Following the significant amount of damage done by a number of natural disasters across the country last year, federal lawmakers overhauled the nation's flood insurance program, but that has now led to large premium hikes for hundreds of thousands of people nationwide.
Many state legislators are now trying desperately to get those new, far higher rates pushed back at least for a little while, as some consumers, depending upon where they live, could see their costs go up by as much as tens of thousands of dollars per year, according to a report from The Associated Press. The new rates are based on a flood map constructed by the Federal Emergency Management Agency, which some criticize as not taking into account man-made structures designed to protect homes from exactly this type of danger.
About 1.1 million people already receive subsidies to help them cover their flood insurance costs either in whole or in part, and of that number, slightly less than a quarter will likely see at least some increase in their costs, the report said. However, about 5.5 million people have to buy this type of insurance every year. Under the new plan, businesses in flood zones and homes that have been flooded more than once or incurred significant damage in one such incident will see rates rise 25 percent per year until federally-mandated "true risk" is met. If a home or business is sold or repeatedly flooded during that time, all current subsidies will be stripped.
These changes may be particularly impactful, and difficult to bear, in places where subsidized flood insurance is necessary to afford the coverage at all, the report said. States like Louisiana, New Jersey and Florida have been hit hard by the decision, and in some cases the uncertainty about the issue has led to significant declines in home values in those areas.
For this reason, consumers may choose to cut back on other types of property and casualty insurance they currently have, and may be on the lookout for plans that help them to find at least some coverage that will be more affordable to them going forward. If insurers can develop offerings of this type, they may prove rather popular with those homeowners across the country who are now facing higher flood insurance costs.