Flood Insurance Price Increases Affecting Home Sales

By Toluse Olorunnipa | October 24, 2013
house_flood

  • October 24, 2013 at 1:40 pm
    Two Cents says:
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    I think that the price increases are capped at 25% per year, but even so a $3,000 price increase per yet until they get to the $14,000 rates is still a bitter pill to swallow.

    I’ve been seeing a lot of private flood insurance offerings out there. The feedback I’ve heard thus far is some of these carrier have premiums lower than NFIP as base elevation certificates may not be part of the underwriting process. Some of these programs is copying the NFIP forms to make it an easier approval with lenders.

    As insurane professionals, we could be seen as heros if we take a proactive approach and shop the marketplace for alternative private flood insurance.

    Just my two cents.

  • October 24, 2013 at 1:43 pm
    Jeff says:
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    Unfortunately one the the new realities of a changing FEMA WYO flood program. This is where FEMA believes it can pass on the increased risk expense to the property owners.

    The property owners understand the economics and are looking to sell to avoid calamity. Very sorry to see these hard working people forced into abandoning their dream.

  • October 24, 2013 at 1:44 pm
    UW says:
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    First, I suggest that we require flood coverage on every home, renters and business insurance policy sold in the USA, not just ones in flood prone areas. Let’s spread out the risk like we do for fire or other natural perils. Premiums would increase, yes, but every homeowner has some level of flood risk.

    Story from my past: 15 years ago the agency I was at sent out letters encouraging all homeowners to consider flood insurance. Almost no one bought it. That winter we had heavy rains while the ground was frozen and lots of homeowners tried to call in claims, all of which were denied since it was ground/surface water. I live on a hill and had the same thing happen last year to me: heavy rains during the spring thaw flooded my basement. Did not bother calling my carrier, just got out the shop vac.

    On to this situation: let’s say the house is worth $300,000, probably low for beach property in Florida. $2,000 a year for flood coverage sounds artificially low when you consider that there’s probably going to be a flood event every decade. At $2,000 per year you would have to have 150 years between events just to break even to cover a limits claim.

    • October 24, 2013 at 1:56 pm
      Becky says:
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      The problem is when consumers think ‘flood insurance’ they picture events they see in the media, like a rushing river, hurricane surge, tsunamis, etc. What they don’t realize is that (like you said) hard rain can flood a basement with a couple inches of water and cause hundreds or thousands in damage. That’s not sensational enough to end up in the news, so people don’t think about it.

      • October 24, 2013 at 3:16 pm
        Becky says:
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        For the record, I don’t agree that we should mandate flood coverage for everyone. Didn’t make that point clear in my original comment. I’m saying we need to better educate consumers on true flood risks.

    • October 24, 2013 at 1:57 pm
      KentU says:
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      Requiring anyone to have flood insurance that isn’t in or near a flood zone is just plain wrong – period – no debate should be necessary. Two primary reasons the flood program is having funding problems is (1) it never should have been a subsidized program in the first place and (2) over development (putting concrete over bare earth) has caused runoff flooding. I have a substanial number of my customers that have been rezoned to an AE even though their property has never come even close to being flooded. The rezoning program currently underway is unfair and is being done simply to bring in funding.

      • October 24, 2013 at 2:20 pm
        Jay says:
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        KentU-Everyone is in a flood zone. Some high hazard some low hazard.

        Would not have thought that those homeowners in Colorado would have wished their agents sold them flood insurance.

        • October 24, 2013 at 6:28 pm
          KentU says:
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          By the very definition of a ‘flood zone’ by the NFIP – NO not everyone is in a flood zone. The Colorado situation was a runoff problem and I would guess they were in either flood zones B, C or X – but, not an A. Unless, you are referring to the Great Flood in the Bible or earth crust displacement then, everyone is not in a flood zone.

          • October 24, 2013 at 6:58 pm
            Take another look says:
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            Your comment about zones B, C or X puts them in a flood zone. Given that, everyone IS in a flood zone, just depends upon which one.

