Pennsylvania sets up new system to find, buy private flood insurance

19 Feb
Pennsylvania Home and Flood Insurance Rates

Luckily, the state is working to help Pennsylvania homeowners find more affordable flood insurance policies.

In the last year Pennsylvania homeowners have seen the cost of flood insurance continually rise. Luckily, the state is working to help homeowners find more affordable flood policies.

After the 2011 floods in Dauphin County, flood maps were redrawn which puts some homeowners who had previously not fallen within flood boundaries, into a floodplain. This has left a number of homeowners with no option but to purchase a flood policy. Unfortunately, coverage often comes at a huge price.

One homeowner was shocked by the $2,700 a year premium that he was quoted by the National Flood Insurance Program (NFIP). Luckily, his insurance agent was able to find a similar policy in the private market with a premium of only $718 a year. Not all homeowners are this lucky.

The Pennsylvania insurance Commissioner has stepped up to help homeowners find affordable flood insurance.

Why it’s so Expensive

The National Flood Insurance Program managed to keep its premiums low for decades, which meant that people who needed flood insurance, usually purchased a policy through that program. Unfortunately, premiums were actually set too low and did not accurately reflect the flood risk for the homes they were insuring.

When Hurricane Katrina hit, it the left the NFIP billions of dollars in debt. This prompted Congress to raise premiums for the program as well as redraw flood risk maps.

As floodplain maps were redrawn more and more homeowners discovered they were now considered a flood risk and their mortgage lender required flood insurance. At the same time, flood insurance premiums for policies via the NFIP were going up dramatically.

This deadly combination of rising premiums and larger flood risk maps put many homeowners in financial jeopardy.

Insurer Commissioner Helps Out

As consumer complaints have grown over the last year local lawmakers and the Insurance Commissioner in the state of Pennsylvania decided something needed to be done. They have put together information and a website to help consumers find flood insurance in the private market.

While homeowners who live in extreme high risk flood zones such as riverfront property will still need to turn to the NFIP for protection, homeowners in moderate to low risk areas can often find coverage in the private market that is less expensive than the federal alternative.

The new website has information regarding flood insurance in general as well as a listing of all insurers who sell flood insurance in the state of Pennsylvania. The website also includes “Surplus Line” insurers which are insurance agencies that are licensed in other states or countries but not Pennsylvania. However, they can write flood insurance policies in Pennsylvania for higher risk properties.

You can check out the commission’s recommendations and get general flood insurance information here.

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