Flood Insurance Rates Could Kill Property Values
October 15, 2013
Federal flood insurance rates are on the rise, and the sharp increases from New England to Hawaii are hurting property values, residents and legislators say.
The law, known as the Biggert-Waters Flood Insurance Reform Act, is rolling out in stages. A part of the law that went into effect Oct. 1 removed flood-insurance subsidies for more than a million home owners nationwide. The subsidies applied to properties that existed before the drawing of flood insurance rate maps, The New York Times reports.
The rising insurance rates have sparked rallies and petitions across the country. Mississippi has sued the federal government to try to stop the discontinuing of subsidies.
“Some property owners, including business owners and those who bought property after July 6, 2012, are shocked to be facing potential tenfold premium increases or, in some cases, significant losses to the value of their homes,” the Times reports.
Flooding disasters in recent years — including Hurricane Sandy — have left the National Flood Insurance Program with a $25 billion deficit. The program must make up for the losses, but home owners are concerned about how they will cover their insurance increases and how the law will effect resale of their homes.
An estimated 600,000 home owners across the country will see their rates increase if they buy a new policy or let their current policy lapse, according to the Times. Some home owners are growing concerned that the higher premiums will deter home buyers from purchasing their homes. Depending on the home’s cost and its flood risk, the premiums could range from $3,000 to $33,000 more, the Times reports.
Source: “Cost of Flood Insurance Rises, Along With Worries,” The New York Times (Oct. 12, 2013)
Updated: July 02, 2020