Friday
November 28, 2014

Brown: Flood Insurance Hikes Drowning Home Owners

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Brown: Flood Insurance Hikes Drowning Home Owners

About 40,000 home sales across the country have already been disrupted because of increases in flood insurance premiums, according to data from the National Association of REALTORS®.

The 2012 Biggert-Waters law sets out to gradually phase out flood insurance subsidies as a way to make up for the National Flood Insurance Program's $24 billion debt. Therefore, home owners who have long received federal aid to pay for flood insurance are now being facing up to tens of thousands of dollars a year in flood insurance hikes.

In an editorial in The Wall Street Journal, NAR President Steve Brown and Florida Gov. Rick Scott, among others, share their concerns about rising flood insurance rates and the impact on home owners.

The economic hardship is being felt by home owners across the country, not just wealthy owners of beachfront vacation properties, Brown writes. He cites a home owner in Dayton, Ohio, who paid less than a $1,000 a year for flood insurance, but when the home owner went to sell his house, the new buyer was being quoted $3,000 a year for a new flood insurance policy. The house was under contract for $79,000. But “at $250 a month, the seemingly ‘modest’ increase would make the premium more than 50 percent of [the buyer's] mortgage payment,” Brown writes, adding that the sale fell through.

Scott cites another example of a home owner whose premium will skyrocket from $2,000 each year to $14,000, if there is no delay or change in the current law.  “The uncertainty that looms over Florida’s home owners and real estate market has become an overwhelming burden that must be addressed,” Scott writes in the editorial.

“Insurance subsidies for properties in historic flood plains need to be carefully reviewed and adjusted, but we need to make sure that the new maps are accurate and the new rates are properly calculated,” Brown writes in the editorial. “And we need to fully understand the dramatic impact these increases have on property values and ownership sustainability.”

Source: “Rational Flood Insurance Needs Better Implementation,” The Wall Street Journal (March 3, 2014)

Read more:

National Flood Insurance Program Resource Page
Why Flood Insurance Subsidies Are Phasing Out