Flood Insurance Bill Clears Senate
Thursday, January 30, 2014
The U.S. Senate voted Thursday to delay planned increases in flood insurance rates that many homeowners along the coasts of New Jersey and New York have said would price them out of their homes.
The Homeowner Flood Insurance Affordability Act passed the Senate 67 to 32, but it faces substantial opposition from the the House of Representatives and the White House.
The rate increases were part of reforms passed in 2012 when Congress worried about the financial stability of the National Flood Insurance Program, a system that is run through the Federal Emergency Management Agency and insures 5.5 million homeowners. FEMA says roughly 20 percent of policyholders pay below-market rates that do not reflect their true risk of flooding. They either have seen their premiums go up already or will face hikes soon unless the law is rolled back.
The Senate bill would:
- impose a moratorium on rate increase on certain categories of properties until FEMA finishes an affordability study;
- permit the rate increases to go into effect after four years, even if the affordability study is not completed by then;
- and create an ombudsman within FEMA to help policyholders with disputes about their flood risk.
Menendez's bill would not affect second homes or properties that have seen repetitive flooding. Rates for those policies would go up according to the 2012 legislation.