Flood Insurance Changes A Cause For Confusion

Nov. 30--NORTHWEST OTTAWA COUNTY -- Residents who live amidst flood zones might soon pay more to live there.

In 2012, Congress passed the Biggert-Waters Flood Insurance Reform Act. It calls on the Federal Emergency Management Agency to change the way the National Flood Insurance Program is run.

The act requires the program to raise rates to reflect true flood risk, make the program financially stable and change how updates of the Flood Insurance Rate Map impacts policyholders.

The bottom line is that the changes will lead to premium increases for some policyholders.

"The flood insurance issues are impacting people in these new flood maps, and they're facing premiums they can't pay," said Dale Zahn, CEO of the West Michigan Lakeshore Association of Realtors.

Zahn said what's happened is FEMA redrew flood maps and pulled subsidies for flood insurance that were once there.

"This is a mess that is only going to get worse," he said. "We're absolutely convinced it will affect people in Grand Haven and Spring Lake. There's lots of water here."

Homeowners and homebuyers have already faced increases in premiums. So large are some increases, Zahn said, that some have found homes unsellable and unaffordable.

"This could be worse than the recession," he said. "(Homeowners) will walk."

Zahn gave several examples of how this has played out in West Michigan.

"I did a presentation in Muskegon, and I was hearing talks of property being unsellable," he said.

One case involved a woman who purchased a home and was told no flood insurance was required. Only recently did she receive a letter from her lender saying she needed to have the coverage added -- a $200 per month payment she says she can't afford.

"There's also one in Holland that lost a sale, and it only backs a creek," Zahn said.

In this case, the $149,000 home was under contract to sell when the buyer learned from the lender that, since there was a creek behind the home, the property was included in new flood zone maps. The premium jumped to $8,000 per year, Zahn said.

For local insurance agents, the changes have left just as much head scratching.

"It's very confusing," said Mike Wheeler of the Oakes Agency in Grand Haven. "We are kind of learning on the fly."

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