Flood Insurance Reform Adds Coverage for Wind Damage
The House on Sept. 27 approved NAHB-supported legislation that would reform the National Flood Insurance Program (NFIP), and, for the first time, include coverage for wind in addition to water damage.
H.R. 3121, the Flood Insurance Reform and Modernization Act of 2007, was approved by a vote of 263 to 146. It includes a provision championed by Rep. Gene Taylor (D-Miss.), who lost his home in Hurricane Katrina, that would expand the NFIP to provide property insurance coverage for wind-related damage to help residents who live in coastal areas.
The day before the vote, NAHB sent a letter to every House member in support of the bill and urged lawmakers to approve a needed amendment to the legislation to expand the availability and affordability of property insurance in high hazard areas.
The amendment, which was approved by the chamber, calls on Congress to direct the Federal Emergency Management Agency to use the wind provisions of the model building codes published by the International Code Council and prevents FEMA from defining or establishing windstorm zones and any additional federal land use controls.
These provisions were also included as part of a resolution approved by the NAHB Board of Directors in Seattle last month that supports the expansion of the NFIP to include wind damage.
NAHB is also urging Congress to limit the amount of the program's fiscal exposure to ensure its financial sustainability and to require premiums for the new multiple-peril coverage to be risk-based and actuarially sound.
Of note to home builders, the bill does not expand the Special Flood Hazard Area to encompass the 500-year floodplain or include mandatory purchase requirements for properties sited behind flood protection structures. NAHB defeated several attempts to include these provisions in previous Congresses and neither is included in H.R. 3121.
The legislation would also:
- Increase the amount FEMA can raise policy rates in any given year from 10% to 15%.
- Extend multiple-peril policies for wind damage where local governments agree to adopt and enforce building codes and standards designed to minimize wind damage.
- Permit any community participating in the flood insurance program to opt into the multiple-peril coverage. The multiple-peril residential policy limit is $500,000 for the structure and $150,000 for contents. Non-residential properties could be covered up to $1 million for the structure and $750,000 for its contents and business interruption.
- Increase the maximum coverage limits for flood insurance policies from $250,000 for structures and $100,000 for contents to $335,000 and $135,000, respectively; and raise non-residential property coverage from $500,000 to $670,000.
The final outlook for enacting this bill into law is uncertain. There is currently no companion bill in the Senate and President Bush has indicated that he would veto the House bill because adding wind coverage to the NFIP could mean that taxpayers would have to subsidize any added expansion to the program.
To read the legislation, click here and enter the bill number in the box at the center of the page.
For more information, e-mail Scott Meyer at NAHB, or call him at 800-368-5242 x8144.