          • October 29, 2013 at 3:45 pm
            John Koziol says:
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            25% of the paid flood claims come from low to moderate flood zones.

        • October 29, 2013 at 7:55 pm
          KentU says:
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          I should have stated that to be in a 100 year flood plain you must be in an ‘A’ zone. The B,C & X are not in 100 year flood plains but, adjacent to them. Having said that I believe it is not a bad idea to buy flood insurance if you are in one of the B, C or X zones in that if you later get rezoned into an A zone then, you simply get removed from the preferred program and put in the standard program but, are able to retain your B, C or X zone ratings.

      • October 24, 2013 at 3:18 pm
        Becky says:
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        KentU, you’re absolutely correct about over development causing a lot of the runoff flooding that leads to flash floods in areas that aren’t anywhere near a body of water.

      • October 24, 2013 at 4:18 pm
        susan says:
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        When it rains for days and days and days, it doesn’t matter if you’re in an A or X zone. If you’re low lying, you will flood. Most of the areas that flood in my city are not homes out on the key or near the beach, they are inland, in town, “regular” streets. People are uneducated about flood insurance and why they should have it.

      • October 24, 2013 at 8:23 pm
        Jason J. Marchi says:
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        The ONLY proper solution is that EVERYONE has to pay for flood insurance who owns real estate, mortgage or no mortgage, just like property tax on real estate is now paid to municipalities in many states on ALL real estate in those states; just like the tax EVERYONE pays on gasoline who buys gasoline, etc. The risk MUST be spread out. The flood insurance price per year would be on a sliding scale based on risk level, combined with a sliding scale based on fair market value of each property, and a third sliding scale based on mortgage (more expensive) verses no mortgage (less expensive). Start with a simple percentage; say .001 (1/100th of a percent) for a $400,000 house in a low risk area, or $400 a year, and a $3,000,000 home in that same location would pay $3,000 a year. THEN a risk factor percentage would be applied to those same houses if they are in a high risk area. So the low risk $400,000 house pays the $400 a year and that same house in a high risk area pays an additional .005, or an additional $2,000 a year for a total of $2,400 a year. A $3,000,000 home cost $18,000 a year in flood insurance in a high risk area. The way the law is written now the mandatory (mortgaged house) flood insurance on a $100,000 house in a high risk area will cost the home owner a min. of $4,500 a year and grow to $11,000 a year in five years for the life of the mortgage! That’s just unaffordable, unsustainable, and unacceptable. The economic disaster to lost property tax revenue from abandoned homes will bankrupt many cities and towns along waterways, and will cost ALL of us when the federal government has to bail out those municipalities from those lost property tax revenues. YOU WILL pay for it now, or later.

        • January 4, 2014 at 1:23 am
          Rodelyne says:
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          Some people think that the homeowners affected by the flood insurance increase all have waterfront vacation houses. This is not the case. I bought an inland house last year , and paid $1700 a year for flood insurance. Now, I cannot afford the unreasonable amount they asked me to pay. I am thinking about walking away. This will result in more foreclosures.

      • October 26, 2013 at 7:16 pm
        henry says:
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        you think it is wrong, so what happens if they dont carry it, the house floods and the people walk away, and the banks or taxpayers are left footing another bill, if you live in a flood zone i think it should be required i worked with a gentleman who counted on having his house flood every few years, actually looked forward to it, he would get the money, fix it up and pocket the rest, all on the taxpayers

  • October 24, 2013 at 1:46 pm
    JAM says:
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    Once again another genius Congress member proposed and passed a bill that she had no idea about what it contained and the ramifications. Sounds like Obama care when it was passed when another Congressional member made the statement that “we should pass it then we will know what it means”??
    Until the mapping is complete and the exposures are understood with the consequences being determined, we are once again with the Wagon ahead of the Horse!
    It is amazing that we are still in one piece with such morons in DC governing our lives!!

