Damaged homes along the New Jersey shore after Sandy. Photo by the U.S. Fish and Wildlife Service via Flickr.

When communities are hit by a hurricane or flooding, the National Flood Insurance Program helps families recover and rebuild. Changes to the program proposed by Smart Growth America—and supported by the Obama Administration—could help homeowners reduce their flood risk and cut costs for the federal government at the same time.

Most homeowners’ insurance policies do not cover damage from flooding, and the National Flood Insurnce Program (NFIP) is a supplemental insurance offered by FEMA to protect families financially from flood damage. Many NFIP plan members pay highly subsidized rates that do not reflect the true risk of flooding or the costs associated with it, and these subsidies have contributed to increased development in flood hazard areas, putting more people and property at risk. All this has come at a high cost to taxpayers: The program is currently almost $24 billion in debt to the Department of Treasury.