Early this year, Congress had only extended the FEMA statutory right to issue flood insurance until the end of August 2004. This summer, Congress and the Senate approved legislation to reauthorize the National Flood Insurance Program (“NFIP”) through September 30, 2008. The new legislation was signed into law by President Bush and provides for four-year reauthorization of the NFIP, full eligibility of the program and “severe repetitive loss properties.”
The bill also established a $40 million pilot program to reduce repeated payments to owners of a few relatively flood prone areas that are considered “severe repetitive loss properties.” Under this pilot program, any owner of “severe repetitive loss properties” who refuses mitigation assistance and later suffers additional flood damages would be subject to an increase in their premium after each flood insurance claim, but no premium may exceed the market rate for flood insurance.
Under the severe repetitive loss pilot program, flood damaged structures may be demolished and rebuilt in an effort to prevent future flood damages. No property owner may be removed from the NFIP because of additional claims on severe repetitive loss property. FEMA is required to notify landowners whenever their property is deemed a “severe repetitive loss” under the pilot program and to explain the type of assistance they are eligible for under the pilot program and the implications for refusing to accept an offer of mitigation assistance.
This article was written by Alan P. Fox, Esq. Shareholder in Capehart Scatchard’s Commercial Group. Should you have questions or like more information, please contact Mr. Fox at 856.914.2056, by fax at 856.235.2786, or by e-mail at afox@capehart.com.
