Menu Bar

Home           Calendar           Topics          Just Charlestown          About Us

Friday, February 7, 2014

Coastal property owners get a temporary reprieve on flood insurance rate hike

Flood insurance hike temporarily suspended
From: Robin Blackstone,

EDITOR'S NOTE: Charlestown Zoning Official Joe Warner has submitted Charlestown's application to join FEMA's Community Rating System which can learn about by clicking on the link. The key feature of Charlestown winning FEMA recognition of its flood preparedness is a nice discount on flood insurance rates - 10% if we win an "8" rating, 15% off if we are scored a "7." Joe is confident Charlestown will earn at least an 8 and that we have a good shot at a 7. 

As a follow on to last week's ENN article about the agreement by the Senate to initiate debate to delay increases mandated by the Biggert-Waters Flood Insurance Reform Act of 2012, the Senate recently passed (67-32) the Menendez-Isakson Homeowner Flood Insurance Affordability Act which will delay the Biggert-Waters Act until such time as FEMA can complete an affordability study, provide solutions to mitigate their effect and scientifically certify accuracy of the maps used to determine insurance rates on specific properties.

According to FEMA, key provisions of the Biggert-Waters act required "the NFIP (National Flood Insurance Program) to raise rates to reflect true flood risk, make the program more financially stable, and change how Flood Insurance Rate Map (FIRM) updates impact policyholders." These rate increases were to begin at the end of last year. The law was developed as a result of the inundation of insurance claims posted after Hurricane Katrina, which put the NFIP on the verge of bankruptcy. Further stress was added following Hurricane Sandy.

The new law encourages Program financial stability by eliminating some artificially low rates and discounts. Implementation of the new flood insurance rates began in January of 2013. These were for homes that are non-primary/secondary residences. But subsidized policies for primary residential properties that have experienced severe or repeated flooding were to see their rates increase 25% per year until their rates reflected the true flood risk as were businesses and non-residential properties on Special Flood Hazard areas beginning October 1 of 2013.

But the drastic increases are placing a tremendous burden on recovering flood victims and on the real estate market as people can no longer afford their homes and businesses. For those who built to code but had their properties remapped into a higher risk area following construction and for those who built before flood maps were ever released, property values are likely to skyrocket.

The NFIP was originally created in 1968 by Congress to help homeowners within flood zones to obtain affordable insurance policies to rebuild following a devastating flood. According to FEMA, "The NFIP was formed to fill that gap and was designed to incorporate community adoption of minimum standards for new construction and development to minimize future risk of flood damage. Pre-existing homes and businesses, however, could remain as they were. Owners of many of these older properties were eligible to obtain insurance at lower, subsidized rates that did not reflect the property’s true flood risk."

Read more at  FEMA.