Rising Flood Insurance Rates Frustrate Homeowners

As homeowners in the Northeast continue to rebuild nearly one year after Superstorm Sandy, they are now bracing for another obstacle: higher National Flood Insurance Program (NFIP) premiums.

In accordance with the Biggert-Waters Flood Insurance Reform Act of 2012, NFIP has already begun implementing higher rates for secondary homes in January. Beginning in October, premiums for businesses in flood zones and homes that have been severely or repeatedly flooded will start rising 25 percent a year until the rates reflect true actuarial risks.

But opponents of the Biggert-Waters Act say such rate hikes would devastate many homeowners who are still struggling to recover from Sandy. George Kasimos, a New Jersey homeowner whose grassroots organization “Stop FEMA Now” held rallies around the country on Sept. 28, said the scheduled rate hikes would adversely affect the property value of many local homes.

Elevating homes is also turning out to be an unaffordable option for many homeowners facing higher premiums, Kasimos said. Homeowners who elevate their homes in compliance with guidelines would see lower flood insurance rates, but raising homes can cost tens of thousands of dollars or more.

In Washington, lawmakers are scrambling to help ease the problem. At a Senate subcommittee hearing on Sept. 18, legislators spoke of difficulties faced by their constituents. “These consequences are for real people. It’s not just about property. People won’t be able to afford [their homes] as a result of this,” said Sen. Bob Menendez (D-N.J.).

Sen. Charles Schumer (D-N.Y.) remarked that money is tight for many homeowners who suffered losses from Sandy. “They are just beginning to rebuild their homes, and then they get their flood insurance go way up. They don’t have any money,” he said.

But at the hearing, Craig Fugate, director of the Federal Emergency Management Agency, said he does not believe his agency has any authority to delay the increases and suggested he would need additional legislative support to address the issue.

FEMA estimates that about 20 percent of its 5.5 million policyholders get subsidies. The Biggert-Waters Act would impose immediate increases to about 250,000 of them. An additional 578,000 policyholders living in hazardous areas will retain subsidies until they sell their homes or suffer severe, repeated flood losses.

Topics Trends Flood Pricing Trends Homeowners