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Congressman Kurt Schrader co-sponsors flood insurance legislation aimed at lowering sky high premiums

Rep. Kurt Schrader D-Oregon File photo

Rep. Kurt Schrader
D-Oregon
File photo

Congressman Kurt Schrader (D-OR) and Congressman Tom Marino (R-PA) this week introduced bipartisan legislation to provide homeowner relief from costly, unreasonable flood insurance premium hikes that are set to take effect on October 1, 2014, if Congress fails to act.

“The clock is ticking for residents along the Oregon coast and folks across the country who live in areas designated as flood zones,” said Schrader. “Without Congressional action, many Oregon coastal residents will face costly increases in their flood insurance premiums. Congressman Marino and I have introduced a bill that addresses this issue head on by providing more insurance options and flexibility for homeowners. Our legislation is an important first step in what we hope will lead to a comprehensive solution.”

The Flood Insurance Flexibility Act, H.R.4071, creates a new option in the National Flood Insurance Program that would allow homeowners to purchase a flood insurance policy with a higher deductible in exchange for lower monthly premiums.

“While I am still advocating for a full repeal of Biggert-Waters, this legislation represents an immediate, workable solution for homeowners whose insurance premiums have skyrocketed through no fault of their own,” said Marino. “I want to thank Congressman Schrader for his leadership on this bill and I look forward to working with him to ensure homeowners in Pennsylvania, Oregon and across the country get the relief they need.”

Congressman Schrader met with coastal residents and state and local officials throughout much of last year to resolve this impending crisis. The Flood Insurance Flexibility Act is the product of those discussions. Last month, Schrader helped lead the charge in the House of Representatives to get a provision into a must-pass appropriations bill that delays the U.S. Federal Emergency Management Agency (FEMA) from preparing for scheduled premium increases so that Congress can resolve the issues facing the severely underfunded National Flood Insurance Program.

Editor’s note: The FEMA fund for flood insurance is $25 Billion in the hole as hurricanes and general flooding have swept away entire towns and coastal properties all at great expense to the federal treasury contributing to the federal deficit. The private sector stopped providing property owner insurance many years ago leaving the federal government (that’s me and you) to bail out people whose property frequently floods and creates chronic claims for repairs and rebuilds. FEMA and other government agencies have mapped the country to reflect where most of the recurring flooding occurs. The flood insurance is still available in those areas so long as local governments discontinue issuing building permits for lands that regularly flood and rack up more insurance claims against the National Flood Insurance pool. Again, it’s $25 Billion in the red. Congress recently ordered FEMA and the National Flood Insurance Program to raise raise that will pay down the deficit in the fund.

One option Congressman Schrader mentions is flexibility in setting insurance rates. As it is, the rates are rather high in view of a maximum reimbursement for property loss of $250,000. Schrader’s legislation would offer a higher deductible for a lower premium but the margin of premium-to-pay-off is so close now it may not make any sense nor pencil out anyway.

Those who owe on a mortgage are the ones in the worst shape. Banks that hold the mortgages require flood insurance. No flood insurance, the mortgage collapses. It also poses a unique tax revenue dilemma for counties across the country whose tax base is substantially laden with flood prone properties. If sky-high costly flood insurance is required, property values will plummet and local governments could be hit hard with a hurricane of red ink instead of tax revenues – badly wounding services like law enforcement, road construction and maintenance, public health, fire protection, schools and other vital services.

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