Overview
Title
To make protection against damage and loss resulting from the erosion and undermining of shorelines available under the National Flood Insurance Program, and for other purposes.
ELI5 AI
H.R. 8637 is a plan to help people with houses near the ocean by giving money if their house is in danger from big waves or water eating away the sand. It covers damage to the house but not things inside, and if someone already got help once, they can't ask for more help for the same house later.
Summary AI
H.R. 8637, titled the "Preventing Environmental Hazards Act of 2024," seeks to expand flood insurance through the National Flood Insurance Program to cover damages related to shoreline erosion. The bill allows for federal assistance in demolishing or relocating structures at risk due to erosion, with specific financial provisions laid out for each process. The value of the structure and the maximum applicable insurance claim is to be assessed, and any new or additional flood insurance will not be available for the same structure after a claim and settlement. The Administrator is tasked with crafting regulations to effectively implement these changes.
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AnalysisAI
General Summary of the Bill
The bill, titled the "Preventing Environmental Hazards Act of 2024," seeks to expand the National Flood Insurance Program by providing coverage for structures located on lands threatened by imminent collapse or subsidence due to shoreline erosion. It amends the National Flood Insurance Act of 1968 to allow compensation for the demolition or relocation of such structures. The legislation attempts to address the financial vulnerability that property owners face due to the constant threat of shoreline erosion, which can lead to the collapse or subsidence of their homes or businesses.
Summary of Significant Issues
Several significant issues arise from the provisions outlined in the proposed bill:
Subjectivity in Authority Determination: The bill allows state or local authorities to determine whether a structure is threatened by imminent collapse due to shoreline erosion. This presents a potential issue with subjectivity across different jurisdictions, potentially leading to inconsistent outcomes for property owners.
Coverage Limitations: The maximum payout under this program is limited to $250,000, which may not be adequate for high-value properties. This gap could leave property owners with substantial losses if their properties exceed this coverage cap.
Regulatory Complexity: The bill introduces a complex framework requiring strict adherence to various certifications and regulations, potentially delaying support for affected property owners.
Insurance Coverage Requirements: The bill stipulates that a structure must have been covered for a specific period before a claim, which might leave newer property owners or those with recent coverage gaps unprotected.
Exclusions and Future Coverage: The legislation clearly excludes any loss of or damage to the contents of a structure, which might be a critical concern for property owners expecting more comprehensive coverage.
Impact on the Public
Broadly, the bill aims to provide financial relief and a safety net for property owners facing the risk of erosion-related damages. For the general public, this could mean increased confidence in owning and investing in shoreline properties, knowing that insurance coverage extends to new threats beyond traditional flood damage. However, the public might also experience issues related to navigating the bill's complex requirements and regulations.
Impact on Specific Stakeholders
Property Owners: This group stands to gain the most direct benefit, as the bill offers a new form of risk mitigation for their property investments. However, they may also find themselves grappling with the subjectivity and complexity of new rules.
Insurers: Insurance providers may face challenges in assessing appropriate coverage values and managing claims under the new provisions. The cap on payouts could also create hurdles in ensuring adequate coverage for all situations.
Local and State Authorities: These entities are likely to take on additional responsibilities in assessing and certifying properties under threat, which could strain resources. Inconsistent application of standards may lead to challenges in equitably protecting homeowners across different regions.
Real Estate Market: The potential increase in insurance coverage could boost buyer confidence in coastal and shoreline properties, possibly impacting the local real estate market positively by stabilizing property values in erosion-prone areas.
In conclusion, while the "Preventing Environmental Hazards Act of 2024" proposes necessary updates to the National Flood Insurance Program to address a growing environmental challenge, its implementation may require careful consideration of subjective assessments, coverage limitations, and administrative complexities to ensure that it serves the interests of all stakeholders effectively.
Financial Assessment
In reviewing the financial aspects of H.R. 8637, several key points emerge regarding the financial provisions and their possible implications.
Maximum Claim Limitations
The bill introduces a coverage limit for claims made under the National Flood Insurance Program that is aimed at addressing damages caused by shoreline erosion. Specifically, the bill states that the amount paid in connection with any claim under this subsection may not exceed the lesser of the amount of coverage under the flood insurance contract for the structure or $250,000. This cap is designed to manage the financial risk and exposure of the program.
