ‘lowest opening’, such as a door or window. So, in some cases, a concrete well can be placed around a basement window, and raise the ‘lowest opening’.

Elevation certificate/floodproofing: A surveyor usually gets involved with this. If a surveyor goes in your house and certifies that appliances such as the water heater and furnace are well above the flood elevation, you can get a discount on the rate (since the insurance company knows it will never have to replace these items due to flooding). And there are things you can do to ‘floodproof’ the basement that deal with sticking balloons in the floor drain and verifying that the walls are strong enough to withstand hydrostatic pressures.

Finally - the new maps are devastating to communities. The insurance rates are so high, that it becomes difficult to sell a house. So, the re-sale value goes down, and an investor with enough capital sweeps in and buys it. If there is no loan on the property, he doesn’t have to insure it. And he rents it - and parts of town near the creeks become rental areas, instead of areas with high home ownership...and the kicker is that its really not worth it to invest a huge amount for maintenance on these rentals.

So this leads to a bill that is out there - the Homeowners Flood Insurance Affordability Act. Its sponsored by democrats...but elements of it are good. For the first time, it would force FEMA to consider the economic consequences of their map changes, and answer to congress in a more direct way. My local county commission just voted to support this and notify our congressional delegation that the county supports the bill. So you might investigate that bill.

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