Congress has recently started to undertake a major overhaul of the National Flood Insurance Program. Real Estate News’ Kathy Fettke says it’s been in desperate need of reform for years as storms grow more severe and the program falls into more debt. She says the while new plan is expected to increase insurance rates in flood-prone areas, it could also impact home values in those areas as well. However, the cost to insure individual homes in these flood-prone areas will more accurately reflect the ongoing risks.
“The government created the flood insurance program decades ago, after private insurers stopped offering it. It was once included in a typical homeowners policy, but many private insurers started selling it separately in the 1950s as flooding and flood damage became more common. Heavy flooding from the Mississippi river in the 1960s apparently convinced most of them to stop issuing it altogether. That’s when the government stepped in. Congress approved the National Flood Insurance Act in 1968 and created the National Flood Insurance Program.”