Flood insurance more costly for many
We learned this past week that the flood insurance subsidies that the National Association of Realtors fought so hard for was signed into law by the President. Although the law delays the cessation of subsidies to those who own property in FEMA designated flood zones it does not freeze rates.
The signing will delay action proposed by the Biggert-Waters Act whose intent was to provide some semblance of solvency to the National Flood Insurance Program which is $24 billion in the red after catastrophic events like hurricane Katrina. Opponents of Biggert-Waters' rate hikes said that they would have a disparate impact on lower-income homeowners.
"Today, many months of hard work, negotiation and bipartisan compromise have culminated in a law that will end skyrocketing flood insurance costs for hundreds of thousands of homeowners. Though the measure isn't perfect, it ensures there will be no more dramatic rate increases for families currently facing unaffordable premiums," said U.S. Rep. Maxine Waters, D-California.
Congress created the www.njspotlight.com/stories/13/09/09/explainer-mapping-out-the-national-flood-insurance-program/ National Flood Insurance Program in the late 1960s after Hurricane Betsy hit New Orleans, causing more than $1 billion in damage. Flood insurance was nearly impossible to secure from the private market, so lawmakers felt the federal government had a duty to step in and provide help to residents along the coast.
The program was set up to be self-sustaining, borrowing from the U.S. Treasury only when necessary, and it generally worked for several decades. But beginning in 2005, Hurricanes Katrina, Rita, Wilma and several other storms caused it to blow through its budget.
As a result of the phase-out, some homeowners who were not required to pay the full cost of their insurance were being faced with tens of thousands of dollars a year in flood insurance hikes. The new Homeowner Flood Insurance Affordability Act repeals the Federal Emergency Management Agency's authority to increase premium rates when a property is sold. It also refunds the excessive premium to those who bought a property before FEMA warned them of the rate increase.
As many as 1.1 million policy-holders with subsidized government insurance will still be hit with steady rate increases. While no one is sure yet how high rates will go, there is cause for worry in cities and towns that rely on affordable policies to keep businesses afloat and prop up the local housing market.
Owners of single-family, primary residences with subsidized flood insurance policies could be hit with increases of up to 18 percent compounded annually until they switch to a risk-based rate. Those with such policies on businesses and second homes will see their rates rise 25 percent each year.
An Associated Press analysis of Federal Emergency Management Agency data found that nearly 1,450 policies in Idaho received discounts at the end of 2012, the most recent year records were available. Of those, 440 face 25 percent increases, and more than 1,000 faced 18 percent hikes.
Trust an expert ... call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
Kim Cooper is a real estate Broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the Association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of REALTORS, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling 208-667-0664