110TH CONGRESS 
1ST SESSION H. R. 3121 
AN ACT 
To restore the financial solvency of the national flood insur-
ance program and to provide for such program to make 
available multiperil coverage for damage resulting from 
windstorms and floods, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Flood Insurance Reform and Modernization Act of 
2007’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title and table of contents. 
Sec. 2. Findings and purposes. 
Sec. 3. Study regarding status of pre-firm properties and mandatory purchase 
requirement for natural 100-year floodplain and non-federally 
related loans. 
Sec. 4. Phase-in of actuarial rates for nonresidential properties and non-pri-
mary residences. 
Sec. 5. Exception to waiting period for effective date of policies. 
Sec. 6. Enforcement. 
Sec. 7. Multiperil coverage for flood and windstorm. 
Sec. 8. Maximum coverage limits. 
Sec. 9. Coverage for additional living expenses, basement improvements, busi-
ness interruption, and replacement cost of contents. 
Sec. 10. Notification to tenants of availability of contents insurance. 
Sec. 11. Increase in annual limitation on premium increases. 
Sec. 12. Report regarding borrowing authority. 
Sec. 13. FEMA participation in State disaster claims mediation programs. 
Sec. 14. FEMA annual report on insurance program. 
Sec. 15. Flood insurance outreach. 
Sec. 16. Grants for direct funding of mitigation activities for individual repet-
itive claims properties. 
Sec. 17. Extension of pilot program for mitigation of severe repetitive loss prop-
erties. 
Sec. 18. Flood mitigation assistance program. 
Sec. 19. GAO study of methods to increase flood insurance program participa-
tion by low-income families. 
Sec. 20. Notice of availability of flood insurance and escrow in RESPA good 
faith estimate. 
Sec. 21. Reiteration of FEMA responsibilities under 2004 Reform Act. 
Sec. 22. Ongoing modernization of flood maps and elevation standards. 
Sec. 23. Notification and appeal of map changes; notification of establishment 
of flood elevations. 
Sec. 24. Clarification of replacement cost provisions, forms, and policy lan-
guage. 
Sec. 25. Authorization of additional FEMA staff. 
Sec. 26. Extension of deadline for filing proof of loss. 
Sec. 27. 5-year extension of program. 
Sec. 28. Report on inclusion of building codes in floodplain management cri-
teria. 
Sec. 29. Study of economic effects of charging actuarially-based premium rates 
for pre-firm structures.
Sec. 30. Prohibition on enforcement of penalty assessed on condominium asso-
ciations. 
Sec. 31. Report of administrative expenses of write-your-own insurers; inde-
pendent audits. 
Sec. 32. Plan to verify maintenance of flood insurance on Mississippi and Lou-
isiana properties receiving emergency supplemental funds. 
Sec. 33. GAO study of factors affecting enrollment in multiperil insurance pro-
gram. 
Sec. 34. National flood insurance advocate; reports. 
Sec. 35. Requirements relating to windstorm and flood. 
Sec. 36. Notations on flood insurance rate maps for areas protected against 
100-year and 500-year floods by certified flood control struc-
ture. 
SEC. 2. FINDINGS AND PURPOSES. 
(a) FINDINGS.—The Congress finds that— 
(1) flooding has been shown to occur in all 50 
States, the District of Columbia, and in all terri-
tories and possessions of the United States; 
(2) the national flood insurance program 
(NFIP) is the only affordable and reliable source of 
insurance to protect against flood losses; 
(3) the aggregate amount of the flood insurance 
claims resulting from Hurricane Katrina, Hurricane 
Rita, and other events has exceeded the aggregate 
amount of all claims previously paid in the history 
of the national flood insurance program, requiring a 
significant increase in the program’s borrowing au-
thority; 
(4) flood insurance policyholders have a legiti-
mate expectation that they will receive fair and time-
ly compensation for losses covered under their poli-
cies;
(5) substantial flooding has occurred, and will 
likely occur again, outside the areas designated by 
the 
Federal 
Emergency 
Management 
Agency 
(FEMA) as high-risk flood hazard areas; 
(6) properties located in low- to moderate-risk 
areas are eligible to purchase flood insurance policies 
with premiums as low as $112 a year; 
(7) about 450,000 vacation homes, second 
homes, and commercial properties are subsidized 
and are not paying actuarially sound rates for flood 
insurance; 
(8) phasing out subsidies currently extended to 
vacation homes, second homes, and commercial 
properties would result in estimated average annual 
savings to the taxpayers of the United States and 
the 
national 
flood 
insurance 
program 
of 
$335,000,000; 
(9) the maximum coverage limits for flood in-
surance policies should be increased to reflect infla-
tion and the increased cost of housing; 
(10) significant reforms to the national flood in-
surance program required in the Bunning-Bereuter- 
Blumenauer Flood Insurance Reform Act of 2004 
have yet to be implemented; and
(11) in addition to reforms required in the 
Bunning-Bereuter-Blumenauer Flood Insurance Re-
form Act of 2004, the national flood insurance pro-
gram requires a modernized and updated adminis-
trative model to ensure that the program is solvent 
and the people of the United States have continued 
access to flood insurance. 
