Relief from Flood Insurance Rate Hike

[JourneyOfLife]

Looks like there was a bit of a reprieve and a little relief for some homeowners that were impacted by the The Biggert-Waters Flood Insurance Reform Act of 2012.

Apparently the President signed the bill the other day.


It appears the the relief is for primary homes, but rate will still rise.

Flood insurance still on the rise despite new law (http://bigstory.ap.org/article/ap-impact-flood-insurance-hikes-still-peril-0)


I wonder if prospective home buyers can get a multi-year projection of premium rates along with the full actuarial premium that they may have to pay for the home they are thinking about buying?


People whose second home is in a flood zone and those whose properties have flooded repeatedly would continue to see their premiums go up by 25 percent a year until reaching a level consistent with their real risk of flooding.


Obama signs relief from flood insurance hike (http://bigstory.ap.org/article/obama-signs-relief-flood-insurance-hike)


Looks like people with vacation homes may have to pay up. I wonder what that will do to the prices of those properties?

[njbchbum]

So does that mean that there is relief for the primary homeowner and no relief for the millions of taxpayers who will still be subsidizing flood insurance premiums and the inefficiencies of FEMA?

[JourneyOfLife]

Read the articles they provide details about the issues.

[clod]

30-40 years ago there was no flood insurance on flood plain houses. Therefore no mortgages. To buh you had to pay cash. Then came Fed. flood insurance in which the owner was subsidized by tax payers for building in a poor location. Mortgages followed, as did lots of large houses. After all, others were taking all the risk. Congress did a rare good job fixing this, now has cold feet and it has been reversed. Too bad. Those who build 50 feet from the shore should pay lots more for insurance than those who are more prudent.

[JourneyOfLife]

Here are a couple of interesting Wiki articles on the topic

They describe the history and why private insurers abandoned the market.

It will be interesting to see if FEMA runs into the same problems as the private insurers as premiums are raised.

Flood insurance - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Flood_insurance)

Apparently a little over half of the people with Flood insurance are in Florida and Texas.

National Flood Insurance Program - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/National_Flood_Insurance_Program)

This is a study from the Institute of Policy Integrity

http://policyintegrity.org/documents/FloodingtheMarket.pdf

[graciegirl]

30-40 years ago there was no flood insurance on flood plain houses. Therefore no mortgages. To buh you had to pay cash. Then came Fed. flood insurance in which the owner was subsidized by tax payers for building in a poor location. Mortgages followed, as did lots of large houses. After all, others were taking all the risk. Congress did a rare good job fixing this, now has cold feet and it has been reversed. Too bad. Those who build 50 feet from the shore should pay lots more for insurance than those who are more prudent.



I agree.

[JourneyOfLife]

It could turn out that the FEMA premiums are going to be so high, some of the private insurers may want back in on the action.

Looks like Florida may pass a bill to entice more private insurers to write flood policies in FL.

Florida lawmakers consider flood insurance changes - wptv.com (http://www.wptv.com/news/state/florida-lawmakers-consider-flood-insurance-changes)

[villagerjack]

30-40 years ago there was no flood insurance on flood plain houses. Therefore no mortgages. To buh you had to pay cash. Then came Fed. flood insurance in which the owner was subsidized by tax payers for building in a poor location. Mortgages followed, as did lots of large houses. After all, others were taking all the risk. Congress did a rare good job fixing this, now has cold feet and it has been reversed. Too bad. Those who build 50 feet from the shore should pay lots more for insurance than those who are more prudent.

Unfortunately, it is not just those who built 50 feet from the shore who are affected. Entire economies have built up in places like Hilton Head SC which has very rare occurrences of hurricanes and those investor homeowners are lumped in with the guy who built 50 feet from The shore. It is much more complicated than your simple example. I hope the government proceeds carefully as these new flood maps are uodated.

[TNLAKEPANDA]

Any break in flood insurance cost will come from the tax payers! The program has not been solvent for years now. Every new large flood event gets more expensive. Cost to make repairs are much higher than anyone would ever pay out of their own pocket. The should be no subsidy for secondary homes (which most beach front homes are).

