America is a country that has been built off recovering from financial, personal, and foreign disputes. When there is an attack on our homeland, it is taken more seriously than anything else. In the case of natural disasters, the task of confronting disaster may be much more difficult. Every year there is an incident that leaves thousands, if not millions of people broken, disheveled, and weak. Through the means of insurance, we can make these people whole again. The fight to assist our communities is never-ending, and every day we strive to improve programs that do precisely that. When there is high wind, heavy rain, or even a high tide, we experience the wrath of water. The unstoppable nature of flooding affects us more than we think. “The NFIP, also known as the National Flood Insurance Program, aims to reduce the impact of flooding on private and public structures.”(fema.com). Aside from a few imperfections in the program, the NFIP is one of the most helpful programs related to the natural disaster, their cause is much appreciated to those communities affected by accident, and the need for insurance is never an unnecessary entity.
The National Flood Insurance Program or NFIP is one of the most sought-after insurance programs in the united states. The NFIP was created under the department of homeland security in 1979 under President Jimmy Carter. Floods are among the most devastating events to happen in an area. According to Floodsmart.gov, “Over ninety percent of all natural disasters involve flooding, and all 50 states have experienced floods or flash floods in the past five years”. These statistics haven't changed drastically since the development of the NFIP, hence the need for insurance across the country. As a part of the Flood Disaster Protection Act of 1973, National Flood Insurance Reform Act of 1994, Biggert-Waters Flood Insurance Reform Act of 2012, Homeowner Flood Insurance Affordability Act of 2014 and the National Flood Insurance Act of 1968, The NFIP was created in response to the lack of disaster insurance. While politicians look at this matter as an investment opportunity, it has done great deals of help to the victims of these floods. Before this act was passed, flood was viewed as an uninsurable risk, leaving victims stranded in their debt. In the modern day, the NFIP is viewed as a Federal program, managed by the Federal Emergency Management Administration (FEMA), and has three components: to provide flood insurance, to improve floodplain management and to develop maps of flood hazard zones. Though homeowners insurance does not cover property damage from storm surge, such coverage is attained through the NFIP and other private insurers. After years of review and revision, the program has proved itself to have the best interest of businesses, homes, and any insurable consumer in mind while aiming to reduce the social-economic and physical impact of natural disasters. If a community adopts and enforce a floodplain management ordinance to reduce flood risks than the Federal Government will make flood insurance available in the area through the NFIP Homeowners, renters, and business owners can now receive flood insurance if their community participates in the NFIP. The chance of being in an NFIP participating area is very likely, especially in coastal regions. The NFIP utilizes flood maps to determine rates, the factors that go into deciding whether an area is in a floodplain is Weather patterns, Erosion, New construction, Development. “In the Atlantic Coast region alone, there are approximately 2.4 million homes at risk, valued at more than $793 billion. Total exposure along the Gulf Coast is $354 billion, with 1.8 million homes at risk for potential storm-surge damage.” (Insurance Information Institute). Currently, there are 5.1 million properties covered by NFIP. As shown in the chart below, a majority, about 69%, of policies are held by single-family homes; the other 31% consists of condominiums, non-residential properties such as businesses. Two to four-family units and other residential policies account for the remainder.
In the event of a disaster, the proper action is required to receive the most compensation from the NFIP. Due to the program being administered through FEMA, Federal Emergency Management Agency, you will need to submit your claim to their agency. This kind of assistance is called, Individual Disaster Insurance, this is the process that victims of natural disaster experience to file a claim for any event that FEMA covers. First, you must contact your insurance company to report any and take pictures of the damaged property. “An insurance adjuster will be assigned to you within 24-48 hours of your request. They will help in the collection of information for the claims process.” (thebalance.com). After your claim is filed, the insurance company will need to approve the cost of repairs. “You will also need to provide a proof of loss to get paid. A proof of loss is your sworn statement about the amount of money you are claiming and usually includes supporting documentation."(thebalance.com).
Where flood insurance is one of the most sought-after kinds of insurance, some complications are packaged with it. If someone is to have a house at the Jersey Shore on a ground level and is looking to buy flood insurance, the price of flood insurance may be significantly more due to their home being in a floodplain. In an attempt to lower rates, the homeowner may raise their house, this kind of renovation can cost anywhere from $30,000 and $100,000. The price ranges due to the size of the home, and any complications with the foundation of the home if the standard price for a flood insurance policy is somewhere between $1,700 and $2,500 for a home in a low-risk zone. The extra cost of a raising renovation may even out the price of a homes policy that is in a flood zone that is susceptible to yearly flood.
The process a person will follow is quite simple, though there are a couple of considerations that one will need to make. When someone is inquired to buy a house, the same agent that is used for purchasing homeowners or renters insurance may also help purchase flood insurance. National Flood Insurance can be purchased nationwide through thousand of insurance agents. If your insurance provider does not sell flood insurance, then the NFIP help center must be contacted. To buy National Flood Insurance, you must live within a community that participates in the NFIP. There are more than 20,600 participating communities that adopt floodplain management ordinances to reduce future damages. Flood insurance is broken down into two main categories — one being “Building property,” which included plumbing, furnaces. Moreover, the other being Contents, which includes belongings and personal property. This coverage can be further divided into two categories, Elevated floors and Areas below the lowest elevated level, such as basements, crawl spaces, “walkout basements.” When dealing with high stories, the NFIP covers up to $250,000 in building property and covers contents up to $100,000. For areas below the lowest elevated level, the NFIP offers limited coverage for drywall, cisterns, furnaces, fuel tanks and their fuel, electrical outlets, and central air conditioners, as well as portable air conditioners and food/food freezers. Flood insurance from the NFIP does not cover, Damage from movement of the earth, even if the flood itself causes the motion, Damage from mold or mildew that could have been avoided by the property owner before the flood or not caused by it, and property outside the building like trees, plants, wells, decks, patios, fences, hot tubs and swimming pools. One of the most significant problems that disable the NFIP (and FEMA) is their direct access to the US Treasury, causing them to have little to no budgetary discipline. Under its 2012 authorization, the NFIP was granted authority to borrow up to $30,425 billion from the U.S. Treasury—a necessity because the program was designed with subsidies and would not generate the funds necessary to fulfill claims in the event of a significant flood. To date, the NFIP has paid $2.9 billion of premium revenue to service the debt. Under the current rate structure, there seems to be no feasible way to spend the $25 billion in debt owed to the treasury.
Where the NFIP has some juvenile tendencies as well as some system flaws, the pros exceed its constraints. In high flood risk areas, private insurers would not cover because there is no incentive, so NFIP is there to support a homeowners concerns. NFIP is optional, so towns can decide whether it is right for them