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Flood Disaster Protection Act

By: Staff Editor
Date: July 08, 2009

Floods are among the most dangerous natural disasters to human life and property. However, according to the Federal Deposit Insurance Corporation (FDIC), Americans continue to build property in flood-prone areas. The Flood Disaster Protection Act was enacted in 1973 by Congress in order to protect homes which are most vulnerable.

Background
The National Flood Insurance Program (NFIP) was created by the Congress of the United States in 1968 through the National Flood Insurance Act of 1968. The program enables property owners in participating communities to purchase insurance protection from the government against losses from flooding. This insurance is designed to provide an insurance alternative to disaster assistance to meet the escalating costs of repairing damage to buildings and their contents caused by floods. The NFIP is administered by a department of the Federal Emergency Management Agency (FEMA) and the Federal Insurance Ad-ministration (FIA).

The program was first amended by the Flood Disaster Protection Act of 1973, which made the purchase of flood insurance mandatory for the protection of property within Special Flood Hazard Areas (SFHAs). In 1982, the Act was amended by the Coastal Barrier Resources Act (CBRA). The CBRA enacted a set of maps depicting the John H. Chafee Coastal Barrier Resources System (CBRS) in which federal flood insur-ance is unavailable for new or significantly improved structures. The program was further amended by the Flood Insurance Reform Act of 2004, with the goal of reducing losses to properties for which repeti-tive flood insurance claim payments have been made.

Enforcement
The National Flood Insurance Program (NFIP) is administered primarily under two statutes: the Na-tional Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973 (FDPA).

The 1968 Act made federally subsidized flood insurance available to owners of improved real estate or mobile homes located in special flood hazard areas (SFHA) if their community partici-pates in the NFEP.
The FDPA requires federal financial regulatory agencies to adopt regulations prohibiting their regulated lending institutions from making, increasing, extending or renewing a loan secured by improved real estate or a mobile home located or to be located in a SFHA in a community participating in the NFIP unless the property securing the loan is covered by flood insurance.

The Various Aspects of the FDPA

Key Roles	Identifying communities with SFHAS. Issuing flood boundary and flood rate maps for flood-prone areas. Making flood insurance available through the NFIP "Write Your Own" Program (WYO), which enables the public to purchase NFIP coverage from private companies that have entered into agreements with FIA. Assisting communities in adopting flood plain management requirements. Administering the insurance program: Licensed property and casualty insurance agents and brokers provide the primary connection between the NFIP and the insured party. Licensed agents sell flood insurance. They complete the insured party's application form, report claims and follow-up with the insured subjects for renewals of the policies.
Functions	The Flood Insurance Act helped make flood insurance available for homeowners. Prior to 1968, flood insurance was not available. The Flood Disaster Protection Act made flood insurance mandatory for owners whose property is located in flood-prone areas.
Requirements	According to the FDIC, lenders cannot lawfully extend a mortgage or any other type of loan to a person seeking property ownership in a flood area without ensuring that the owner first gets flood insurance.
Enforcement	Property owners in flood zones who fail to purchase flood insurance in accordance with the Act will not be able to seek disaster relief in the event of a flood.
Benefits	The Flood Disaster Protection Act is designed to help homeowners in the event of a flood. Flood insurance purchases in addition to regular homeowners insurance will help recover losses if property is damaged in a flood.