Grim Price Hikes Likely for Floridians Needing Flood Insurance
Posted in General on June 25, 2012
According to the Tampa Bay Times, Florida accounts – amazingly – for almost 40 percent of the nation’s flood insurance policies. However, the state does have thousands of miles of coastline and huge stretches of wetlands, putting many residents living in low areas at risk of flood damage from hurricanes and tropical storms.
The areas most vulnerable to flooding are the northern Atlantic coastal area and the southern tip of the state.
About 2.1 million homeowners in the state have flood policies, only available through the National Flood Insurance Program, a federal government insurance program that protects citizens at risk of flood damage. NFIP was established because private insurers refused to cover flood damage, although NFIP is sold by private insurers at set rates.
The Federal Emergency Management Agency administers NFIP, a program in deep financial trouble – to the tune of $18 billion in debt. Starting Oct. 1, FEMA will no longer allow discounts that have helped homeowners afford their policies.
Rates could go up by 5 percent on average in the October price hike and may continue to rise steeply, especially for people living in the highest risk locales.
The Times reports further that the rate increases could also dampen the housing market because mortgages are only available in certain areas if flood insurance is in place, and in some high risk locations, insurance against flood damage may no longer be offered at all.
This raises the troubling question: how many homeowners will have to drop their flood coverage without government subsidies that have helped with their insurance premiums? Broadly, NFIP now covers the structure and the personal property in it. Without the insurance, a homeowner or renter could be financially ruined by a serious flood.
Source: Tampa Bay Times, “Price hike expected for flood insurance,” May 4, 2012