Paying raising insurance premiums can be a major drain on the old bank account. So when flood insurance rates increase double digits from one year to the next, small business owners and home owners suffer the most. Realtors are grappling with this situation as rising flood insurance rates can really affect the future home buyer. Property values that fall within flood zone map boundaries may become a tough sell.
Back in 2012, the Biggert-Waters Flood Insurance Reform Act essentially stated that premiums can increase bast on risk. So all of the sudden if you live in a “flood plain” are then your rates can increase exponentially. So what about properties built before 1980, before flood zone maps were created? These cannot not be grandfathered into the National Flood Insurance Program. And thus home owners were denied subsidized flood coverage discounts under the NFIP which standardizes rates and coverage. Rates shot up making flood insurance expensive for the small business owner. Thankfully Homeowner Flood Insurance Act of 2014 delays these increases in flood insurance premiums. Yet still the National Flood Insurance Program is $24,000,000,000 in debt and major reforms are needed.
Something has to give! If rate increases are delayed then the NFIP debt will no doubt increase. But if flood insurance premiums rise then the small business and home owner will suffer. Coverage may become so expensive that people will leave the floodplain areas causing economic ruin for real estate values in these areas. It is estimated that over 1 million properties may be subject to significant increase in flood insurance rates. Reforms are needed to reign in year-over-year flood insurance rate increases. High flood insurance premiums are driving both businesses and perspective home buyers away from any property within the floodplain.
