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Flood Insurance 50 Percent Rule Problem in Wake of Ian


For decades, the National Flood Insurance Program has been a thorny issue nationally as most homeowners throughout the country believe it is unfair to subsidize homeowners knowingly living in floodplain areas next to rivers, lakes, and along the coast. Another problem is the politicization of the floodplain maps. Political leaders at all levels would fight and contest swaths of land in their jurisdiction that were deemed a flood area by the Federal Emergency Management Agency. Many times, they did this on behalf of business interests and money.


Since the mid-1990s, FEMA has sought to put common sense in areas that were at high risk for flooding by encouraging homeowners and business owners, as well as complete towns, to not rebuild in areas of constant flooding. Nationally, there is a push to have those who choose to live in a floodplain, to assume their full risk.


Last fall, after years of wrangling and delays by politicians and bureaucrats, the National Flood Insurance Program implemented a Risk Rating 2.0 which shifted the burden to the homeowners in established floodplains. Additionally, there have been significant updates to FEMA flood maps as technology has improved the models for flooding.


Under the new 50 percent rule as mandated by the National Flood Insurance Program, a structure that is damaged by more than 50 percent of its value due to flooding will have to be updated to full compliance of the current flood and building regulations for that floodplain. This is a big deal because homeowners that have significant flooding damage to their property will no longer be able to just refurbish or rebuild as-built status.


Most homeowners would be forced to rebuild their home with significant elevation requirement and upgraded protection from flooding. This could easily double rebuilding or refurbishing costs, and based on this change, there will be countless homeowners whose properties that were destroyed or substantially damaged by Hurricane Ian who will not build back because of these new building requirements. There will probably be de-population along those areas hardest hit by Ian and eventually, the land will be sold to commercial developers who can afford to construct hurricane and flood resistant structures.

The other shoe that may drop from the guidelines of the National Flood Insurance Program and updated FEMA flood maps is the cost of flood insurance. Don’t forget flood insurance is based on real costs and experiences, and with Hurricane Ian’s damage probably topping $90 billion, homeowners in coastal areas will be forced to pay much higher rates. For the wealthy who own their property and who can afford to self-insure their property, they can rebuild, but not most people.


The potential fallout of much higher flood insurance premiums and restrictions on rebuilding could have a chilling effect on property values along the coasts and those next to rivers. Keep in mind, the people affected by the massive flooding in the Central Florida area from Hurricane Ian will face the same issues as those on Fort Myers Beach, and potentially there could be tens of thousands of homeowners facing the prospect of displacement by either not being able to afford the build back or the cost of the flood insurance.


Could the politicians get involved and try some maneuverers like they did in the past to artificially lower the cost? Maybe, but honestly most know the reality that building in a floodplain is a recipe for disaster. Plus, many will debate the cause and political nature of it, but few will no longer debate the issue of climate change. It is happening and sea levels are rising which will exacerbate flooding in many flood-prone areas.


If you live or plan to move to Florida, know your flood zones before buying because flood insurance is about to be a huge issue.


Don Magruder is the CEO of Ro-Mac Lumber & Supply, Inc., and he is also the host of the “Around the House” Show which can be seen at AroundtheHouse.TV.

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