More than 1 million home owners living in older houses along the coastlines and riverbanks of the United States are preparing for federal flood insurance rate hikes effective Oct. 1 under a law passed in the wake of devastating storms.
Congress passed the law in an effort to balance a $24 billion deficit in the National Flood Insurance Program, which had growing losses from Hurricane Katrina in New Orleans in 2005 and earlier disasters. The rate increase is designed to make property owners pay for the true risk of living in high flood hazard areas, including coastal areas of Florida, New Jersey, New York, Texas, and Louisiana, and inland states prone to river flooding. Members of Congress from high-risk flood states want to delay the higher rates so they can gather more information on the impact on property owners, but with next Tuesday's deadline, time is running out.
The act requires the Federal Emergency Management Agency to phase out insurance subsidies enjoyed for decades by owners of homes that were built in high-risk flood zones before the creation of the original federal flood insurance rate maps and building standards, which in most communities occurred in the 1970s and 1980s.
The act comes on top of a nationwide remapping of flood zones, which in some coastal areas has moved some properties into newly widened hazard zones, exposing them to rate increases. More than 80 percent of the 5.6 million properties nationwide covered by the $1.12 trillion program already comply with existing standards and would not see any change in their policies, at least for the time being, FEMA director Craig Fugate told a hearing of the U.S. Senate Banking, Housing and Urban Affairs Committee on Sept. 18. He acknowledged that the rates of those homeowners in compliance could go up, too, if new maps reveal higher flood risks.
Source: "Coastal, Riverbank Homeowners Brace for U.S. Flood Insurance Hike," Reuters (09/24/13)
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