The Latest Developments in Florida Flood Insurance Rates

13 Apr
Florida Flood Insurance Rates

If you live in a high-risk flood area and have a mortgage, in most cases your mortgage lender will require that you carry a flood insurance policy. However, many homeowners who live in medium or low risk areas don’t carry flood insurance and that can be a big mistake.

As the spring storm and hurricane season approaches we thought it might be a good idea to take a look at the latest developments in Florida flood insurance. We will have a quick look at the National Flood Insurance program to see where rates are headed and what options are available to you when it comes to protecting your home from flood damage.

Flood Insurance is Always a Good Idea

If you live in a flood prone area, flood insurance is a must. It is important to remember that flood damage is never covered by a standard homeowners policy so if your home is damaged by floodwaters and you are not carrying a separate flood policy, the bills to repair or rebuild your home will fall to you.

According to data from the Federal Emergency Management Agency (FEMA), flood damage is the nations most costly and common natural disaster and in many cases homeowners don’t understand the need for flood insurance. A 2016 survey done by the Insurance Information Institute found that 43 percent of homeowners believe that flood damage caused by heavy rain is covered by a standard homeowners policy, that belief is incorrect.

If you live in a high-risk flood area and have a mortgage, in most cases your mortgage lender will require that you carry a flood insurance policy. However, many homeowners who live in medium or low risk areas don’t carry flood insurance and that can be a big mistake.

Flooding can happen anywhere, according to FEMA data, 20 percent of flood claims originate from properties that are not located in a high-risk flood zone. If you are even remotely at risk for flood damage, you should have a flood insurance policy in place.

Now is the time to find a flood insurance policy as spring and summer storms are on the way and a flood insurance policy doesn’t take effect until 30 days after your sign on the dotted line. In addition, prices may be headed up depending on how Congress decides to deal with the National Flood Insurance Program.

Flood Insurance is Being Tweaked

Due to the inaction by Congress, FEMA is making a few tweaks to the National Flood Insurance Program, which may make it easier to get a policy from a private insurer and inject some much need private money into the government program.

The NFIP is currently almost $30 billion in debt and Congress continues to kick the can down the road when it comes to reforming the program. FEMA has decided to act on its own, loosening rules about private insurers offering their own policies and also taking on roughly $1.5 billion in reinsurance, which will help limit its losses if the 2018 storm season turns nasty.

In addition to the reinsurance, FEMA is trashing its non-compete rule that barred insurance companies from selling NFIP endorsed policies through the NFIP program “Write Your Own.” This will hopefully entice more private insurers to offer flood insurance products in the Florida market as well as other states.

FEMA hopes that allowing private competition will help reduce the number of homeowners that go without flood insurance. While FEMA has gone ahead and made these changes, a long term solution still seems out of reach as Congress refuses to confront the issue a decision that will most likely lead to higher premiums for most homeowners looking to purchase flood insurance.

Premiums on the Rise in Florida

Flood insurance premiums are set to rise this month according to an article in the Tampa Bay Times. Prices could be headed up anywhere from 5 percent up to a whopping 25 percent.

In April, rates for flood insurance climbed from an average of $866 to $935, which is an increase of 8 percent although many homeowners will only see an increase of 5 percent.

While homeowners can expect an average rate hike of 8 percent, prices could be headed up dramatically after July 31st if Congress doesn’t make changes to the NFIP program. This is the deadline for action that Congress set the last time they kicked the issue down the road.

Congress has until the July 31st deadline to renew the NFIP and make changes that will help the program climb out of debt. Experts see three possible outcomes by the July 31st deadline:

  • NFIP is renewed with a long-term solution that helps keep it financially viable. In most cases this would result in higher premiums for most homeowners, premiums that would reflect the actual cost of insuring their property.
  • Congress kicks the program down the road yet again, moving the renewal date to sometime after the midterm elections.
  • Congress allows the NFIP to lapse, which means that no new flood policies would be written until they decide to take further action. This could have a major impact on new homeowners, potential homeowners as well as homeowners looking to sell their homes.

As it stands now, there is no indication of what direction Congress will go, making it a good time to consider flood insurance if you are not currently covered as there is a good chance that prices will be headed up in the future.

Finally, remember that waiting until a storm is on its way is always a bad idea. Policies from the NFIP take a month to take affect and private insurers writing flood insurance in Florida usually stop writing new polices once a storm is named.

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