The National Flood Insurance Program, backed by the U.S. Government, was set to go broke this week without additional taxpayer funding. It’s bailout time. After House Republicans revolted last week at the bloated Senate-passed $60 Billion Sandy Aid Relief legislation, today the House passed a $9.7 Billion bill to fund the National Flood Insurance Program. Through the Program, you can insure a home and contents located on a coast, up to $250,000 if you have had no previous claims. The cost is about $5,000 annually to the homeowner. There is also a “High Risk” category with coverage up to $250,000 without previous claims for about $2,400 annually. In the “Preferred Risk” category, coverage of $250,000 without a previous claim is available for about $317 annually.
Now the National Flood Insurance Program has been hit with too many eligible claims and has run out of money. Mr. and Mrs Taxpayer come to the rescue and pay for a substantial portion of the luxury of deciding to live ocean-side or near-ocean-side, where everyone know, the highest and surest risks reside.
If these homeowners have owned a coastal home for 20 years and acquired insurance through the National Flood insurance Program at $5,000 per year, their investment in the coverage of their property is $100,000. It’s unlikely that $100,000 will do much to replace a home and contents in such desirable areas, so to cover the remaining $150,000, taxpayers are paying in $9.7 billion, this outside of the other Billions in FEMA aid already spent with more to come.
My opinion: if you cannot self-insure in these areas, you should not be allowed to build there. As in New Orleans, some areas at or below sea-level should be non-buildable, and certainly uninsurable by The People.
Please do not misunderstand what I’m saying. I feel terribly for the victims. I cannot imagine having several feet of sand in my living room, losing my most precious belongings and perhaps having my health damaged or losing a loved one, but I also cannot imagine deciding to live in vulnerable places unless I can afford full coverage for possible damage. I understand that what we can afford is what relief we will have. I live in tornado alley. It’s a risk, but I’m not in close proximity to a tornado every minute of the day and night. There is no specific tornado coverage, as there is with earthquakes and floods. Hubby and I keep full replacement insurance on our home (and document contents with photos, backed-up by an online service) and have decided what deductible is acceptable for our pocketbook, understanding that the lower the premium, the more that comes out of our pocket, should we be hit. We sacrifice to do so.
In the wings is a bill to be passed by January 15, 2013 allotting many Billions more in Sandy aid. Update: Karen at The Lonely Conservative has some interesting quotes about NFIP and comes to the conclusion that northeast politicians will throw tantrums until they get what they want. I’ve come to the conclusion that Rep. Peter King (R-NY) is unhinged.