(b) PURPOSES.—The purposes of this Act are— 
(1) to protect the integrity of the national flood 
insurance program by fully funding existing legal ob-
ligations expected by existing policyholders who have 
paid policy premiums in return for flood insurance 
coverage and to pay debt service on funds borrowed 
by the NFIP; 
(2) to increase incentives for homeowners and 
communities to participate in the national flood in-
surance program and to improve oversight to ensure 
better accountability of the NFIP and FEMA; 
(3) to increase awareness of homeowners of 
flood risks and improve the quality of information 
regarding such risks provided to homeowners; and 
(4) to provide for the national flood insurance 
program to make available optional multiperil insur-
ance coverage against loss resulting from physical
damage to or loss of real or personal property aris-
ing from any flood or windstorm. 
SEC. 3. STUDY REGARDING STATUS OF PRE-FIRM PROP-
ERTIES AND MANDATORY PURCHASE RE-
QUIREMENT FOR NATURAL 100-YEAR FLOOD-
PLAIN 
AND 
NON-FEDERALLY 
RELATED 
LOANS. 
(a) IN GENERAL.—The Comptroller General shall 
conduct a study as follows: 
(1) PRE-FIRM
PROPERTIES.—The study shall 
determine the status of the national flood insurance 
program, as of the date of the enactment of this Act, 
with respect to the provision of flood insurance cov-
erage for pre-FIRM properties (as such term is de-
fined in section 578(b) of the National Flood Insur-
ance Reform Act of 1994 (42 U.S.C. 4014 note)), 
which shall include determinations of— 
(A) the number of pre-FIRM properties 
for which coverage is provided and the extent of 
such coverage; 
(B) the cost of providing coverage for such 
pre-FIRM properties to the national flood in-
surance program;
(C) the anticipated rate at which such pre- 
FIRM properties will cease to be covered under 
the program; and 
(D) the effects that implementation of the 
Bunning-Bereuter-Blumenauer Flood Insurance 
Reform Act of 2004 will have on the national 
flood insurance program generally and on cov-
erage of pre-FIRM properties under the pro-
gram. 
(2) MANDATORY PURCHASE REQUIREMENT FOR 
NATURAL 100-YEAR FLOODPLAIN.—The study shall 
assess the impact, effectiveness, and feasibility of 
amending the provisions of the Flood Disaster Pro-
tection Act of 1973 regarding the properties that are 
subject to the mandatory flood insurance coverage 
purchase requirements under such Act to extend 
such requirements to properties located in any area 
that would be designated as an area having special 
flood hazards but for the existence of a structural 
flood protection system, and shall determine— 
(A) the regulatory, financial and economic 
impacts of extending such mandatory purchase 
requirements on the costs of homeownership, 
the actuarial soundness of the national flood in-
surance program, the Federal Emergency Man-
agement Agency, local communities, insurance 
companies, and local land use; 
(B) the effectiveness of extending such 
mandatory purchase requirements in protecting 
homeowners from financial loss and in pro-
tecting the financial soundness of the national 
flood insurance program; and 
(C) any impact on lenders of complying 
with or enforcing such extended mandatory re-
quirements. 
(3) MANDATORY PURCHASE REQUIREMENT FOR 
NON-FEDERALLY RELATED LOANS.—The study shall 
assess the impact, effectiveness, and feasibility of, 
and basis under the Constitution of the United 
States for, amending the provisions of the Flood 
Disaster Protection Act of 1973 regarding the prop-
erties that are subject to the mandatory flood insur-
ance coverage purchase requirements under such Act 
to extend such requirements to any property that is 
located in any area having special flood hazards and 
which secures the repayment of a loan that is not 
described in paragraph (1), (2), or (3) of section 
102(b) of such Act, and shall determine how best to 
administer and enforce such a requirement, taking
into consideration other insurance purchase require-
ments under Federal and State law. 
