National Flood Insurance Act of 1968 Overview and Details

The National Flood Insurance Act of 1968 was a game-changer for flood-prone communities. It was signed into law by President Lyndon B. Johnson on September 23, 1968.

The Act was a response to the devastating flood of 1965 in the Midwestern United States, which caused over $1 billion in damages. This disaster highlighted the need for a national flood insurance program to help communities recover from such events.

Prior to the Act, flood insurance was not widely available, and many property owners were left without financial protection. The new law aimed to fill this gap by providing affordable flood insurance to homeowners and businesses.

The National Flood Insurance Act of 1968 had a significant impact on the implementation of flood insurance requirements.

The National Flood Insurance Program was launched by the National Flood Insurance Act of 1968.

In order to meet the requirements, a structure needed to be covered by a contract for flood insurance under this title on or before June 1, 1988.

Presentation of the appropriate premium and a properly completed flood insurance application form to the National Flood Insurance Program or a Write Your Own (WYO) Company on or before June 1, 1988, was sufficient to meet this requirement.

The Flood Disaster Protection Act of 1973 mandated that lenders require flood insurance on loans secured by properties located within high-risk flood areas.

Benefits under the National Flood Insurance Act of 1968 are not available for items excluded under the Standard Flood Insurance Policy (SFIP).

Items excluded under the SFIP are not covered under section 1306(c) of the Act.

The policy covers the expense of removing contents up to the minimum deductible of $500.00 to protect and preserve them from flood or imminent danger of flood.

Coverage for contents removal applies when a structure is subject to imminent collapse or subsidence due to erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels.

The coverage for contents removal is only available if contents coverage is in effect.

Insurance availability is restored to a property upon a finding by the Federal Insurance Administrator of a valid rescission of a declaration of a violation.

A valid rescission requires a clear and unequivocal statement by an authorized public body rescinding the declaration and giving the reason(s) for the rescission.

The public body must also provide documentation for the measures taken in lieu of denial of insurance to bring the structure into compliance with local flood plain management regulations.

A clear statement must be made that the public body rescinding the declaration has the authority to do so and a citation to that authority must be provided.

Denial of Coverage can be a frustrating experience, especially if you're not aware of the reasons behind it. No new flood insurance shall be provided for any property that has been declared by a duly constituted State or local zoning authority to be in violation of State or local laws, regulations, or ordinances that discourage or restrict land development or occupancy in flood-prone areas.

A valid declaration of a violation requires specific information, including the property owner's name and address, a clear declaration of the property's violation, and evidence that the property owner has been notified of the violation and potential denial of insurance.

States and communities have the authority to submit a declaration to the Federal Insurance Administrator for the denial of insurance. The Administrator will then review the declaration and make a decision based on the provided information.

A property owner can expect their insurance to be denied if the Federal Insurance Administrator finds a valid declaration of a violation. This can be a significant setback, especially if you're relying on flood insurance for protection.

Insurance coverage can be restored to a property if a valid rescission of a declaration of a violation is submitted to the Federal Insurance Administrator.

The rescission must include the name of the property owner(s) and an address or legal description of the property to identify it and enable FEMA to identify the previous declaration.

A clear and unequivocal statement by an authorized public body is required, along with the reason(s) for the rescission.

Supporting documentation for measures taken to bring the structure into compliance with local flood plain management regulations must also be provided.

The public body must have the authority to rescind the declaration, and a citation to that authority must be included.

The Federal Insurance Administrator reviews State applications for eligibility to certify structures subject to imminent collapse. This review can result in approval, rejection, or a request for additional information.

If the State's program and data base meets the criteria, the Administrator approves the State as eligible to certify structures. However, this approval is provisional and subject to review for continued compliance.

The Administrator reviews State certifications after a claim has been filed by the property owner. The review can result in one of three outcomes: the structure is determined to be subject to imminent collapse, the structure is not determined to be subject to imminent collapse with a basis for the determination, or additional data are needed to verify that the procedures and criteria for imminent collapse certification have been met.

Here are the possible outcomes of the State certification review:

If the State's program and data base is found to be inadequate and not corrected within 90 days, the Administrator may revoke approval.

If a claimant sells a structure prior to its demolition or relocation, no benefits are payable to that claimant under section 1306(c) of the Act, and any payments which may have been made under those provisions shall be reimbursed to the insurer making them.

Relocation costs that are covered under section 1306(c) of the Act include the costs of removing the structure from the site, moving it to a new site, and preparing the new site for the structure, including installing new sewer, septic, electric, gas, telephone, and water connections.

A policyholder's notice of claim for benefits under section 1306(c) of the Act must be received by the insurer before any benefits can be paid, and a copy of the effective Flood Insurance Rate Map panel annotated with the location of the threatened structure must also be provided.

If a policyholder sells a structure before its demolition or relocation, they won't be eligible for benefits under section 1306(c) of the Act.

Any payments made under those provisions will need to be reimbursed to the insurer.

