Flood-insurance rates skyrocket for some in Beaufort County [The Island Packet (Hilton Head Island, S.C.)]
By Dan Burley, The Island Packet (Hilton Head Island, S.C.) | |
McClatchy-Tribune Information Services |
Some who recently purchased property are seeing their rates increase tenfold, while rates for second homes or rental units are climbing 25 percent a year, with more raises to come. Local real estate agents say they've lost some deals after prospective buyers realized the cost of insurance, which can run more than
"There is definitely a shakeup in the industry," said
The rate increase stems from the Biggert-Waters Flood Insurance Reform Act of 2012. The measure was passed overwhelmingly by
Key to the act is getting rid of subsidized flood-insurance rates, in some cases gradually and in others cases -- as with the sale of a home -- all at once.
More than 7,000 of
For subsidized properties, certain elements determine the rate increase. A home's elevation relative to sea level, the year it was built and the amount of vent space, for example, can alter the rate, said Alagna.
"There are so many aspects where a premium might go up by a lot or a little," he said. "It's a case-by-case basis. But people need to find out, because the last thing you want is to be surprised by an insurance quote with no way out of a contract."
When she pondered changing insurance policies a few months back, she found her
Although Richards decided to keep her current policy, "if I stay here for the next 10 or 14 years, I'll pay more in flood insurance than the property is worth," she said.
For new owners or those whose policy lapses, the new law provides no subsidies, according to
That worries some area Realtors, especially those selling older homes in low-lying communities like Sea Pines and Palmetto Dunes, where the higher rates might hit new homeowners harder.
"This is going to scare the bejesus out of people," said
Many lenders require flood insurance if a home is in a flood plain. The only way potential new owners of a home in a flood plain can escape the expense is to pay for a house with cash and risk going without insurance,
"If you don't buy in cash, you might be out of luck," Klepchick said.
For secondary homeowners, rentals or businesses, the new law increases rates by 25 percent each year until their premiums reflect true market risk, said
Patrick represented
"I found out we're lucky here on
Senators from those states are pushing to delay the law's implementation. And the state of
"It seems like it's going to take congressional action, and what do you think the chances of that are?" Patrick said.
Besides a few lost deals, he said he doesn't think the law has dampened the real estate market yet.
But he did say things could get much worse in the next few years, when secondary-home rates are fully realized.
Richards, of Sea Pines, agrees.
"My problem is going to be if I want to sell," she said. "I think eventually people will just have to walk away."
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