Changes To Flood Insurance Program Could Mean Higher Premiums

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The U.S. Congress has extended FEMA’s National Flood Insurance Program another five years.  

In the prrocess, it has made changes that could have an impact on thousands of Vermonters enrolled in the program.

The program provides insurance coverage to people who live in designated flood plains, if their towns participate in it, and most Vermont towns do. 

According to FEMA there were 3700 policies in force in Vermont as of last September 30th.

Since Hurricane Katrina, the flood insurance program has been operating in the red, and many of the changes approved by Congress are designed to get it back in the black.  As a result, property owners could see bigger increases in their flood insurance premiums.  The legislation raises the cap on annual premium hikes from 10% to 20% and adds a minimum deductible for claims.

The new National Flood Insurance rules would also streamline the process towns use to apply for the FEMA buyout program on behalf of homeowners whose houses are destroyed by flooding. 

After Tropical Storm Irene, towns that wanted to apply for buyouts were faced with a daunting amount of paperwork.  The new law is supposed to reduce that.

"We think this is a very positive step," says Eileen Fretz, national director of flood policy with the conservation group American Rivers.

"It would streamline the process and make it easier for communities to actually work with FEMA.  We’ve heard of many communities that have been reluctant to actually to through the buyout and relocation process because it’s difficult to work through all the red tape that’s involved."

Another provision of the revamped flood insurance program phases out subsidies on what are called repetitive losses. 

These are properties that have been flooded and rebuilt more than once and have repeatedly received flood insurance payouts. 

There are 50 to 60 such properties in Vermont. 

Fretz says in the future its more likely repetitive loss properties will be bought out under the program, instead of being rebuilt. Under the buyout provisions the land becomes the property of the town and can no longer be developed.

And Fretz says for the first time climate change will be factored into how flood insurance rates are calculated. 

"This bill will help them look at things like the impacts of future conditions and the impacts of sea level rise and increased precipitation changes due to climate change in the future, so it will give them a much more accurate depiction of the risk," says Fretz.

While the National Flood Insurance program is designed to provide coverage for buildings constructed on floodplains, the state of Vermont has been working with towns to adopt more stringent zoning bylaws that would prevent any new building in flood prone areas. 

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