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Senate bill would stop some flood insurance price increases

Senate bill would stop some flood insurance price increases

Changes in the National Flood Insurance Program have prompted outcries from property owners in Florida, as well as those living along much of the Atlantic Coast. In a state like Florida, a significant increase in the cost of flood insurance could have severe implications for thousands of homeowners.

For those on the coasts, the restructuring of the National Flood Insurance program, which offered subsidized insurance rate to homeowners, has meant some would have had to abandon their property or face “huge, gargantuan” price increases for their flood insurance.

The program, which found itself overwhelmed by storm damage and $24 billion in debt after Hurricane Katrina in 2005 and Superstorm Sandy in 2012, needed significant changes, and the Biggert-Waters Flood Insurance Reform Act provided them.

It also removed subsidies for homes, some immediately and some phased in over five years, which more accurately reflect the actual risk the property faces. For homeowners in Florida, which has the most subsidized flood insurance policies in the U.S., the increases ranged from $2,000 to $10,000 per year.

For an individual homeowner, this could be a catastrophic increase that would leave them unable to afford insurance. Because flood insurance is typically required for home with a mortgage, the loss of coverage could force some people out of their homes.

It could also have a damaging effect on the real estate market in a state like Florida, which was hit hard by the real estate bubble and collapse of home prices.

A bill has been passed by the Senate that would limit some the harsh impact of the law, but it faces opposition in the House. The Republican majority has said it won’t consider the bill, but will consider alternatives. Homeowners hope they act before higher rates drive them out of their homes.

Source: Tampa Bay Times, “U.S. Senate approves delay in flood insurance rate hikes,” Alex Leary, January 30, 2014

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