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Tuesday, April 7, 2015

Federal Flood Insurance Premiums for Homeowners Rise

By ABIA Outside Counsel: McIntyre & Lemon, PLLC

The New York Times reports that federal flood insurance premiums will increase by as much as 25 percent.

According to the New York Times, “As of April 1, new rates took effect under the National Flood Insurance Program that increase individual policy premiums for homeowners in high-risk areas by as much as 25 percent. Plus, policyholders will see new surcharges, $25 for owner-occupied primary homes and $250 for second homes.”

“The new rates are part of a plan to put the flood insurance program on sounder financial footing.”
“[O]ver the last decade — in part because of disastrous hurricanes like Katrina and Sandy — the program has fallen billions of dollars into debt. In 2012, Congress passed the Biggert-Waters Flood Insurance Reform Act to phase out federal discounts for policies in high-risk areas. But last year, Congress passed the owner Flood Insurance Affordability Act, which slows the impact of rate increases for many policies.”

“Homes that were substantially damaged by hurricanes like Sandy or Irene could see premium increases of up to 25 percent, [said Christie Peale, executive director of the Center for New York City Neighborhoods], because their owners have already made claims under their policies.”

“Robert P. Hartwig, president of the Insurance Information Institute, an industry group, said the higher rates were a financial necessity. ‘The fiscal reality is that rates need to approximate risk,’ he said. Increased development in coastal areas, along with climate change and rising sea levels, he said, mean that living on the coast ‘is going to be riskier and more expensive in the future.’”

Read New York Times article.