Comforting news came last week regarding the flood insurance rate hikes looming over homeowners and homeowners-to-be. The Senate just passed a bill to delay those increases for up to 4 more years, a huge relief to those who own in current or proposed high-risk flood zone areas across the nation.
Why Was the Bill Passed?
Last week’s bill was the result of the overwhelming uproar in the Senate, as well as complaints from the public and lobbyists who back the real estate and construction industry.
Concerns of the dramatic flood insurance increases, sometimes to the point of unaffordability for many homeowners, had begun a trickle down affect…not only did it result in panic to some owners, it also lead to many selling their properties for well below market value because buyers were apprehensive about taking on the burden of impending rate spikes.
These sales started to impact the real estate market in those coastal and high-risk areas.
Initially, lawmakers were attempting to address concerns over our government’s insolvent flood insurance program, to the tune of over $24 billion, due to the super storms and hurricanes that have hit the United States in recent years. Understandably trying to rescue the program two years ago, lawmakers voted in favor of reforms that would eventually bring it more financial stability.
The goal was to end the government and other policyholders’ subsidized insurance costs for homeowners in high-risk areas. Full responsibility would be on those coastal homeowners to pay more realistic premiums, aligning better with their true risk of flooding. The government also began to update their flood maps, which was going to affect hundreds of thousands of homeowners’ insurance costs.
Benefit of the Delay
This delay will bring insurance premiums back to “normal” and allow time for the government to conduct insurance affordability studies, as well as more research on the proposed changes in the flood zone maps. While only a band-aid was put on this issue, at least it buys many homeowners time for better planning, and brings the real estate market a sigh of relief.
For more information about the National Flood Insurance Program, see my past blog, or contact me.