At long last, Congress, yes that gridlocked legislative body in D.C., has made changes to the National Flood Insurance Program. Astoundingly, the new rules actually make sense.
NFIP will raise rates to reflect true flood risk, make the program more financially stable, and change how the Flood Insurance Rate Map updates impact policy holders.
Most property owners’ homes are not covered by their own insurance against flooding so NFIP was created to fill that gap in 1968. Pre-existing homes were not subject to the new construction standard, and they even received subsidized rates. Subsidized by the taxpayers of this country, that is. This grandfathering approach prevented rate increases for existing properties even when the flood risk in their area increased.
The Flood Insurance Reform Act of 2012 eliminates the artificially low rates and discounts. The new rates will reflect full risk and some flood insurance rates will rise.
Subsidized rates for the non-primary and secondary residences are being phased out.
So, a movie star with a beach house in Hawaii will begin to see 25 percent increase annually until rates reflect the true cost. Wonder how long that will take?
Owners  that have experienced severe or repeated flooding will see a 25 percent rate increase annually until rates reflect true risk.
Why the original legislation with taxpayer funds was passed to subsidize beach or river homes is incomprehensible. If an individual builds a million dollar house on the beach, it should not be the minimum wage people who pay to help rebuild that home in the exact same spot. There was no incentive to move the home to higher ground.
Until now.