By Mark Hite, President
Greater Chattanooga Association of REALTORS®
While it may seem crazy to be talking about flood insurance in the depth of Summer, it’s actually an important issue with a major deadline looming in the near future.
The National Flood Insurance Program (NFIP) was created by the United States Congress through the National Flood Insurance Act of 1968. The program was designed to provide property owners with an avenue to purchase insurance against losses from flooding for properties across the county. While administered by the government, this insurance is required on loans and lines of credit for buildings and homes that are located within determined flood plains. Its primary design is to provide a means to insure against flooding disasters and maintain affordable costs.
Coastal flooding is the most common image that may come to mind when one thinks of this issue. A majority of properties covered by the NFIP are located in Florida and Texas, yet there are homes and businesses across the Greater Chattanooga region that are prone to flooding and for which flood insurance is required.
There have been a series of amendments and extensions to the NFIP over the years, including an expiration of the program in 2010 which disrupted more than 1,300 home sales daily/thus 40,000 per month. Next the “Biggert-Waters Flood Ins. Reform Act of 2012” was passed and allowed premiums to match actuarial risk of expected losses and sent many premiums skyrocketing. In January 2014, the US Senate passed the “Homeowner Flood Insurance Affordability Act of 2014” that provided for subsidized premiums and reinstated lower rates.
The current version of the NFIP is expiring on September 30, 2017, and the National Association of REALTORS® (NAR) warns that this represents a threat to consumers. NAR President William E. Brown, believes that expiration would “deal significant damage to current policy-holding property owners, as well as threaten property sales and the broader housing market.”
With this looming threat fast approaching, the National Association of REALTORS® issued a “call for action” for its 1.6 million members on August 22. In this action, REALTORS® are urged to contact their respective Members of Congress and encourage them to support H.R. 2874, “The 21st Century Flood Reform Act”. This Act would reauthorize the NFIP and make a number of critical improvements which NAR feels are important to property owners.
If you do not own property that requires flood insurance, you may be thinking this issue is not your concern. Quite the opposite is true as any break in the NFIP would cause a disruption to national home sales, which would be a negative for all homeowners. The Greater Chattanooga Association of REALTORS® encourages you to join us in supporting this important program.