Why aren’t the federal flood insurance limits at least equal to the amount which the Federal government backs Fannie Mae mortgages? Why haven’t federal flood limits on residential policies kept up with inflation? Why do they stay the same for over a decade? And why isn’t the increased costs of compliance coverage up to $100,000, so people can rebuild to the new flood standard?

I was thinking about these questions while reading a Sarasota Herald feature story, FEMA Rule Could Mean Many Can’t Afford to Rebuild After Hurricane Ian, which noted:

Thousands of homeowners in Southwest Florida whose homes were damaged by flooding from Hurricane Ian are running into a bureaucratic buzzsaw that may force them to tear down their properties and rebuild at higher elevations.

In response, some local governments are seeking workarounds to help homeowners avoid wholesale reconstruction, but because the regulations are designed to prevent future flooding damage, federal officials seem unlikely to relax the rules.

This will likely preclude some property owners from rebuilding because they can’t afford the cost of building higher.

The total number of properties affected by the Federal Emergency Management Agency requirements at issue are not yet clear, but it is likely to be substantial. Many homeowners may not yet know the hardships they’ll face if they are not far along enough in the post-Ian reconstruction process.

In the worst-case scenarios, the additional costs imposed by the federal regulations could mean homes must be taken down to their concrete slabs and several feet of fill dirt brought in to raise a site above the area’s base-flood elevation before a homeowner could even begin to rebuild.

In an insurance world where every insurer has penalties for not insuring to value, the current federal flood program underinsures many of its insured structures. Why? I cannot find any answer to this other than Congress has not raised the flood policy limits. While the federal government insures the mortgages for much higher amounts, it does not require those financing to insure to the value of the mortgage. This makes no sense.

I do not mean to beat a dead horse, but the 50% rule is very much a relevant part of every significant Hurricane Ian and Nicole adjustment, as I indicated in, Can You Get Around FEMA’s 50% Rule?

Thought For The Day

Life is like riding a bicycle. To keep your balance, you must keep moving.
—Albert Einstein