Who Pays For Flood Insurance?

February 24, 2010
By Daniel Brouse

What government insurance plans are subsidized by the taxpayers and available to everyone? Probably, the only answer is flood insurance.

The Federal Emergency Management Agency (FEMA) oversees the flood insurance program. Over the past few years, FEMA has been hammered with insurance claims. In an effort to keep expenses under control, FEMA has been encouraging relocation instead of rebuilding after a disaster. FEMA has also been re-drawing the flood plain maps that determine were you can build. The new maps reflect the changes in the Earth’s climate, in particular more frequent and sever storms coupled with rising sea levels.

The city of Sacramento, CA has become involved in what is one of the biggest flood insurance scandals of all time. The city issued building permits on land that FEMA had determined not suitable for building.

FEMA Regional Administrator Nancy Ward sent the city a letter that states “these houses, when fully constructed, represent a significant exposure to flood damages, personal loss and potential emergency/disaster costs to your city.”

Sacramento Congresswoman Doris Matsui said she was “outraged” by the violation

“I strongly urge the city of Sacramento to comply with FEMA’s request to submit a robust remediation plan within 60 days,” she said. “Failure to do so could severely compromise, and even derail, the ongoing efforts to minimize flood risk and lower insurance rates. The city must take this opportunity to demonstrate to FEMA that the city has rectified what must be an isolated incident.”

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