Understanding the changes to flood insurance [The Bradenton Herald]
By Charles Schelle, The Bradenton Herald | |
McClatchy-Tribune Information Services |
Damage to the flood insurance program has mounted as the federal program paid the clean-up costs from Hurricanes Katrina and Rita and Superstorm Sandy. Those costs prompted the Biggert-Waters Flood Insurance Reform Act of 2012, which is designed to make up for losses to the National Flood Insurance Program, created by
There are no rainy day funds to pay for the nation's rainy day fund. And the losses have to be reversed.
And the Biggert-Waters act puts the costs of making up those funds squarely on Floridians' shoulders.
Floridians carry the most flood insurance policies in the nation and contribute more money to the program than any other state. They are also about to see the highest increases in their premiums, set to take effect
Those hikes are expected to take place as soon as Tuesday in a move the government calls "eliminating subsidies." Anyone who gets a new flood insurance policy will have to pay what the government estimates is the real costs, based on risk. Some flood policies will actually be higher than home insurance policies.
How we got here
But it's those very estimates and the structure of the program that has rankled
The study, which looked at claims from 1978 to 2008, and accounts for inflation, found that Floridians paid
In
In the grand scheme of housing in
"It'll be a select group of people who experience sticker shock, but it doesn't matter how small if you're the one," Thompson said during a recent training seminar to help educate insurance agents around the state about the impending changes.
It's not just Floridians who are trying to stop the increases, either. The
Some in
Earlier this year, the
Here's the problem with that: H.J. 59 is the spending bill to keep the government at sequestration levels, and has been muddled with other issues, including attempting to defund the Affordable Care Act, also known as ObamaCare. The House would also have to pass that bill, which is also under an
Who sees the sticker shock?
Homes in a Special Flood Hazard Area will see the greatest increases. This is considered a high-risk zone for 100-year floods, and includes zones A, V and D. The low- to moderate-risk zones, or 500-year flood Zones B, C and X, will see smaller increases.
Pre-Flood Insurance Rate Map homes in the V and A zones will see the largest increases at 17 percent and 16 percent annually over the next five years. Those who purchased a preferred risk plan because their property was mapped in a high-risk flood zone after
Next year,
Those who don't have a subsidized plan could still see increases. The rates of 28,763 policy-holders in
Save money while you can
Finding discounts on rates will be more difficult, and some discounts will be going away soon.
One way to save money is by taking advantage of the Grandfather Rule, Thompson said. However, grandfathering could also be phased out, and Thompson encourages people to "ride the wave of grandfathering while it lasts."
Grandfathering is when a homeowner buys a new policy before the new flood maps kick in, or has proof that the home was built to comply with the flood map in use at the time of construction, according to the
But grandfathering can't be passed on if the home is sold, Thompson said. They'll pay the full rates from the first day they own the home, and will have to get an elevation certificate.
The grandfathered rates will be phased out, but
"Does that mean just people who bought policies after 2012, or all the people we sold polices to over the last 20, 30 years are not subjected to the discounted rate?" said
Homeowners have some protection if their home is going into a 100-year flood zone and if the natural grade is above the base flood elevation, said
But entire neighborhoods can't apply for the exemption, she said.
Key changes in the county's flood map are in the eastern
Still, about 20 to 25 percent of all flood insurance claims are in low- to moderate-risk zones, according to
It's also a tool for homes placed in high-risk zones that haven't had any previous claims. That preferred risk plan allows policy-holders to renew for two years after the new flood maps take effect, and on the third renewal, rates for moderate- to low-risk zones will be applied instead of high-risk zones rates, according to FloodSmart.gov.
Thompson is encouraging Pre-Flood Insurance Rate Map homeowners to find a surveyor now for an elevation certificate to help provide some relief on rates. The certificate verifies the lowest floor elevation compared to the ground, to assure that the contents of the home have a lower damage risk because they are above the baseline flood elevation.
Elevation certificates are also required in new, lapsed and assigned policies, Thompson said, and already required for homes built since the Flood Insurance Rate Map went into effect. Policies purchased before
The demand for these surveyors is already being seen locally. Laurie said there is a backlog of requests for the surveyors, and in some cases folks are being quoted prices from
In some cases, obtaining a certificate isn't as easy as calling the surveyor to get a piece of paper.
"We get situations where people don't think about how they might have a slab or floor above elevation, but they might have a hot water heater in the garage or
Spending a couple hundred dollars to change the location of a water heater or AC unit could save a few thousand dollars on flood insurance, he said.
What else is affected?
Primary, single-family homes and duplexes aren't alone in the increases.
Vacation homes are already seeing increases. As of
Businesses with subsidized premiums will also see a 25 percent annual increase until the rate is reached, affecting 10,964 businesses in the state, Thompson said. Those businesses seeing the highest increases would have a pre-Flood Insurance Rate Map building in a Special Flood Hazard Area or Zone D.
But wait, there's more in 2014
More changes are expected to come in 2014 and beyond, but
New deductible limits are expected to take effect after 2014, too. For pre-Flood Insurance Rate Map properties, if coverage is
For post-Flood Insurance Rate Map properties, it's
Lenders will be heavily scrutinized, too. If mortgage companies are late by one day paying flood insurance policies, it will prompt rate increases. If lenders don't have the proper flood insurance on the homes they are financing, the penalty increases from
An installment payment option to allow homeowners to place a down payment on the policy to help ease monthly payments will be implemented after 2014, Thompson said.
Apartment buildings and cooperatives will be able to buy
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