Flood Insurance Rates Soar
Paying for flood insurance on your house? As flood insurance rates soar this year, and over the next decade or two, look out for financial pain. A re-write and update of flood insurance rates by FEMA raises prices across the board. The Federal Emergency Management Agency (FEMA) manages the National Flood Insurance Program (NFIP). Federal law caps the annual increases in rates it can charge at 18% per year. Since some areas and homes may see a 10 fold increase over the next 20 years. That’s right, an annual premium of $900 may go to $9000 per year. How does that fit your budget.
That’s the bad news. The other news is that other companies offering flood insurance will be allowed. That’s not necessarily good news or bad news. The insurance premium costs haven’t yet been determined.
Why New Rates
The cost of paying for flood claims continuously exceeds the premiums received by FEMA. In addition, many normal homeowners paying for flood insurance have effectively subsidized wealthy homeowners. Perhaps you own a home in Oklahoma, or Colorado, or Vermont, or California. You’ve paid premiums for years but never had a flood or a claim. But your counterparts owning multi-million dollar homes at the beach have rebuilt new homes three times with flood insurance money from FEMA. This without premiums increasing for them to offset their drain on the flood insurance program.
In the future, the program supposedly will begin ratcheting up the premiums for those owners to compensate for the risk and cost they pose. Have you had a flood insurance claim. You may be in for a shocking increase in premiums. How do you find out about flood risk and flood insurance on your home or on a home you want to buy? Check out a few tools and pick up a copy of Winning Mortgage, Winning Home for more insight on planning, buying, due diligence/inspections, and borrowing. Buy the right house and budget right as flood insurance rates soar.