Mortgage

Here’s how much the National Flood Insurance Program costs homeowners

Program needs more money to survive

The Congressional Budget Office, a nonpartisan analysis for the U.S. Congress, crunched the numbers on the National Flood Insurance Program again, calculating the average cost to families this time around.

According to the first report from the CBO, the program has an expected one-year shortfall of $1.4 billion.

This new report took it a step further and included the median premium for a policy on a primary single-family home.

The program is designed to help reduce the impact of flooding on private and public structures. “It does so by providing affordable insurance to property owners and by encouraging communities to adopt and enforce floodplain management regulations,” FEMA’s website states.

The CBO calculated the data in response to a request from Rep. Maxine Waters, D-Calif., ranking member of the House's Committee on Financial Services.

The analysis compared actual premiums for 2.5 million policies covering primary single-family homes with the median income of single-family households in the census tracts in which the insured homes were located.

For most policies in the analysis, the CBO found that the actual premium was between 0.45% and 1.70% of the median household income for single-family households within the same census tract. The median sat at 0.75%.  

Broken up further, roughly 8% of premiums were below 0.35% of the relevant median household income, 14% of premiums were above 2% of that income, and 6% of premiums were above 3% of that income.

The updated numbers on premium costs to homeowners comes at a point where the NFIP might not even be able to fulfill its financial obligations to flood victims.

Looking at this year specifically, the NFIP is already drained from the growing costs from Hurricane Harvey, Irma and Maria.

In a recent letter to the presidentOffice of Management and Budget Director Mick Mulvaney stated, “The recent hurricanes have inflicted projected losses of $16 billion. As a result, by the latter part of this month, the NFIP will have fully exhausted its financial resources (including its $30.4 billion in borrowing authority) and will be unable to pay claims.”

3d rendering of a row of luxury townhouses along a street

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