Flood insurance rate hikes coming [Florida Keys Keynoter, (Marathon, Fla.)]

April 06--A storm of dire insurance news for Florida Keys property owners just won't stop.

Future cost of windstorm-insurance policies sold through the state-backed Citizens Property Insurance Corp. remains a topic of heated debate in the Florida Legislature.

Now the National Flood Insurance Program has alerted policyholders of rate hikes that could hit 25 percent for second homes and businesses.

Residences occupied by owners could go up anywhere from 6 percent to 17 percent, under a 2012 law passed by Congress that seeks to essentially make the flood-insurance program pay for itself. "It is not good news," said Derek Martin-Vegue, president of Keys Insurance.

"From the information we've received, it looks like the average premium will go up around 10 to 11 percent," Martin-Vegue said Friday.

Property owners renewing their annual flood insurance policies recently saw a standard hike of about 8 percent.

The 25-percent increases for "non-primary [or] secondary residences" -- typically second homes not designated as a Homestead property under Florida law -- begin in January 2014.

"Some people now paying hundreds of dollars a year could wind up paying thousands with the biggest increases for people who live in high-risk areas," the Associated Press reported in a story on Federal Emergency Management Agency Director Craig Fugate's presentation at last month's National Hurricane Conference.

FEMA oversees the National Flood Insurance Program, which writes nearly all flood-insurance policies in Monroe County. Flood insurance is required for homes financed with a mortgage.

Jaime Craddock, a Summerland Key homeowner, just saw her annual flood-insurance policy of more than $2,000 increase by $200. As a real-estate professional, Craddock knows more increases are on the way. "This is no fun at all," she said.

Flood-insurance rates in the Florida Keys depend on a wide variety of circumstances. The property's age, height above sea level and whether it is elevated all go into the calculation, Martin-Vegue said.

Most long-existing "subsidies" in place that keep rates affordable on older properties will be phased out over the next three years, FEMA says.

"The new law eliminates some artificially low rates and discounts which are no longer sustainable," A FEMA report adds. "Most flood insurance rates will reflect full risk, and flood insurance rates will rise on some policies."

Most Keys areas not on the waterfront lie in "AE" zones, where there is a probability of being flooded at least once in a 100-year period. These are considered "high risk" areas by FEMA. The AE zones also have above-sea-level height elevations listed, like "AE-6," meaning 6 feet above sea level.

Waterfront properties may carry a "V" zone designation, which means they may be as susceptible to floods as the AE class, plus the threat of damaging wave action.

In general, flood-insurance rates for AE zones will rise about 16 percent for older homes, considered pre-1975, where rates were set before Flood Insurance Rate Maps were enacted. AE residential properties built after 1975 ("Post-FIRM" in insurance reference) will see hikes of about 6 percent.

Newer homes built in V zones after 1975 will see hikes of around 11 percent, while pre-1975 homes in V zones -- close to open water and subject to wave action damage -- will go up 17 percent.

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