MAJOR FLOOD INSURANCE REVISIONS SIGNED INTO LAW

On July 6, 2012, President Obama signed into law the Moving Ahead for Progress in the 21st Century Act (Map-21) (H.R. 4348), which , includes the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters). Among numerous other provisions, Biggert-Waters re-authorizes the National Flood Insurance Program (NFIP) through 2017.

The NFIP had been operating under stopgap extensions (18 since 2008) and shut down twice for several weeks. Just one of these lapses, in June 2010, stalled more than 40,000 homes sales or 1,300 homes per day. This reauthorization brings long-needed certainty to real estate transactions in the 21,000 communities nationwide where flood insurance is required for a mortgage.

In addition to program reauthorization, the bill includes program reforms which:

  • Establish a formula for NFIP and wind insurers to pay where property damage cannot be attributed to wind or water, settling a long-standing dispute and avoiding further lawsuits;
  • Eliminate subsidized insurance rates on properties with repeated flood losses and claims;
  • Increase the maximum penalty for flood violations from $350 per violation to $2,000 per violation;
  • Raise $3 billion in revenue to help pay down the outstanding Treasury loan for the 2005 storm season, which shattered all records for hurricanes;
  • Improve the accuracy of floodplain maps by establishing a technical council of experts to review and set the standards;
  • Establish an independent appeals board for homeowners and communities to resolve their flood map disputes with FEMA;
  • Reimburse homeowner’s appeal expenses when successfully challenging a flood map;
  • Require the lender to terminate the flood insurance it “force places” and issue refunds to homeowners who already have their own coverage;
  • Study expanding NFIP coverage to include living and business-interruption expenses; and
  • Study the availability and affordability of property insurance for natural disasters other than floods.

The full text of MAP-21 is available here. Biggert-Waters begins on page 512 of the law.

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