SuperStorms have Flood Insurance Rates Skyrocketing
November 21, 2013
Climate Change gets real for the Chamber of Commerce.
Many older homes in flood zones have long benefited from a big subsidy that kept flood insurance rates very low. Starting next month, those homeowners will typically see annual rates jump more than 20 percent, including a fee for a new reserve fund. A late payment could cost them their subsidy immediately.
If the owner sells the home, the buyer will lose the subsidy. That could, as in one scenario, raise a premium that had been $1,400 a year to $9,500.
Travis wasn’t hopeful of a congressional reprieve in the next couple of weeks.
“Have I demoralized everyone here?” he asked.
Concern about rising flood insurance rates — triggered by the Biggert-Waters Act of 2012 — has been percolating for months. Now, just weeks before the law’s main provisions take effect, real estate agents and communities from Apollo Beach to Treasure Island are galvanizing, worried about falling property values, busted real estate sales and a crippling effect on the broader economy.
“This is a major change,” said Patty Latshaw of St. Petersburg-based Wright National Flood Insurance Co., the biggest writer of federal flood insurance in the country. “I’m just glad to see people are realizing what is going on and asking questions and becoming involved. Finally.”
For Cristy and Fred Assidy, reality hit too late.
After 15 years in their “starter home” in St. Petersburg’s Shore Acres, the couple was excited recently to close on a new home in Riviera Bay near Weedon Island.
Then came a shocker.
During this first year, their premium through the National Flood Insurance Program is a doable $1,700; next year it jumps to $17,000. For a house they bought for $205,000.
“This is going to devastate the real estate market here just when it’s barely making a comeback,” Cristy Assidy said. “People are going to leave the state in mass exodus.”
And not just in traditional hurricane zones…
NORTH POWNAL, VT – Hurricanes Katrina, Irene, Lee and Sandy have wiped out FEMA financially. The agency is broke and it’s looking to get out of the red by upping flood insurance premiums on millions of homeowners across the country. Thousands of those homeowners are in the Capital Region and they’ve recently been receiving their premium bills for next year.
Those who are required to have the insurance are seeing their bills double this year compared to last and then there are those that were never in a flood zone who are now being added to one under new flood maps that FEMA has drawn up for most local communities. Judy Greenwalt has lived in front of Witches Brook in North Pownal, Vermont for 30 years and because it is only about 30 yards away from her home, she’s in a designated flood zone. She pays annually for flood insurance but this year when her bill came, she was shocked, “It went from $1623 to $4,389…I thought I was going to have a heart attack, I don’t have that kind of money, nobody has that kind of money to fork over all at once and yea, you have escrow in your mortgage but no one has that amount in escrow,” she tells CBS6.
Over the past several years, FEMA has shelled out way more money than it has taken in from Flood Insurance premiums and now as the agency looks to build back up the pot, it is redrawing flood maps across the country. Many folks like Greenwalt are having their flood designations change. She went from being in a moderate risk area to a high risk area despite the fact she has never had a flooding problem, “this is what I call extortion, these rates,” she says.