[JourneyOfLife]

One thing is for sure, the cost of a beach, or near the beach, second home just got more expensive.

It will be interesting to see what happens... either the total cost of ownership went up quite a bit or the property prices will drop to offset the increased insurance cost.

I also wonder if building codes will change in certain areas too.

[villagerjack]

Any break in flood insurance cost will come from the tax payers! The program has not been solvent for years now. Every new large flood event gets more expensive. Cost to make repairs are much higher than anyone would ever pay out of their own pocket. The should be no subsidy for secondary homes (which most beach front homes are).

Zing Government created this problem and withdrawing suddenly now will create an even bigger problem. Many economies dependent on tourism have been built up, homes constructed and businesses started because of availability of Flood Insurance. Many areas not prone to flooding are being penalized because of their location, not their flood history. A second homes and investment properties should be treated the same as primary homes. Risk is exactly the same. This has become a political issue more so than an insurance issue.

[graciegirl]

Zing Government created this problem and withdrawing suddenly now will create an even bigger problem. Many economies dependent on tourism have been built up, homes constructed and businesses started because of availability of Flood Insurance. Many areas not prone to flooding are being penalized because of their location, not their flood history. A second homes and investment properties should be treated the same as primary homes. Risk is exactly the same. This has become a political issue more so than an insurance issue.


Isn't this the same as sinkhole insurance? Now we can no longer buy it because private insurance providers won't offer it because of fraudulent cases?


I am not trying to argue, just to understand. It seems that rates go up when the risk go up...the government cannot underwrite everything. In Ohio people along the Ohio river would flood, rebuild and flood again.

[villagerjack]

Risks are the same for primary owners and owners of second homes/investment properties however the rules are not the same. That is unfair.

[JourneyOfLife]

I have read about some big increase in premium that seemed extremely high.

I was wondering of those news stories were just sensationalizing the cost increases by cherry picking a few houses that may not be typical.

Anybody have any insight into how premiums have increased in florida around the coastal areas?

[janmcn]

I have read about some big increase in premium that seemed extremely high.

I was wondering of those news stories were just sensationalizing the cost increases by cherry picking a few houses that may not be typical.

Anybody have any insight into how premiums have increased in florida around the coastal areas?



Seminole couple hit with $44,000 flood insurance premium | Tampa Bay Times (http://www.tampabay.com/news/humaninterest/seminole-couple-hit-with-43000-flood-insurance-premium/2155990)

[TNLAKEPANDA]

I have read about some big increase in premium that seemed extremely high.

I was wondering of those news stories were just sensationalizing the cost increases by cherry picking a few houses that may not be typical.

Anybody have any insight into how premiums have increased in florida around the coastal areas?

Flood Ins rates are based on two things...
1. What flood zone you are located in. There are many different zones but the high hazard zones are the most expensive.

2. How high your house is located above or below the BFE (base flood elevation). If you are below the BFE you will be paying a lot more.

New homes must comply with all the flood standards.

[TNLAKEPANDA]

Risks are the same for primary owners and owners of second homes/investment properties however the rules are not the same. That is unfair.

Where are you getting your information? The rules are the same for everyone who is in the same Flood Zone as far as coverage goes.

[JourneyOfLife]

Some interesting info in this article

Five things the flood insurance fix doesn't fix | Tampa Bay Times (http://www.tampabay.com/news/business/banking/five-things-the-flood-insurance-fix-doesnt-fix/2170286)

[John_W]

I went home to St. Petersburg for my high school reunion last November. Some of my classmates who live on either Treasure island or St. Pete Beach now pay about $2,000 a year for flood insurance, under the new plan they were told it would go to about $20,000 per year. Most of these homeowners would have to become self insured, meaning no insurance, and would have to just about give it away when they sell. We did some looking while there, and the beach areas had a lot of bargains, $100,000 to $150,000 went a long way.

