Federal Law Hikes Flood Insurance Rates by 25 Percent
It was only a few months ago that theÂ Federal Emergency Management AgencyÂ (FEMA)Â announced its plans to increaseÂ flood insurance ratesÂ by eliminating discounts homeowners had access to for decades. According to recent reports, homeowners are beginning to experience those increases, seeing hikes in their coverage as high as 25 percent.
Federal Emergency Management Agency Hikes Costs
FEMA’sÂ National Flood Insurance Program (NFIP)Â has been struggling financially for some time, which has led federal lawmakers to look for ways to create more financial stability.
One solution was to pass a 2012 federal law, known as the Biggert-Waters Act, which would phase out discounts (subsidies) for flood insurance that had been in place for decades. The Federal Emergency Management Agency has also redrawn flood plain maps that determine which households are deemed high risk and are therefore required to purchase coverage.
The combination of redrawn maps and the elimination of discounts has resulted in flood insurance rates increasing to as much as 25 percent for some waterfront properties.
Homeowners in New Jersey, communities north of Boston and even south in Louisiana have been hit hard. According to published reports, policyholders who may have paid as little as $200 now are experiencing costs as high as $2,000.
Some homeowners in the highest-risk areas are now faced with $4,000 annual premiums.
How to Lower Flood Insurance Rates
TheÂ National Flood Insurance Program (NFIP)Â estimated that as many as 20 percent of policyholders nationwide could see a significant hike in theirÂ flood insuranceÂ costs this year. For individuals who are facing higher premiums, consider the following tips for lowering flood insurance rates:
- Lift home:Â Experts recommend that homeowners living in moderate- and high-risk flood areas consider lifting their homes a foot above the base flood elevation. This reduces the likelihood of flooding and also can lower flood insurance rates.
- Increase deductible:Â If you aren’t currently able to have your home lifted, consider increasing your deductible to lower your monthly premiums. Of course, if you take this step, you should have the deductible amount set aside in the event of flood damage to your home.
Unfortunately, flood insurance is regulated by the NFIP, which means shopping around won’t result in finding low-cost flood insurance rates. But if you take other steps, you may be able to lower your flood insurance to an affordable premium.