Flood insurance do we even want to know
It's finally October and so far, our area has again been spared from the "big one." Although we did experience flooding during Hurricane Hermine last month it was not crushing. However, none of that matters when it comes to the premium for your flood insurance where you will not be spared.
Let's start with a little recap here for anyone who has deleted the details from their minds. In 2012 after hurricanes Katrina, Sandy and other major storms plunged the flood insurance program deeply into debt, Congress enacted the Biggert-Waters Flood Insurance Reform Act of 2012. The act was designed to remove government discounts and bring insurance rates charged for risky properties up to levels reflecting actual risk. However, many homeowners of those risky properties received such large increases in their 2014 renewals that Congress was pressured to throttle back on the rate increases. In addition, there was a fear of the housing market located in flood zones collapsing.
The congressional fix was a 25 percent annual limit on rate increases for properties in flood hazard zones paid for with a new surcharge imposed on all property owners. This temporary reprieve did stop the bleeding and the drama until now.
So this year as many of you already may know the flood insurance rates are increasing for all policyholders as the National Flood Insurance Program continues to dig itself out of the $24 billion in debt it has incurred. Out of the National Flood Insurance Program's 5.1 million policies, about 1.8 million are written for properties in Florida.
Nationwide the flood insurance premiums are increasing an average of 9 percent excluding some surcharges and fees said a spokeswoman for the Federal Emergency Management Agency back in April of this year. The increases are based on if the home was built prior to the 1980s, are in flood hazard zones or have been paying artificially low premiums since flood zone maps were first created in the 1980s.
The good news is homeowners won't endure annual flood premiums immediately jumping five or six times, but year after year of flood rate increases of 9 percent to more than 20 percent are expected. Home buyers can expect their flood rates will double within four or five years, with the rates eventually reaching the government's unsubsidized level.
And for most homeowners, flood insurance coverage is not an option since homeowners with mortgages backed by a federal lending guarantor such as Fannie Mae or Freddie Mac are required to carry flood insurance if they lie in a special flood hazard zone. Special flood hazard zones are defined as being typically near the ocean or Gulf of Mexico, the Intracoastal Waterway, canals, rivers or other low-lying areas.
And because bad news follows other bad news a couple of weeks ago Florida regulators approved a rate hike for Citizens Insurance "the insurer of last resort." Although private insurers have come into the State in recent years, Citizens still has nearly 500,000 customers. These homeowners can expect their rates to increase by an average of 6.4 percent next February. Citizens officials said they needed to raise rates to deal with rising claims associated with water loses not associated with storms in spite of the fact that Florida has been relatively hurricane free for the past ten years.
It seems that sometimes you just can't get a break, even without storms the rates keep going up. Don't be crushed by the latest crushing news; enjoy your water view and remember it's almost November.