(b) REPORT.—The Comptroller General shall submit 
a report to the Congress regarding the results and conclu-
sions of the study under this subsection not later than the 
expiration of the 6-month period beginning on the date 
of the enactment of this Act. 
SEC. 4. PHASE-IN OF ACTUARIAL RATES FOR NONRESIDEN-
TIAL PROPERTIES AND NON-PRIMARY RESI-
DENCES. 
(a) IN GENERAL.—Section 1308(c) of the National 
Flood Insurance Act of 1968 (42 U.S.C. 4015(c)) is 
amended— 
(1) by redesignating paragraph (2) as para-
graph (4); and 
(2) by inserting after paragraph (1) the fol-
lowing new paragraphs: 
‘‘(2) NONRESIDENTIAL PROPERTIES.—Any non-
residential property, which term shall not include 
any multifamily rental property that consists of four 
or more dwelling units. 
‘‘(3) NON-PRIMARY RESIDENCES.—Any residen-
tial property that is not the primary residence of any 
individual, including the owner of the property or
any other individual who resides in the property as 
a tenant.’’. 
(b) TECHNICAL AMENDMENTS.—Section 1308 of the 
National Flood Insurance Act of 1968 (42 U.S.C. 4015) 
is amended— 
(1) in subsection (c)— 
(A) in the matter preceding paragraph (1), 
by striking ‘‘the limitations provided under 
paragraphs (1) and (2)’’ and inserting ‘‘sub-
section (e)’’; and 
(B) in paragraph (1), by striking ‘‘, ex-
cept’’ and all that follows through ‘‘subsection 
(e)’’; and 
(2) in subsection (e), by striking ‘‘paragraph 
(2) or (3)’’ and inserting ‘‘paragraph (4)’’. 
(c) EFFECTIVE DATE AND TRANSITION.— 
(1) EFFECTIVE DATE.—The amendments made 
by subsections (a) and (b) shall apply beginning on 
January 1, 2011, except as provided in paragraph 
(2) of this subsection. 
(2) TRANSITION FOR PROPERTIES COVERED BY 
FLOOD INSURANCE UPON EFFECTIVE DATE.— 
(A) INCREASE OF RATES OVER TIME.—In 
the case of any property described in paragraph 
(2) or (3) of section 1308(c) of the National
Flood Insurance Act of 1968, as amended by 
subsection (a) of this section, that, as of the ef-
fective date under paragraph (1) of this sub-
section, is covered under a policy for flood in-
surance made available under the national flood 
insurance program for which the chargeable 
premium rates are less than the applicable esti-
mated 
risk 
premium 
rate 
under 
section 
1307(a)(1) for the area in which the property 
is located, the Director of the Federal Emer-
gency Management Agency shall increase the 
chargeable premium rates for such property 
over time to such applicable estimated risk pre-
mium rate under section 1307(a)(1). 
(B) ANNUAL
INCREASE.—Such increase 
shall be made by increasing the chargeable pre-
mium rates for the property (after application 
of any increase in the premium rates otherwise 
applicable to such property), once during the 
12-month period that begins upon the effective 
date under paragraph (1) of this subsection and 
once every 12 months thereafter until such in-
crease is accomplished, by 15 percent (or such 
lesser amount as may be necessary so that the 
chargeable rate does not exceed such applicable
estimated risk premium rate or to comply with 
subparagraph (C)). Any increase in chargeable 
premium rates for a property pursuant to this 
paragraph shall not be considered for purposes 
of the limitation under section 1308(e) of such 
Act. 
(C) PROPERTIES
SUBJECT
TO
PHASE-IN 
AND ANNUAL INCREASES.—In the case of any 
pre-FIRM property (as such term is defined in 
section 578(b) of the National Flood Insurance 
Reform Act of 1974), the aggregate increase, 
during any 12-month period, in the chargeable 
premium rate for the property that is attrib-
utable to this paragraph or to an increase de-
scribed in section 1308(e) of the National Flood 
Insurance Act of 1968 may not exceed the fol-
lowing percentage: 
(i) NONRESIDENTIAL PROPERTIES.— 
In the case of any property described in 
such section 1308(c)(2), 20 percent. 
(ii) NON-PRIMARY
RESIDENCES.—In 
the case of any property described in such 
section 1308(c)(3), 25 percent. 
(D) FULL ACTUARIAL RATES.—The provi-
sions of paragraphs (2) and (3) of such section