Hurricane Irene Drains FEMA and Wreaks Havoc on Insurance Plans

Many Homes Damaged by Extreme Weather Lack the Proper Insurance Coverage

by Adam Hilliard on August 29, 2011

The Federal Disaster Relief Fund, which supplies money to individuals and areas afflicted by disasters like Hurricane Irene, has nearly run dry. The news come at the same time many homeowners face damage to their home caused by weather they never predicted. Congress will be forced to add more money to the fund, or many victims of disasters both past and present may have to look for help elsewhere.

The FDRF is operated and dispersed by the Federal Emergency Management Agency. According to FEMA Administrator Craig Fugate, the fund has dropped to $800 million, meaning FEMA can only pay for emergency repairs. While it may be too early for an exact tally, damages from Hurricane Irene alone are projected to be in the billions.

When asked about whether FEMA had enough to cover Irene costs, Fugate answered, “Don’t know. What we’ve been working on will take care of quite a few folks. But as I testified back earlier this year … if we had any significant disasters between now and the end of the fiscal year, it would likely require additional funds.”

Long-term projects helping communities affected by tornados earlier this year, such as towns in Mississippi and Alabama, may have to be on hold until more money begins to flow from Congress. Much of these recovery projects are helping to rebuild community infrastructure, such as roads and government buildings and schools.

The historic spate of disasters not commonly occurring in the areas they affect has left many homeowners looking for outside help like FEMA. One of the biggest single costs of Hurricane Irene is likely to be to homes damaged by rivers overrunning their banks from Irene. Many of these homes are not in areas designated floodplains. Federal law mandates that homes built in an area deemed to be at-risk of floods must purchase flood insurance.

Many homeowners filing for insurance claims will not be covered for flood damages. According to Michael Barry, an Insurance Information Institute spokesman, “Many Americans underestimate the risk of flood damage [from a hurricane].”

In a move which seems par for the course in light of recent budgetary emergencies like the debt ceiling and FAA, the Republican-controlled House has attached additional funding to a budget plan for the Department of Homeland Security. The bill may or not be pushed through the Democrat-controlled Senate, however, as partisan voters may not want to pass other details to which the additional $1 billion has been attached.

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