I just took this off Zillow, it's a 1BR/1BA condo on the beach, asking $116,000. Last sold in 2004 for $142,000.

http://photos3.zillow.com/p_d/ISxrztnjw87o310000000000.jpg

http://photos1.zillow.com/p_d/ISplxh5ds0zq310000000000.jpg

http://photos1.zillow.com/p_d/ISl6r35ba40sgx1000000000.jpg

[JourneyOfLife]

With Condos and HOAs, the obligation might be that the cost of fixing it follow the owner. Not just the unit, but the property in common. If there was no insurance or insurance was inadequate, there might be big special assessments.

I am not sure about Florida, but some states have laws that are intended to protect owners in condo association... Does florida require the association to buy insurance?

I would have to understand the details. If I were considering any property like that I would have a lawyer review it to better understand my exposure to financial obligations over and above the cost of the unit.

[JourneyOfLife]

This is the type of thing I find outrageous! :swear:

The practice of high rise, beach front condos fishing, until they found an engineering company that would give them a favorable study to lobby for, in effect, low or no premium.

NBC News:
Three engineers told owner Larry Wireman there was no way the flood map qualified for a change, not on this stretch of the Gulf of Mexico, not in a hurricane-prone community where dozens of buildings were destroyed by the most recent of many storms to blow through the area. "There's no way in hell that's going to happen," one of those engineers, Vince Lucido, said he was told by a firm specializing in coastal engineering.

But a fourth company saw it differently, persuading the Federal Emergency Management Agency to move the line on its flood maps. Turquoise Place Tower I, which had been in the highest-risk flood zone, was now in a low-risk zone, where flood insurance was optional.

Meet the Flood Insurance 'Robin Hood' Who Saves Condo Owners Millions - NBC News (http://www.nbcnews.com/news/investigations/meet-flood-insurance-robin-hood-who-saves-condo-owners-millions-n26711)



It sure looks like their premium costs are being shifted to other groups and people.


For Average Joes, Fighting FEMA Flood Maps Isn't Easy or Cheap - NBC News (http://www.nbcnews.com/news/us-news/average-joes-fighting-fema-flood-maps-isnt-easy-or-cheap-n23871)




I wonder if the primary people/companies/associations involved will be charged with Fraud? I also wonder if owners, investors, or banks/lenders will end up suing the condo association.

At a minimum FEMA is swept into the spotlight and hopefully will tighten up on the process.

FBI Investigates FEMA Flood Map Changes After NBC News Report - NBC News (http://www.nbcnews.com/news/investigations/fbi-investigates-fema-flood-map-changes-after-nbc-news-report-n62906)

[ping]

It's not just those who live near a beach.....they are the ones effected by flood damage, but others who live near ponds or water ways (NEAR not on) who have never been effected by flooding, are now paying hefty flood insurance bills to finance those actually effected. Why did the government take on offering flood insurance when insurance companies dropped the policy cause it wreaked havoc with profits. Now anyone living near so much as a "puddle" has to pay flood insurance at increased rates to try to cover those who's homes have been flooded. My home in MA is a property that has been forced to pay for flood insurance I will never need. If my home got flooded, it would take a tidal wave of huge proportions and I wouldn't need flood insurance, we would be in a disaster area receiving federal funds.

[JourneyOfLife]

It's not just those who live near a beach.....they are the ones effected by flood damage, but others who live near ponds or water ways (NEAR not on) who have never been effected by flooding, are now paying hefty flood insurance bills to finance those actually effected. Why did the government take on offering flood insurance when insurance companies dropped the policy cause it wreaked havoc with profits. Now anyone living near so much as a "puddle" has to pay flood insurance at increased rates to try to cover those who's homes have been flooded. My home in MA is a property that has been forced to pay for flood insurance I will never need. If my home got flooded, it would take a tidal wave of huge proportions and I wouldn't need flood insurance, we would be in a disaster area receiving federal funds.

Two things:

1) read the wiki link in a previous post for some background. I am sure they intended to fill the void. States do it to.... look at Florida. Good intentions, but perhaps less than perfect implementation.

2) Normal Banks would not lend money anyway if it put them at risk of loss! Plus they would have to hold the paper themselves. They are not fools.

Does the FEMA flood program force people to buy flood insurance?

One other thing... I think you may be making assumptions about risk and the federal funds.