    • October 24, 2013 at 5:31 pm
      KB says:
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      Why does Obamacare have to be part of a discussion on flood insurance? Seems off topic to me.

      • October 25, 2013 at 1:32 pm
        InsGuy says:
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        O-Care wasn’t the topic – it was example. The point was how the DC politicos take every opportunity to pass legislation for the sake of a photo-op, without regard to what’s in the bill itself.

  • October 24, 2013 at 1:46 pm
    Spooky says:
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    As a property owner in Tampa, Fl. with Flood insurance, the chance of selling my home is zero. My current flood premium is approximately $1200.00 per year, the new buyer would pay $7000.00. But there is once ace up all of our sleeeves left and that is to let the banks take back all the homes. It is difficult to think that most of us have been diligent in making our payments for our homes but when it gets to be $10,000.00 per year for homeowners and flood insurance, enough is enough.

  • October 24, 2013 at 1:51 pm
    Spooky says:
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    So let’s see, I pay $1200.00 for flood insurance right now and if I could sell my house the flood premium would go to $7,000.00. Don’t think there is much of a demand for my little home. I do not live on the beach, I do not see the water, I just live in a 1950 home that was built before there was even a flood program. I believe the only option that I have is to eventually let the bank have the home back.

  • October 24, 2013 at 1:56 pm
    Bryan says:
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    I am sorry these, and other people, are going to be charged closer to the full-risk rates for their policies. But, then again, I don’t want to pay their claims, which is what ultimately happens when coast dwellers are underinsured.

    The program is not changing, it is just moving toward charging what it should for the risk involved. Waters may have been clueless as to the results of her bill, but the bill is not wrong. In fact, it’s still not enough. It won’t fix the problem. I think the wagon is still very far behind the horse.

    Requiring everyone to pay for flood insurance is a good idea, but it won’t fix these people’s problem either. They will still have a much higher premium than they currently have.

  • October 24, 2013 at 2:08 pm
    T says:
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    City and State planners should not allow building homes in flood prone areas to begin with.

    • October 24, 2013 at 3:54 pm
      jack says:
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      When did city planners become God and be able to forcast floods?

    • October 29, 2013 at 8:04 pm
      KentU says:
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      I agree T! What is worse is that city and state planners allow for over development which turns non-flood prone areas into areas that are flood prone due to runoff problems. I went to an NFIB flood class a couple of years ago – had a young instructor from California with some good ideas. He said many cities with runoff problems from over development are now requiring businesses to install tanks to hold runoff water from their roofs and ditches next to their parking lots to hold runoff water. The businesses can release the water later – when the runoff has subsided. To a homeowner a couple of miles away that can be the difference in the water coming into your home or simply getting close to the house.

  • October 24, 2013 at 2:19 pm
    Darla says:
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    Well, we can fix the problem, like the ACA is allegedly doing by making the whole country sign up for flood insurance by pooling the risk and the premiums will plummet. Flood zone property owners will help support flood zone property owners much like the same idea with ACA, healthy people will help support the sick. Or better yet, make flood insurance part of the basic homeowners policy and increase the rate accordingly so all are covered and paying into the system. There are properties that are not in flood zones that can have flood damage. It is called ground surface water and that can happen on hills too! The sewer overfills with torrential rain, backs up the drainage in the street and here comes the flood.

    Some food for thought

    • October 24, 2013 at 2:20 pm
      Darla says:
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      Correction: Non-flood zone property owners…

    • October 24, 2013 at 4:00 pm
      jack says:
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      Yeah, lets make everybody pay so it’s fair. What a flippin joke!

      I just exchanged an email with a current home and flood client about the FEMA changes. He’s an executive with one of the largest health ins companies in the US. He said the health ins is NOW in worse shape than FEMA. 2 major points that he made was 1. there will be a shortage of doctors and 2. the system will be bankrupt and your children will pay for it. Thanks Obumacareless!!

