Federal Disaster Assistance

After a flood, people are often uncertain if their eligibility for federal disaster assistance is linked in any way to whether or not they have flood insurance. Because much of the other disaster assistance that is available to individuals comes from the Federal Emergency Management Agency (FEMA), there may be confusion between possible claims provided through the National Flood Insurance Program (NFIP, which is also managed by FEMA), and other disaster assistance programs. This report provides an overview of the assistance available to individuals and households following a flood and provides links to more comprehensive guidance on both flood insurance and disaster assistance. The National Flood Insurance Program (NFIP) is the main program intended to provide federal assistance to homeowners and renters recovering from flood losses. The maximum coverage for one- to four-family homes is $100,000 for contents and $250,000 for buildings coverage. In addition to NFIP claims payments to policyholders, homeowners and renters may also access a number of other federal programs aimed at mitigating the impact on individuals and households. The principal FEMA program to offer assistance to individuals and families is the Individuals and Households Program (IHP). The total of all IHP assistance to one household cannot exceed $34,000. IHP recipients whose homes are located in a Special Flood Hazard Area, are in a community participating in the NFIP, and who receive assistance for repair, replacement, permanent housing construction, and/or personal property as a result of a flood-related disaster must obtain and maintain flood insurance as a condition of accepting disaster assistance. The Small Business Administration (SBA) Disaster Loan Program provides direct loans to businesses, nonprofit organizations, homeowners, and renters to repair or replace property destroyed in a federally declared disaster. A Personal Property Loan provides a creditworthy homeowner or renter in a declared disaster area with up to $40,000 to repair or replace personal property owned by the survivor, while Real Property Loans provide creditworthy homeowners with up to $200,000 to repair or restore the homeowners' primary residence to its predisaster condition. Recipients of SBA loans must carry flood insurance for the life of the loan. In some instances that are perceived as catastrophic events, Congress has provided additional resources to states and local governments through the Department of Housing and Urban Development's Community Development Block Grant Disaster Recovery Program (CDBG-DR); however, the CDBG-DR program is not automatically triggered by a disaster. Due to the block grant nature of the program, local and state officials exercise a great deal of discretion in determining which combination of eligible activities to employ. This allows communities to use CDBG-DR funds to meet disaster-related needs, including short-term disaster relief, mitigation activities, and long-term recovery activities. HUD does not provide CDBG-DR funding directly to individuals; however, individuals and families may benefit from a number of the eligible activities for which CDBG-DR funds can be used. Unless the individual state requires the purchase of flood insurance, the recipients of CDBG-DR grants are exempt from the requirement to purchase flood insurance. The NFIP's authorization expires on July 31, 2018. If the NFIP is not reauthorized and is allowed to lapse, the authority to provide new flood insurance contracts will expire. If the NFIP were to lapse, the unavailability of NFIP insurance could have an impact on other programs such as IHP, SBA disaster loans, and CDBG-DR. Separately from or in conjunction with NFIP reauthorization, the impacts on such other programs may be useful to consider. In particular, Congress may consider revising the requirements for flood insurance in the Flood Disaster Protection Act.