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...I don't see the reason to subsidize flood insurance if someone can afford to pay. ...
Flood insurance subsidies have nothing to do with whether someone can afford to pay or not. If they cannot afford the premium, then the policy is cancelled due to non-payment.
Subsidies for flood insurance are related to homes that WERE built to FEMA flood code and were "compliant" at one time, but later the FEMA flood maps changed and the homes became grandfathered in because those homes became non-compliant after-the-fact. Because FEMA changed the rules years after the homes were built, FEMA allows those homes to be grandfathered in and they get subsidized rather than penalized due to rules changing after-the-fact. There are strict grandfather rules and if a flood insurance policy lapses, that home loses the grandfathering.
Usually it's older small ranch homes that are subsidized because they were built at lower elevations, prior to FEMA mandating the home to be elevated higher to reduce flood risk.
Max property value covered for flood insurance is $250,000, regardless of home value.
Newer homes are rarely subsidized because they meet the FEMA code. Subsidies only apply for grandfathered homes that were once in compliance but became out-of-compliance solely due to FEMA changing the rules AFTER the home was built. Although FEMA is constantly changing their maps/rules(usually the minimum required elevation above sea level is what changes), so a newer home could become non-complaint and get grandfathered too. But often is older small ranches.
Because private sector insurers would not insure flood risks, the Federal Government created such insurance in 1968. It was thought at the time, most homeowners, regardless of flood risk, would opt in for flood insurance. That did not pan out, as intended.
Nixon supported and signed off on the Flood Insurance Protection Act in 1973. This legislation requires home owners with mortgages to purchase flood insurance in high flood risk areas.
The cost of flood insurance has been subsidized ( SOCIALIZED) out of general revenues ever since. In doing so, it has encouraged massive development of land with high risk of flood.
Those who own free and clear are able to self insure- meaning they accept the loss risk. This gets seriously complicated in multi- unit developments. That one opts to self insure does not mean they have the means to absorb the financial risks which can impact the entire structure.
In my area the Feds came through about 15 years ago and redrew the Flood Plane maps which in some towns increased their exposed areas to the point of being ridiculous. The home owner always has a choice to buy flood insurance but they are not required to being "Grandfathered" in. However when the property is sold and there is a mortgage that Bank now requires the new homeowner to get the insurance and it is not cheap. The insurance can be several thousand dollars per year. That cost is never going away and it will only go up. This has lead lots of potential buyers to first ask if the property is in a flood zone and in many cases if it is they are not interested.
It is easy to imagine an ocean front property or even one close to it being damaged by a big storm and the surge of water it brings but the people that can afford those properties do not have an issue paying the flood insurance. It is the homeowners that are a mile plus from the beach that are burdened with rising costs of insurance.
Risk assessment for those rated 2.0 is increasing but if will take time, they are still fighting over the percent increase anywhere from 9-18% per year to achieve proper risk assessment. The fear is that some of these homeowners will drop insurance.
Plenty of articles on the impact along the shoreline from climate change along with sinking land. That doesn't include the impact of sudden moisture events inland most recently in Kentucky and last year in North Carolina for those who live in flood zones or on river banks.
We have a lake house in a flood zone. We decided to skip flood insurance long before these new rate increases. The rates are high the payouts low and post event service apparently terrible so we passed.
...has encouraged massive development of land with high risk of flood.
...
New homes are NEVER subsidized. This is because new homes must meet all current FEMA guidelines regarding elevation above sea level as well as other FEMA rules. These homes are built to FEMA requirements, which often adds tens of thousands of dollars of cost(or more) to the home in order to meet FEMA rules. If a home meets FEMA rules, then their insurance is fairly cheap and they get no subsidies. And all new homes must meet those rules, because they cannot get a permit build the new home unless the home meets the FEMA flood rules (elevation, vents, break away walls, etc).
It's later, if FEMA does flood remaps for an area and changes their requirements, when an already-built home suddenly does NOT meet the rules, due to FEMA changing the rules. That's when the homeowner can be grandfathered and subsidized, because it's not the homeowners fault that FEMA changed the rules after the home was built.
Often it is homes well inland that get added to flood zones and get subsidies. Homes on and near the coast are usually built to withstand floods if they were built in the past several decades. Old ranches from the 1960s and before didnt get built to withstand the floods, and often those are the homes getting subsidies. In coastal areas, many of those old ranch homes get knocked down and get replaced by a larger home which meets flood standards. Often the old ranch gets knocked down because it is not complaint.
Back in 1993 there was a bad flood in Missouri next to the Mississippi in the 100 years flood plain. Fema had insured those homes, After the flood, homes were built back in the flood plain and were insured again Seems just plain wrong to me to insure anything built in a flood plain.
One way to fix flood insurance cost (and lessen the impact of the supposed "sea level rise") is to stop any new construction in flood zones where the BFE (Base Flood Elevation) is less than ten feet and give people only two, or at most three, bites at the FEMA flood insurance rebuild apple. After that the house is condemned and taken with eminent domain for open space with a payment of fair market value.
Before any of you go nuts on me look at my location and think about how many times I've seen houses have to be rebuilt after a storm over the last forty years.
Back in 1993 there was a bad flood in Missouri next to the Mississippi in the 100 years flood plain. Fema had insured those homes, After the flood, homes were built back in the flood plain and were insured again Seems just plain wrong to me to insure anything built in a flood plain.
Homes built in a flood zone must meet very strict FEMA elevation and building code requirements. An old ranch home built low to the ground often cannot be rebuilt the same way. If rebuilt, they often have to be elevated and built to higher standards as well - built so that they can withstand a flood. Old ranch homes often cannot be rebuilt as a ranch directly on the flat ground again. Often it's elevated when rebuilt.
The standards for building are such that the homes are built to withstand a flood. Often the newer homes DO withstand floods and the older homes built low to the ground get impacted by the flood. That's why the rules keep changing - as sea levels rise, the rules get stricter so newly built homes withstand the floods.
Below is an article about those homes that were rebuilt after the 1993 Missouri flood
Since being socked by floods in 1993 and 1995, many residents in the tiny central Missouri town of Lupus also have relocated - not to higher ground, but to a higher level in their own homes. Lupus still does not have levees shielding it from the Missouri River or two nearby creeks. But many people have literally raised their living spaces by putting their homes atop above-ground foundations. Mayor Sue Denny estimated that the project cost $20,000 per house. The living area of her own home now stands 9 feet higher than in 1993, when the water was 6 feet deep inside
I would say wealthy homeowners probably contribute to the local economy with their need for services. I don't see the reason to subsidize flood insurance if someone can afford to pay. I would support subsidized insurance for small business.
The government should not be subsidizing anything. If you want to stay. You have to pay.
One way to fix flood insurance cost (and lessen the impact of the supposed "sea level rise") is to stop any new construction in flood zones where the BFE (Base Flood Elevation) is less than ten feet and give people only two, or at most three, bites at the FEMA flood insurance rebuild apple. After that the house is condemned and taken with eminent domain for open space with a payment of fair market value.
Before any of you go nuts on me look at my location and think about how many times I've seen houses have to be rebuilt after a storm over the last forty years.
Apparently there are a number of homes in one area around Houston that have flooded and been rebuilt via National Flood Insurance 3x and a few 4x.
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