Flood Insurance

The National Flood Insurance Program is a government-subsidized program available to anyone who wants flood insurance, but required for anyone who has a federally-insured mortgage - which is most middle class home owners. The original goal of the program was to reduce losses from floods, but since the program began flood losses have instead continually increased. This is largely because many more people now live in areas vulnerable to flooding, in part because the NFIP reduces the financial risk to the individual of living in a flood zone.

Here are two contrasting looks at flood insurance:

Taxpayers get soaked by government's flood insurance - John Stossel, ABC News

California town weighs coast of flood protection - Tamara Keith, NPR

Here's a very recent Sacramento Bee article about Natomas and its levees.

Natomas, just north of downtown Sacramento, was developed before the full risk of flooding was recognized. In general, this is an area of low home prices and moderate incomes, and spending $300 per year for flood insurance has many residents concerned. Yet John Stossel argues that the unsubsidized coast of that insurance should be in the thousands of dollars - well out of the reach of many Natomas homeowners.

So who should bear the cost of flood insurance? Should it be a private insurance market with high premiums, and individuals will just be out of luck in case of a flood if they could not afford the insurance? Or should the cost of the Natomas homeowners' insurance be partially paid by all taxpayers - even by those folks wise enough to live well above the floodplain?

Your paper should:

• describe your proposal for how flood insurance should work
• provide at least two arguments for your position
• illustrate each argument with at least one example or explanation (of course, more examples are even better)