Bush signs Katrina-related flood insurance bill

WASHINGTON (Reuters) – President George W. Bush on Tuesday
signed legislation to increase the borrowing authority of the
government’s flood insurance program to $3.5 billion from $1.5
billion to pay claims from Hurricane Katrina.

The legislation increases the borrowing authority of the
National Flood Insurance Program that is administered by the
Federal Emergency Management Agency.

The program offers low-cost flood insurance to homeowners
and small business owners in high-risk areas where it might
otherwise not be available.

The program does not use government funds, but is allowed
to borrow from the Treasury if necessary to pay claims.

Some analysts have expressed concern that the new borrowing
authority was not enough and would have to be increased again
to handle Katrina-related claims.

The National Flood Insurance Program pays up to $250,000
for residential buildings, and another $100,000 for contents
that are lost. It also pays up to $500,000 for nonresidential
buildings and $500,000 for their contents.

Bush also signed into law a bill to exclude federal
financial assistance for flooding from being considered income,
so that the recipient’s eligibility for other government
benefits would not be affected.