Flood Insurance

david52 Zone 6September 24, 2013

snip - Only 18 percent of Americans have any kind of flood insurance coverage. For those who might want it, the price is about to go up. That's because subsidies to policyholders for the federal government's flood insurance program - the National Flood Insurance Program, which is nearly the sole provider of flood insurance - are to phase out starting Oct. 1.


The program is hurting for cash after claim payouts from storms like Irene and Katrina. Its reported deficit is $28 billion. Last year's Hurricane Sandy alone cost the government more than $7 billion in paid losses.

As a result, Congress passed the Biggert-Waters Flood Insurance Reform Act in 2012. That act eliminates government subsides to some 20 percent of policyholders. In some cases, premiums could go as high as $20,000 a year.

"We need these reforms to move premiums to more economic soundness," said Robert Detlefsen, vice president of public policy for the National Association of Mutual Insurance Companies, a trade group for the industry.

"Historically, prices for premiums have been too low, especially in high flood areas where they don't reflect the risk of flooding," he said.


Some flood insurance policyholders are already subject to higher premiums. As part of Biggert-Waters, secondary homes - homes that are not a primary residence - started seeing 25 percent increases from Jan. 1, when policies were renewed. The 25 percent will be added each year until the premiums reach a designated premium level.

According to FEMA, starting on Oct. 1, people in homes with policy lapses or that have been sold and are 4 feet below the agency's base-flood elevation, could have premiums of $9,500 a year.

For individuals with homes at FEMA's base-elevation levels, the rates could be $1,410 a year. Those with homes 3 feet above base-flood elevation could pay only $427 a year.

But in high-risk areas, FEMA says on its website, premiums could reach in "excess of $20,000 a year" in some cases.


As it stands now, higher rates will go into effect over a five-year period starting in late 2014 for flood insurance policyholders who had so-called "grandfather" coverage. They avoided higher rates - as long as they kept up their premiums - in flood-designated areas even when redrawn flood maps showed higher risk. But if those maps are revised now to show greater hazards, the premiums will rise.

end quote

Ought to put a stop to building new vacation homes along hurricane-prone beaches, huh.

Here is a link that might be useful: link

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Might slow it down a little.

    Bookmark   September 24, 2013 at 8:27PM
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Is this a slam on New Orleans, the east coast, some other hurricaine area? I really didn't care for the maybe building would slow down. Because no one thought Nashville, nowhere near any coasts, would ever flood. So we should build where? Where doesn't it flood? Because it's evereywhere now. It cost me $1200 a year for each of the two years I had it, and my repairs get done. Unlike others who didnt't have coverage and ended up walking away because they had no coverage and it cost too much to repair. Insurance is for protection of the unkown. Hope no one ever needs it! What isn't getting cost prohibitive? Next, it'll be clothes.

    Bookmark   September 24, 2013 at 8:51PM
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There was no slam. David sarcastically said that it may put a stop to building on the beach and Pat sarcastically said it might slow it down.

They were being sarcastic because in reality raising the premiums won't stop the rich from grabbing the beaches for themselves and building and rebuilding their mansions when they get inundated by the ocean.

I am a little worried because I have flood insurance and so will be affected by the hike. No mortgage, but I still want the protection. I suspect at some point my rates have to go up. But it has to do done because if it isn't the program will go bankrupt.

    Bookmark   September 24, 2013 at 10:47PM
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I'm glad this subject came up; it's a learning experience. I didn't know this:

"The National Flood Insurance Program (NFIP) is a federal program. Participation is voluntary, but the benefits are considerable. To join, a community agrees to adopt, administer and enforce a floodplain management ordinance that meets or exceeds the minimum requirements. When communities participate in the NFIP, property owners and renters can buy flood insurance to help deal with losses from flooding."

I like the general idea.

"In 1968, Congress passed the National Flood Insurance Act based on findings that: "(1) a program of flood insurance can promote the public interest by providing appropriate protection against the perils of flood losses and encouraging sound land use by minimizing exposure of property to flood losses; and (2) the objectives of a flood insurance program should be integrally related to a unified national program for floodplain management."

So, from that first paragraph quoted, it sounds like one can't participate unless their community does, Is that right?

Here is a link that might be useful: Flood Insurance

    Bookmark   September 24, 2013 at 11:44PM
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not david, pnbrown. I hate those comments like NOLA deserved it somehow. I heard it a lot. And I don't live in New Orleans. I still hate hearing those comments. Wrong!

    Bookmark   September 25, 2013 at 7:42AM
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No such thing as flood insurance in Canada. The insurance companies don't offer it and neither the Federal nor Provincial Government offer an insurance plan either.

There is some relief provided by the governments should a flood occur but I'm not at all sure what the limits and/or eligibility requirements are.

    Bookmark   September 25, 2013 at 7:52AM
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It does make sense to streamline something like that. It wouldn't be good if it bankrupted.

    Bookmark   September 25, 2013 at 7:58AM
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I don't know about communities elvis, but I do know that in order to obtain flood insurance the government requires certain building standards. If you want to take the chance and not have flood insurance, you don't have to meet these standards.

    Bookmark   September 25, 2013 at 8:37AM
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david52 Zone 6

What strikes me is that this is the first indication of what the actual costs of climate change are going to be.

"(Reuters) - More than a million homeowners living in older houses along the coastlines and riverbanks of the United States are being jolted by federal flood insurance rate hikes under a law passed in the wake of devastating storms.

Carol Giovannoni, 51, of St. Pete Beach, a barrier island community off Florida's west coast, is one of the people dreading October 1, when the law takes effect. Giovannoni said the annual flood insurance premium on her standard 1950s concrete-block, ranch-style home on the waterfront will jump from $1,700 to $15,000 over the next few years. She said her home has never flooded in 59 years.

Were Giovannoni to sell her home, or let her policy lapse, the new rate would apply immediately, she said, but exactly how rates will be calculated under the Biggert-Waters Flood Insurance Reform Act of July 2012 is unclear to many. - snip

The act comes on top of a nationwide re-mapping of flood zones which in some coastal areas has moved some properties into newly widened hazard zones, exposing them to rate increases.

More than 80 percent of the 5.6 million properties nationwide covered by the $1.12 trillion program already comply with existing standards and would not see any change in their policies, at least for the time being, FEMA director Craig Fugate told a hearing of the U.S. Senate Banking, Housing and Urban Affairs Committee on September 18.

Fugate said the rates of those homeowners in compliance could go up too if new maps reveal higher flood risks.

Hit hardest by the rate hike are people who bought a home with subsidized insurance after the law's passage on July 6, 2012. Those new buyers must pay full-risk rates starting October 1, according to a timeline on FEMA's website.

Owners of subsidized policies on businesses and properties that have suffered severe or repetitive loss will face 25 percent rate increases annually on policy renewals after October 1, until rates reflect true flood risk.

Owners of secondary and vacation homes already experienced the first 25 per cent rate hikes in subsidized policies that renewed after January 1, 2013.

All other subsidized policyholders in high-risk flood zones can expect rates to rise about 16 to 17 per cent next year. After that future rate hikes are unknown, but Biggert-Waters raised the annual cap from 10 per cent to 20 per cent.

The new maps are based on past data - the last update was in 1986. The new maps are reflecting what has already occurred with climate change - more and stronger storms, more flooding etc.

Here is a link that might be useful: link

    Bookmark   September 25, 2013 at 7:12PM
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In truth we do not need any new buildings, or if we do they should be fully passive solar. The existing structures need much improvement in general.

By the time social attitude changes toward getting along with what we have, climate and resource depletion will have tipped.

    Bookmark   September 25, 2013 at 9:23PM
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