Why does the federal government pay out so much flood insurance money : Planet Money Bill Pennington's house floods a lot: Three times over the course of three years. And every time his house floods, the government pays to help him repair the damage. Is something wrong here? | Subscribe to our weekly newsletter here.

Flood Money (Classic)

Flood Money (Classic)

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Bill Pennington in front of his Houston home, which has flooded every year for the past three years. Noel King hide caption

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Noel King

Bill Pennington in front of his Houston home, which has flooded every year for the past three years.

Noel King

Note: This episode originally ran in 2017

Selling flood insurance is a risky business. So risky that many private companies won't even touch it. And so the federal government has stepped in. Now, the government has to insure homes that are at a high risk for floods. Recent hurricanes show us the flaws in this program. The National Flood Insurance Program (NFIP) is billions of dollars in debt to the U.S. Treasury. If it were a private company, it would be bankrupt. And instead of preventing risky behavior, the NFIP may be encouraging it.

Among the NFIP's many problems are houses that flood again and again and again. Throughout the program's history, one percent of homes have been responsible for more than 25 percent of the claims. The NFIP can't drop these homes.

This week on the show: Why does the U.S. Government pay to rebuild homes in high risk areas?

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