NFIP Proposal: No Insurance For Risky New Homes, Repeat Claimants, And Commercial Buildings

The Biden administration is proposing a massive overhaul of federal flood insurance that would prevent the government from insuring newly built homes in flood-prone areas and would drop coverage for homeowners who receive repeated claims payments.

The administration also is proposing a nationwide disclosure law that would require homebuyers and renters to be told about a property’s flood history before they buy or lease a residence. And no new federal flood insurance policy could be written for any commercial building, regardless of its location or construction date.

The proposals, contained in a 104-page legislative package sent recently to congressional leaders, are the most dramatic attempt to restructure the government’s National Flood Insurance Program since its creation in 1968.

The NFIP provides most of the nation’s flood insurance, covering nearly 5 million properties. It also has historically charged discounted premiums that do not reflect the actual flood risk of properties.

The discounted rates have been criticized for encouraging development in flood-prone areas and discouraging property owners from undertaking flood protection.