A claimant must receive a condemnation in accordance with § 63.2 of this part or a certification in accordance with subpart B of this part before a policyholder's notice of claim for benefits can be processed.

When buying a property, it's essential to consider the costs associated with relocating it to a new site. Removing the structure from the site is a reimbursable relocation cost.

Relocation costs can be a significant expense, but some costs are covered under the law. Moving the structure to a new site is also a reimbursable cost.

At the new site, you'll need to prepare the ground for the relocated structure. A new foundation and related grading, including elevating the structure as required by local flood plain management ordinances, is a reimbursable cost.

Relocating a structure can be a complex process, but understanding the reimbursable costs can help you budget accordingly. Sewer, septic, electric, gas, telephone, and water connections at the building are also reimbursable costs.

The deductible for flood insurance coverage can be as low as $500, as mentioned in § 63.5, which applies to the expense of removing contents to protect and preserve them from flood or imminent danger of flood.

If a structure is subject to imminent collapse or subsidence due to erosion or water, the coverage for contents removal can be up to the minimum deductible of $500.

The amount of building coverage and deductible applicable to a claim for benefits under section 1306(c) of the Act are what was in effect on the date of condemnation or the date of application for certification, as stated in § 63.7.

When working with flood insurance, it's essential to understand the terminology used.

A duly constituted State or local zoning authority or other authorized public body is an official or body authorized under State or local law to declare a structure to be in violation of a law, regulation or ordinance.

State or local flood plain management regulations are measures intended to discourage or restrict development or occupancy of flood-prone areas.

These regulations are defined as Flood plain management regulations in § 59.1 of this subchapter.

Content removal coverage is available if a structure is subject to imminent collapse or subsidence as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels.

This coverage applies if the structure meets the requirements of section 1306(c) of the Act, making benefits payable under those provisions.

The coverage is for the expense of removing contents, up to the minimum deductible of $500.00, to protect and preserve them from flood or from the imminent danger of flood.

Contents coverage must be in effect for this coverage to apply, and the removal of contents must be done to prevent further damage.

If you're unsure about your coverage or have questions about content removal, it's always best to consult with your insurance provider directly.

The Homeowner Affordability Act was a significant change to flood insurance policies. It repealed parts of the Biggert-Waters law, which had led to skyrocketing premiums for many homeowners.

The HFIAA restored the concept of grandfathering, which means that homeowners who had existing policies before the law change were allowed to keep their original rates. This was a major relief for many property owners.

The Act also put limits on certain rate increases, which helped to make flood insurance more affordable for homeowners. The annual surcharge applied to all policyholders, which updated the approach to ensuring the fiscal soundness of the fund.

If benefits have been paid under section 1306(c) of the Act, specific setback requirements must be met to avoid a prohibition on flood insurance or assistance.

These requirements apply to the structure involved, wherever it is located, and to any other structure subsequently constructed on or moved to the same parcel of land.

To meet these requirements, the structure must comply with the setback requirements in section 1306(c)(5) of the Act.

Any structures relocated under section 1306 of the Act must also comply with the flood plain management criteria set forth in § 60.3 of this chapter.

These regulations are in place to ensure that structures are built or relocated in a way that minimizes the risk of flood damage and promotes community flood plain management.

The National Flood Insurance Program has faced criticism for encouraging building and rebuilding in vulnerable coastal areas and floodplains.

Critics argue that the government's subsidized insurance plan has led to properties being covered under the federal insurance program despite frequent flooding, without premiums going up.

Properties that have flooded multiple times, such as those that have flooded 17 or 18 times, are still covered under the federal insurance program, according to critics.

The Biggert-Waters Flood Insurance Reform Act of 2012 was designed to allow premiums to rise to reflect the true risk of living in high-flood areas.

The bill aimed to deal with the increasing debt of the National Flood Insurance Program by making premiums reflect real flood risks, resulting in a 10 fold increase in premiums.

At present, $527 billion worth of property is in the coastal floodplain, which is heavily underwritten by the federal government.

The law ordered FEMA to stop subsidizing flood insurance for second homes and businesses, and for properties that had been swamped multiple times.

These changes were supposed to occur gradually over the course of five years, but a study on the affordability of this process has not been completed by FEMA.

The National Flood Insurance Program has faced criticism for its subsidized insurance plan, which some argue encourages building and rebuilding in vulnerable coastal areas and floodplains.

Critics point out that properties that flood multiple times are still covered under the federal insurance program without premiums going up, as seen with properties that flooded 17 or 18 times.

This lack of premium increase can be problematic, as it doesn't account for the increased risk to the property and the government's financial exposure.

The Flood Disaster Protection Act of 1973 mandated that lenders require flood insurance on loans secured by properties in high-risk flood areas, which has led to a large number of properties being insured under the program.

The National Flood Insurance Act of 1968 launched the National Flood Insurance Program, which has been providing subsidized insurance to property owners for decades.