What is the Food Insurance program?
The National Flood Insurance Program is a program was created by Congress. It was introduced in the year 1968 with the help of an Act. The property owners were asked to participate in an Insurance plan to by the government providing protection against losses. The end of year 2010 has shown that the plan has insured around 5.5 million homes majority of them are located in Florida and Texas.
How the plan does work?
The participation in the plan is dependent on the agreement between the federal government and the local communities. It states that if the communities commit to adopting to the floodplain management ordinance that will ensure the reduced risk of damage to the new constructions in the Special Flood Hazard Area (SFHA) then the federal government will allow the flood insurance to the community. The Flood Insurance Rate Maps determines the Risk Premium Zones and the SFHAs.
Mandatory requirement of the flood plans?
Congress has made flood insurance a mandatory step on properties that are located in the high-risk areas. The owners of properties in the high-risk areas may now not run away from the responsibility of keeping their properties safe from the flood effects. FEMA has rated the areas that are rated high on flood risk. There are cases when many are caught off guard as they do not apparently feel that the area they reside in is rated high on the Federal Emergency Management Agency. Thus, it is advised to check the high risk of the flood in the area and get you covered. Areas that are not high rated on flood risk are also recommended to get themselves covered with Insurance. The reports show that properties that are outside the map of high-risk areas have 25% insurance claims being filed by them. Almost 1/3 receives the Federal Disaster Assistance for flooding that is a loan that needs to be repaid with interest. The mortgaged properties are to be insured as there is a 1 in 4 chance that in the 30 years of the mortgage the property will be exposed to floods.
Changes to the Act
Flood insurance was designed with a view to provide protection to the exposed. The law has undergone many amendments ever since. In the year 1994 the National Flood Insurance program was codified with an incentive program encouraging the communities to exceed the requirement base level for development. In the year 2004 the act was reformed with the aim to reduce the losses on properties where a continuous insurance claim was made. The year 2014 brought another change with-Homeowner Flood Insurance Affordability Act, which will show the actual risk of flooding and not inflated numbers.
