Attempt to Block Flood Insurance Premium Rise

Flood Insurance Program Changes Blocked

Flood Insurance Program Changes Blocked

In Washington DC, Republican Bill Cassidy is attempting to block the upcoming increases in flood insurance premiums by blocking money which was going to the Federal Emergency Management Administration to implement the changes.

Cassidy is trying to block funds which which include FEMA financing. If the funds do not come through for FEMA they will be unable to make their change to the flood insurance law that allows for significant increases for insurance premiums for some properties. The properties affected are mostly ones out of compliance with flood resistance requirements.

Politicians in Louisiana are suggesting that properties that were previously marked as being compliant with previous flood prevention requirements are no longer being considered compliant by FEMA. So through no fault of the homeowners, they have been re-zoned and are now considered non-compliant and required to pay larger flood insurance premiums.

The 2012 changes to the flood insurance program were aimed at making the program more sustainable, particularly in the wake of recent large hurricanes and flood events. The changes were also aimed at making the program more accessible for property owners.

Cassidy’s attemot at blocking FEMA funding measures will considered on Wednesday on the house floor during a homeland security spending bill debate.

He is not the only one attempting to block the changes to the flood insurance program with Senator Mary Landrieu also attempting to delay the bill. Landrieu also has other legislation aimed at blocking any increases to flood insurance premiums and is backed by other politicians from the south.

Homeowners Insurance Costs Exploding

Hurricanes and Homeowners Insurance

Hurricanes and Homeowners Insurance

The cost of homeowners insurance in the United States has exploded, up by 36% between 2003 and 2010 alone, outstripping inflation according to insurance analysts. Homeowners in some parts of the country have seen even greater rises due to the catastrophic weather events in their area. Citizens in Florida have seen their insurance premiums rise by over 90% in the same period, Rhode Island have seen a 62% increase and Louisiana a 58% increase.

The Tampa Tribune reports that one home owner saw their premiums rise from $1000 in 1996, to over $5000 in 2013. A substantial expense for retirees, who now face the prospect of not having insurance on their house and risking everything if an extreme weather event occurs and destroys their house.

Many consumers are being forced to accept higher deductibles just to afford the insurance. Meanwhile the Insurance companies are recording record profits, leading to some angry homeowners asking for more regulation of the industry. Some insurance companies also report greater profits in the areas with extreme weather events – so they make more money from Florida than they do from Ohio. The coastal states pay about $4 billion more than inland residents because of that extreme weather event risk.

The insurance companies suggest that the increases have been necessary because of increased risks associated with climate change weather events. With even more expensive hurricanes wreaking destruction this year, many householders fear that another round of dramatic increases in premiums may be on the way.

On top of that many households are seeing increases in the cost of premiums in the National Flood Insurance Program which many coastal property owners must buy. Their homeowners policy usually covers wind damage from hurricanes only, while the flood insurance is handled separately.

For real estate agents in coastal areas, the increasing insurance costs for coastal properties are a worrying sign, particularly when the market is still recovery mode. Hurricane Sandy caused a massive $19 billion in insurance costs, and we have to see what effect that will have on insurance premiums. If there is another large hurricane this season the 2014 premiums will be even worse.

Insurance agencies actually suggest that in previous years, properties in hurricane affected areas actually had premiums that were too low. This increase is just bringing premiums up to sustainable levels for the insurance companies. However the record breaking profits of many insurance companies tells a different story according to home owners.

Changes to Flood Insurance

Flood Insurance Rates Increase

Flood Insurance Rates Increase

In the United States, hurricane season is about to begin and many homeowners in South Florida are about to see the impact of changes to the National Flood Insurance program.

The National Flood Insurance Program (NFIP) was first created by congress in 1968 and enables communities to purchase flood insurance from the government. The insurance program was designed o provide an alternative source of insurance for communities who have difficulty obtaining insurance from other sources. The program insures over 5.5 million homes in the United States against flood damage.

After Hurricane Sandy caused so much damage in 2012, congress was forced to lend FEMA $30 billion dollars so they could keep the flood insurance program afloat. It is estimated that Hurricane Sandy was the 2nd most expensive hurricane to hit the USA, causing over $70 billion in damage, second only to Hurricane Katrina which created $108 billion in total damage.

The FEMA boss, Craig Fugate commented on the loan recently: “They gave FEMA borrowing authority, not only for Sandy but also to make sure we had funds available to pay claims for future events,”. Which should insure that the program continues in the forseeable future.

Congress approved the Flood Insurance Reform Act of 2012 which increases flood insurance rates for some areas, but also provides some discounts. Most of those affected by changes in the legislation are those in Florida, where the hurricanes frequently create a great deal of damage.

Some of the changes tha are going to occur include the removal of a discount for 2nd homes, which will raise those rates by 25%, and the average rate will increase by 10%. Homes that have had numerous flood insurance claims will also be paying more and flood prone commercially zoned buildings will also pay about 25% more. Politicians claim that these increases are required so the program can be sustainable and with climate change increasing extreme weather events like Hurricanes Sandy and Katrina, rate increase were the only way to keep the program alive.

Not all home owners are required to have flood insurance, so it is worth talking with an insurance agent to discover if it is compulsory in your area. However if you live in a flood prone area in Florida it is a significant risk. Some home owners have observed from past hurricanes that it is not flood damage that damages their properties, but the hurricane itself. If you did not flood from past hurricanes, you might be able to remove the payment from your insurance expenses.