The National Flood Insurance Program provides $1.28 trillion in financial protection against flood damage.
Standard homeowners insurance policies won't cover losses from flooding, so the NFIP has become the dominant source of flood insurance in the United States.
But as climate change makes flooding more frequent and costly, advocates and elected officials say the program needs reform. That hasn't happened.
The NFIP has now been subject to a dozen last-minute short-term extensions, without any serious long-term fixes. The latest came on Monday, when Congress tacked an extension of the program through September onto a disaster relief bill.
"This ridiculous process has created significant uncertainty and anxiety for homeowners, renters and small business owners in our states," a bipartisan group of senators wrote in a letter to the Senate Banking Committee.
Here's how the uncertainty over the NFIP could affect you.
The problems at the NFIP
The NFIP helps pay to repair flood-damaged homes. Many people wouldn't be able to afford to stay living in their homes without it. (Learn what's like to buy a house in a disaster area.)
This coverage can mask the risk of living in a flood area. According to federal data obtained by the NRDC, the NFIP covers more than 30,000 properties that have flooded an average of five times.
This has led to the NFIP falling billions of dollars into debt.
"It creates a situation where people are reliant on a program that could not be sustainable and might fail in the future," said Joel Scata, an attorney for the Natural Resources Defense Council, an environmental advocacy group.
What needs to change?
Every time the program comes close to lapsing, as it did this year, it creates uncertainty in the real estate market, since people taking out mortgages in high-risk flood areas are often required to buy flood insurance, Scata said. Officials from both parties say they want a long-term fix.
But that will take some tough decision-making.
Reforms will likely lead to higher insurance rates and lower home prices in flood areas, Scata said. The program isn't currently sustainable, and increased flooding due to climate change will only make it more costly, he said.
"Saying the program is fine the way it is is living in denial," Scata said.
The NFIP does more than provide insurance. It sets building requirements in flood plains to reduce damage and creates maps of high-risk flood areas. A reformed NFIP needs to focus more making people aware of the flood risks around them, Scata said. One of the biggest reforms the NRDC wants is improved disclosure of flood risk data.
The Federal Emergency Management Agency has lots of flood data, but it's hard for homeowners to access, Scata said. Having access to this data could allow homebuyers to make smarter choices about where to live.
"You can't call up FEMA and say 'What's my flood risk?' especially if you don't have flood insurance," Scata said.
The NFIP also needs to place more of an emphasis on buying people out of frequently flooded homes, rather than paying to rebuild them over and over again, Scata said.
"What Congress needs to address is how to make people safe from flooding, not just making sure that flood insurance remains cheap," he said.
What can people do on their own?
Waiting for Congress to fix something is... not the best use of your time. But people can act on their own to reduce their flood risk, Scata said.
While FEMA flood maps are not always reliable (yet another fix Congress needs to make), they can at least give you a sense of a property's flood risk if you're a new or prospective homeowner. Talking to neighbors who have lived in the area a long time or looking up local news reports might be able to fill in the blanks, Scata said.
Private flood insurance is increasingly becoming a viable option for protecting your investment in your home as well.
"As technology improves and insurers are better able to to assess flood risk, the private market will provide a better option," Scata said.
Private options provide standalone coverage or supplement NFIP policies. NFIP policies are often limited in what they cover, said Fabio Faschi, team lead for property and casualty insurance at Policygenius. (Policygenius can help you protect your home against flood and other risks.)
A standard NFIP policy limits coverage to $250,000 for most residences, while private policies can offer more coverage for both the building and its contents.
"Even if the NFIP is available to you it makes perfect sense to want to see your options in both markets," Faschi said.
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