  • October 24, 2013 at 2:26 pm
    Again says:
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    It’s been many years ago, but I saw on the national news an elderly couple who had been flooded out of their Mississippi home. The visuals were tear jerking, but I found the interview shocking. The elderly gentleman said they are flooded out about every 5 years and the American people have always been there to help them pick up the pieces and rebuild.

    To me, this said a lot about both American generosity, and the willingness of some to take it over and over again.

    • November 2, 2013 at 11:14 am
      fred_flintstone says:
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      Exactly! Growing up in MS, I have seen this over and over…and still see it happening. My family’s home was flooded in the 80s. Lost everything with no insurance….my family rebuilt in the same area but in an elevated house. Its flooded several times since then and it is no problem…it was our choice to stay in the area so we made other choices to make certain we were protected.

      I see others that get flooded, get Tons of money in insurance claims (way more than they have paid into the system) to rebuild and repair, and then wait a few years to do it again. IT IS TIME the risks were properly assessed and the rates increased. One persons lifestyle choices should not be the responsibility of someone else.

  • October 24, 2013 at 2:27 pm
    Enough of Forcing everyone to pick up the tab says:
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    There is a lot of socialist talk about forcing everyone to participate in the Flood Program much like our new Health Insurance laws. Is this fair? Do I not have the right to the risk? If I want to finance the risk through insurance, then I can. If I choose not to, why should the government force me?

    • October 24, 2013 at 4:41 pm
      Unjustified Flood Rates says:
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      There is nothing Socialist about making people pay for actual risk. All areas are flood zones… it’s just to what extent. This is nothing like the Health Insurance Laws which are Socialist.

    • October 30, 2013 at 9:24 am
      txmouthbreatherboogereatertx says:
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      It’s kind of like when you bring back a dinner receipt after “entertaining” a client. You expense that out and expect everyone else to “socialistically” pay for your dinner. You get the commission, and collectively we pick up the tab. In a true Capitalistic society, you go out to dinner for $100 to make a $150 commission, you profit $50. In a socialist or Quasi Capitalist society, you go to dinner, get your $100 reimbursed, your commission, and not to mention with a creative accountant, you can even lower your tax bracket the more you do it. Only in ‘Merica

    • November 11, 2013 at 4:55 pm
      Pat says:
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      Enough – If you own your home outright and don’t have a federally insured mortgage, I would have no objection to you self insuring as long as you also have no expectation of government assistance (loans or otherwise) if your property does flood. If you have a federally insured mortgage, you should have to purchase flood insurance to protect the taxpayers who will ultimately pay the bill if your property floods and you walk away from the damage.

  • October 24, 2013 at 2:28 pm
    Marcus says:
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    It is your God given right to buy property and live any where you want even if it is right over the ocean or on a river.

    It is not your God given right to have me pay for your uninsured or underinsured flood damaged home. Not even once.

    Mitigate.

    • October 27, 2013 at 6:53 pm
      Jason J. Marchi says:
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      Why are you bringing GOD into it? This is not a proper place to push your believe in a deity.

      • January 22, 2014 at 4:30 pm
        Samantha says:
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        atheist and proud! /s

  • October 24, 2013 at 2:29 pm
    jw says:
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    It’s been a while since I read about the NFIP, so my memory may be wrong. I thought the community had to do mitigation or something like that to be eligible to participate. I vaguely remember a few communities here not willing to do the mitigagtion, and therefore, not being allowed to participate. Is that incorrect?

  • October 24, 2013 at 2:54 pm
    Ken says:
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    I have handled flood claims. The policy has a lot of limitations and exclusions in it. A simple flooding of a basement in itself is not considered a flood claim based on the definition of what is a flood. What is covered in a basement is very limited (and the definition of a basement might surprise you.

