Flood Insurance Clears Subcommittee Hurdle 

A bill (HR 1309) to extend the National Flood Insurance Program (NFIP) for five years passed a House subcommittee on April 6.

The measure would not only reauthorize the NFIP through 2016, it also would increase coverage limits, offer business interruption coverage, create a five-year cost phase-in for properties included in newly mapped areas and reform the mandatory purchase requirement (under certain conditions).

The legislation also seeks to improve the financial stability of the program, which is currently more than $18 billion in debt. It does so by increasing premiums and phasing out subsidies/phasing in actuarial rates for several property categories, i.e., second homes, vacation homes and commercial properties, repetitive loss properties and those with lapsed policies. Importantly, apartment properties are not among those proposed to lose the subsidized rate.

The bill also includes initiatives to pursue the private market’s ability to offer flood insurance. NAA/NMHC have some concerns about the viability of such efforts and of possible unintended consequences that could result and will continue to work with Congress to ensure such provisions are carefully considered.

Finally, the amended bill includes a provision to ensure that apartment renters are informed of the availability of content coverage through the NFIP. It would require the FEMA Director to develop and distribute a notice that apartment owners would be required to share with residents. The provision offers flexibility to the owner relative to method of delivery. The Senate has yet to introduce similar legislation.

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