The National Flood Insurance Program was designed to be self-sustaining, but it’s $19 billion in the hole. The Congressional Budget Office says the program will add $900 million a year to the debt.

The reasons, according to a review by USA Today, include leniency in allowing flooded home owners to rebuild over and over in the nation’s worst flood planes.

Some claimants have received more than 10 times the value of their properties. For instance, the owner of a Fairhope, Ala., home, on Mobile Bay has received $2.3 million claims to repair a $153,000 home. The owner of a $116,000 Houston home has received $1.6 million.

The second big issue is discounts for second-homes, many of them going to wealthy owners in places like Hilton Head Island, S.C., and Longboat Key, Naples, and Sanibel in Florida.

One partial solution would be insisting that recipients of flood insurance payouts raise their homes when they rebuild, but local communities have allowed home owners to evade attempts at enforcing this regulation.

Source: USA Today, Thomas Frank (08/26/2010)