National Flood Insurance Program

[seafun]

For those of us that have purchased this insurance, there was an article in the NY Times Sunday regarding enormous premium increases for new policies. It results from a new law called the Biggert-Waters Flood Insurance Reform Act that went into effect 10/1. It would not apply to any of us that have current coverage, but going forward, it would if selling (for new buyers). In some cases, the increases are ten fold.

Anyone have first hand experience?

 

[tsutcli]

Just paid my annual flood insurance premium in Sept. and it went up 10% to just over $400.

 

[evan]

seafun ithink you might be mis interpeting . I studied that issue pretty good a few months ago. Basically flood insurance has bee subsidized hyge the last few yrs by the govt and now its nout going to be. The policy is renewed yearly byt the gov't. The articles i read said peopl,e in flood zone x which many are should not see much different but those in a flood zone at sea level could see up to 10 fold increases and those at 4 feet above sea level could see there premium go up 4-5 times, i'm more worried about citizens selling there block of business the next few yrs which could set the stage for huge increases

 

[Kurt]

With rising sea levels, it seems inevitable that insurance companies have to stop insuring coastal areas - rates will continue rising until no one can afford to live on the coast except those who like wet feet, don't need a mortgage, have no sense, or are fish.

Not sure why sea levels are rising. I think the sun is getting hotter every year and melting the polar ice.

 

[Zebraspots]

Building in certain areas is higher risk, so premiums reflect that.

I think phasing out subsidies will go a long way towards reducing high risk behaviors.

 

[beachmouse]

Tallahassee is really unhappy with this, and in a bipartisan way. Over the past 20 or something years, Florida as a state has paid $3+ for every dollar that Florida residents have claimed from storm damage, even after the messes of 2004-05. In contrast, Alabama residents have paid $0.40 for every dollar they've gotten back from the program.

So the sense is that Florida is being asked to subsidize other coastal and flood-prone states because we're an easy target, and the legislature wants to opt out the state of the federal system and Do Something that might be a single state reinusrance pool, incentives for more affordable private flood insurance, or a combination of things, rather than continue to subsidize the bad decisions of people who chose to live in flood plains in North Dakota or Colorado.

 

[beachbarnacle]

I asked about this last year and was told by my agent that the large increases would apply to pre-firm (in Walton County I think she said 1976) buildings (particularly rental properties) that are in zones A, AE and Z. I'm in an AE zone (hazard) and my premium only went up $20 for the year. I'm not sure if this would be the case if you were buying a new property though. and I'm sure that more changes will be in the works.

 

[evan]

beach barnacle i don't think rate increases hit till oct and how as far as i know flood insurance never asks wether its a rental or not as that as no bearing on a flood claim

 

[beachbarnacle]

Evan: Actually mine just renewed effective 11-11 so it is after the OCt. 1 implementation. And if you read Biggert Waters it actually does matter if the property is owner occupied. If you go to floodsmart.gov it gives you a table to look at and find sample premiums and it has a notation to ask your ins. broker if you do not reside in the property more and 80% (ithink) of the year.

 

[beachbarnacle]

Here's my two cents: They would have done better to do a 20% across the board rate hike for all subsidized policies effective immediately (continued for 5 years) and ban future development in flood prone areas (or at least demand construction standards be at 5 feet above BFE or so. That would effect more land developers than homeowners and avert another foreclosure nightmare especially in places like NOLA.