However, this financial limitation addresses one of the key issues identified: the potential gap in protection for high-value properties. Structures that are worth significantly more than $250,000 could suffer from substantial financial losses that exceed the coverage limit, leaving property owners vulnerable. This limitation highlights the necessity for property owners to assess additional insurance options to fully protect their investments.
Demolition and Relocation Payments
The financial provisions for demolishing or relocating structures are detailed in the amendments to the National Flood Insurance Act of 1968 as part of this bill. For demolition, the bill provides for an initial payment of 40 percent of the structure's value, followed by a subsequent payment of the remaining 60 percent, or the actual cost of demolition — whichever is less — once demolition is completed. Similarly, for relocation, an owner can receive up to 40 percent of the structure's value, provided it does not exceed the actual relocation costs. These financial guidelines aim to incentivize owners to take preemptive action in the face of imminent structural threats due to erosion.
Assessed Value and Coverage Terms
The calculation of a structure's value presents another financial aspect, determining the amount eligible for coverage. The value is defined as the lower of three potential amounts: the fair market value of a similar, unaffected structure, the purchase price plus improvements adjusted for inflation, or the insured value under the flood insurance contract. This calculation can lead to disputes, especially with the ambiguity around the definition of "fair market value," thus potentially affecting financial settlements.
Exclusion of Loss of Contents
Importantly, the bill explicitly excludes coverage for any loss of or damage to the contents of a structure under this section. This exclusion means that financial compensation is strictly limited to the structural claims, not addressing potential personal property losses inside affected buildings. As a result, property owners might experience dissatisfaction, expecting more comprehensive coverage.
In summary, H.R. 8637 proposes clear financial allocations toward mitigating property damage from erosion, but these come with defined limits and exclusions that could lead to significant financial decisions and challenges for property owners. The bill's financial framework necessitates careful consideration by property owners to ensure adequate asset protection and highlights the balance lawmakers are attempting to strike between offering federal assistance and managing fiscal responsibilities.
Issues
The criteria for determining the 'imminent collapse or subsidence' of a structure due to shoreline erosion by a State or local authority might be subjective, leading to inconsistent applications between different jurisdictions. This could result in unequal protection and disputes regarding eligibility, as described in Section 2.
Claims made under this subsection cannot exceed $250,000, as specified in Section 2, creating a gap in protection for high-value properties that could result in significant financial losses for property owners with structures exceeding this value.
The complex nature of regulations requiring different certifications, timelines, and evaluations may create an administrative burden, leading to potential delays in aid distribution, as outlined in Section 2. This might impact the timely support needed by property owners facing erosion threats.
Language requiring continuous coverage for 12 months or 4 years before certification to qualify for flood insurance may penalize individuals who recently purchased insurance or have gap periods, potentially leaving them without necessary protection, as described in Section 2.
The regulation excludes structures not covered by a contract on the date of a certification, possibly disadvantaging new property owners unaware of impending threats, as stated in Section 2.
The provision prevents any future flood insurance coverage or assistance for properties already aided under this section, which could be detrimental if future erosion or subsidence occurs, as specified in Section 2.
The definition of 'fair market value of a comparable structure that is not subject to imminent collapse or subsidence' is not clearly defined and could be subjective, potentially leading to disputes, as mentioned in Section 2.
The exclusion in Section 2 of loss of or damage to any contents of a structure from coverage may lead to disputes or dissatisfaction among property owners, who might expect coverage for both structural and content losses.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the Act specifies its short title, stating that it can be referred to as the “Preventing Environmental Hazards Act of 2024”.
2. Flood insurance coverage for structures on land subject to imminent collapse or subsidence Read Opens in new tab
Summary AI
The new subsection added to the National Flood Insurance Act of 1968 provides insurance coverage for structures on land at risk of collapsing or sinking due to shoreline erosion. If deemed unsafe by authorities, the insurance can cover part or all of the demolition or relocation costs, but not the loss of contents inside the structure, with certain conditions and limits applied.
Money References
- “(4) COVERAGE TERMS.— “(A) MAXIMUM CLAIM.—Notwithstanding any provision of this subsection, the amount paid under a flood insurance contract in connection with any claim under this subsection may not exceed the lesser of— “(i) the amount of coverage under the flood insurance contract for the structure; or “(ii) $250,000. “