Flood Insurance Premiums Are About to Go Up

Many homeowners and buyers in flood-prone areas will see higher flood insurance premiums starting April 1. The premium hikes, which are required by law, will be as little as 2 percent for some properties and as high as 24 percent for others. On average, the increase will be about 8 percent.

“The National Flood Insurance Program requires premiums to rise on certain classes of properties over a period of years until they’re paying the full actuarial rate on their risk,” say analysts with the National Association of REALTORS®. “The 8 percent average increase is right in the range of increases for the last couple of years, so there’s nothing unusual here. It’s just the standard rate increase.”

Learn more about the rate changes in a bulletin released by the Federal Emergency Management Agency, which administers the National Flood Insurance Program.

Mitigation Can Soften Flood Insurance Hikes?

REALTORS® are reporting dramatically rising flood insurance premiums because of recent changes to the National Flood insurance Program. But while some home owners could see big increases in their costs, the changes are likely to be less dramatic for many — and some increases can be reduced by taking steps to mitigate flood risk, federal officials and private-sector experts said at the REALTORS® Conference & Expo.

Under reforms enacted last year, certain categories of property whose owners have been paying subsidized premiums will see those subsidies phased out, requiring owners to pay the full actuarial value of their insurance. The changes effect less than 20 percent of the 5.6 million owners whose properties have federal flood insurance, said Ed Connor, a deputy associate administrator for the Federal Emergency Management Agency.

Meanwhile, NAR is working with lawmakers in Congress to delay implementation of some of the subsidy phase-outs, including for the purchase of properties. Under NAR-backed legislation pending in both houses, the delay would last until FEMA completes a study it’s required to give Congress on the impact the phase-out will have on housing affordability. The bill would also create an advocate to investigate flood mapping and other concerns, and institute a regulatory solution.

More at source:  Rob Freedman, REALTOR® Magazine