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Flood Insurance At Risk In Unemployment Insurance Debate

April 13, 2010 - by Eric Naing

As unemployed Americans drown in bills, Senate Democrats are trying to pass yet another temporary extension for unemployment insurance benefits. But millions of Americans who can’t get flood insurance, even if their homes could quite literally be underwater, are also tuning in to this seemingly perpetual battle.

With good reason, the extension bill’s (H.R.4851) most often discussed provisions are the extensions of unemployment insurance benefits and COBRA health insurance coverage. But another important provision in the bill reauthorizes the expired National Flood Insurance Program:


(a) Extension- Section 129 of the Continuing Appropriations Resolution, 2010 (Public Law 111-68), as amended by section 8 of Public Law 111-144, is amended by striking ‘by substituting’ and all that follows through the period at the end and inserting ‘by substituting April 30, 2010, for the date specified in each such section.’.

(b) Effective Date- The amendments made by subsection (a) shall be considered to have taken effect on February 28, 2010.

Since 1968, the federal government has provided federal flood instance to homes in communities that take steps to reduce the risk of flooding. But In recent years, the NFIP has been subject to repeated short-term extensions by Congress – just like UI and COBRA insurance. On March 28, the NFIP’s authorization finally expired meaning the program is currently incapable of issuing new flood insurance policies or renewing existing policies.

H.R.4851 would reauthorize the NFIP through May 5. It also would retroactively extend the program back to March 28. This, however, provides little comfort to a family that can’t get flood insurance right now. And as the Wonk Room points out, having flood insurance is a pretty big deal to people in the Northeast who have faced historic floods this month.

The expiration of the NFIP also has the effect of postponing or outright canceling hundreds home sale closures according to Fox News:

The impact on the already fragile housing market is too early to be understood but experts say it is unlikely to be positive. The National Association of Realtors, at the request of Fox News, estimated that each day the program is dormant, 1,400 closings are adversely hit.

The impact on the housing market and economy would be serious enough, but prospective home buyers have a more pressing issue at hand: the is the last month in which to get an $8,000 federal tax credit for first-time home buyers. Since flood insurance is mandatory in some cases, the expiration of the NFIP could mean some home buyers will miss out on the tax credit if the Senate fails to act soon.

The House passed the extension bill last month so for it to be signed into law, the Senate just has to pass it. This is easier said that done as some Republicans have objected to paying for part of the bill with unused TARP funds. But even if the Senate manages to pass the bill, remember that the extensions are temporary so we’ll likely see a repeat of this debate next month.


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