Who pays for flood damages?
When a flood damages the property of homeowners with National Flood Insurance Program (NFIP) policies, the damages are paid for out of the shared pool of insurance monies (premiums) managed by the NFIP. The net result: the general taxpayer does not pay for those damages. However, when a federal disaster is declared, the money for damages comes out of the General Fund. In these cases the general taxpayer does foot the bill. Secondly, there are many of types of relief, and repair loans, and grants that involve taxpayer dollars. The concept of subsidized insurance: The NFIP has not made a great effort to be actuarially sound. Which is to say, it generally treats everyone’s flood risk as the same and do not differential the higher volatile regions of the country (with great risk from flash floods from more moderate areas). This is far different than a private auto insurance company for example, which quotes insurance rates based on highly detailed information about each applicant right dow
