Subsidized by your taxes via the National Flood Insurance Program (edit: speaking US-centrically here)

https://www.independent.org/news/article.asp?id=10524

> “The potential losses generated by NFIP have created substantial financial exposure for the federal government and U.S. taxpayers,” the U.S. Government Accountability Office concluded in a February 2013 report to Congress. “While Congress and FEMA intended that NFIP be funded with premiums collected from policyholders and not with tax dollars, the program was, by design, not actuarially sound.”

> In 2012, in an attempt to provide some financial stability to the ailing NFIP, which was $20 billion in debt at the time, Congress required FEMA to phase out many of the subsidized policies in order to more accurately reflect cost and risk. Existing policyholders naturally balked at paying the higher premiums, however, and the backlash was strong enough that politicians quickly caved and rescinded the requirements, restoring the grandfathering of subsidized policies and capping premium increases.

tl;dr: Beachfront property owners don't want to pay for their own flood insurance, so you get to pay for it instead. In October 2017 the government wrote off $16 billion of that debt, and as of February 2018 it was still in debt to the tune of $20.5 billion.

Thanks to these subsidies, people will keep rebuilding in the same idiotic places knowing that it will flood again, which is fine because you're paying for the bulk of their insurance.

I think if the insurance wasn't subsidized, the (massive) values of those beachfront properties would collapse. With that, the tax revenues derived from that would sink beneath the waves, which would bankrupt local and possibly state governments. From what I understand those subsidies are what's keeping Florida from becoming a failed state.

If that's the justification, would it would be cheaper to stop throwing the money away over and over on rebuilding in flood areas and just subsidize Florida directly?

Or would it be cheaper to stop throwing money away and let Florida become a failed state and restructure to some new stable configuration (presumably with a much lower population)?

Wouldn't other luxury housing increase in value though? It's not like the rich people are going stop having vacation homes.

If you're a beachfront town, you don't care much that rich people are now buying vacation homes in the mountains. Your economy is still ruined.

> tl;dr: Beachfront property owners don't want to pay for their own flood insurance, so you get to pay for it instead. In October 2017 the government wrote off $16 billion of that debt, and as of February 2018 it was still in debt to the tune of $20.5 billion.

The NFIP insures millions of properties, like mine, that are nowhere near a beach.

Are the premiums as artificially low in non-costal areas? I’ve been under the impression that most of our increasing flood risks over recent decades are in hurricane areas, but I do know we had pretty bad flooding in the Midwest this year too. Is that the new normal?

FEMA sent us the NFIP claim history when we bought the house, and based on the amount paid out and risk of recurrence, versus the premium we pay, I think our premium is fair. Interestingly, despite being inland in New Jersey the two claims correlate with two hurricane strikes (Floyd and Sandy). The river we are on is pretty small and only rises when there is heavy rain (and starts falling almost as soon as the rain stops).

For the house I recently purchased, it's a little over 1% of the house value every year, based on reconstruction cost and flood zone classification. Is it artificially low? I don't think so, at leaat for my circumstances.