    How is forcing everyone to have flood insurance whether they need it or not any different than just taxing everyone to cover the cost? Is it better to force the value of every property in the country down than to limit it to the people who assumed the risk when they bought flood prone property?

    • October 24, 2013 at 3:34 pm
      Becky says:
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      Help me out with this real-life example, Ken (and pardon my ignorance). If a property owner has two feet of water in his basement from a flash flood (runoff from neighboring fields and subdivisions during two days of extremely heavy rain), would that be covered by a flood policy? In this example, the person did not have flood insurance.

      • October 25, 2013 at 10:49 am
        LH says:
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        Becky, for any condition to be concidered a flood there would have to be what in the policy is concidered a “General Condition of Flooding” which means that the waters would have to cover two or more properties or two or more acres of “normally dry land”. Two or more properties could yours and the neighbors house or your house and the street. If that would be the case and it meets a “General condition of Flooding” then the basement loss would be covered but coverage would be limited.

      • October 25, 2013 at 11:00 am
        LH says:
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        Becky, i can help you with that question. In the flood policy you have to meet the definition of flood which is:

        Flood, as used in this flood insurance policy, means:
        1. A general and temporary condition of partial or
        complete inundation of two or more acres of normally
        dry land area or of two or more properties (at least one of which is your property) from:

        a. Overflow of inland or tidal waters;
        b. Unusual and rapid accumulation or runoff of
        surface waters from any source;

        What it means by two or more properties could mean yours and a neighbors property or your property and the street.

        If it met the discription of Flood, then the basement would have coverage, however, as Ken stated it would be very limited.

        • October 25, 2013 at 12:30 pm
          Becky says:
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          Thank you, that was helpful!

    • October 24, 2013 at 4:18 pm
      Unjustified Flood Rates says:
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      How is forcing everyone to have flood insurance whether they need it or not

      Interesting statement… Colorado 2013, Nashville 2011, Thousands of homeowners located in non-flood zones of NJ & NY during Super Storm Sandy. 40% of all flooding happens in NON-Special Flood Hazard Areas. The NFIP would not be operating at a deficit if all people that have a Federally backed mortgages were required to carry flood insurance and it wouldn’t lower the property values down because the average price for homes in non special flood hazard areas is about $200 a year

    • October 24, 2013 at 5:36 pm
      Kathy says:
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      Perhaps creating jobs in the insurance industry.

  • October 24, 2013 at 2:59 pm
    JC says:
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    Explain to me again why tax payers should continue to subsidze everyone’s flood insurance!

    • October 24, 2013 at 4:53 pm
      jack says:
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      You subsidize their food,housing and abortions so why not flood?

      • October 25, 2013 at 4:37 pm
        trish says:
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        don’t forget all the churches we’re subsidizing

        I find it hard to believe this is the first you all heard of this. There is a premium to living on the ocean. There just needs to be a better way to pay for it – add it to your mortgage.

  • October 24, 2013 at 2:59 pm
    A Forst says:
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    I was wondering what insurance company help draw up the Law.

    I know they didn’t ask a insurance company.

    That’s the same company they asked about health care.

    Why would you want to ask a insurance company.

    We all know that congress knows more about insurance than insurance companies that have been doing it for years.

    • October 28, 2013 at 11:16 am
      InsGuy says:
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      …for over 150+ years.

      “for years” seemed a bit light.

  • October 24, 2013 at 3:14 pm
    Unjustified Flood Rates says:
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    Biggert – Waters Act (Long Read but Worth It)

    Homeowners that have never been flooded should not be expected to make up the deficit of the National Flood Insurance Program (NFIP) when FEMA gives, what appear to be unjustified, massive premium reductions to gulf front condominium buildings that have been paid millions of dollars in NFIP flood claims.

    July 6, 2012: The President signed the Biggert-Waters Act authorizing a five year extension of funding for the National Flood Insurance Program (NFIP). It was also intended to make the program actuarially sound. Implementation of sections 205 and 207 of the Biggert Waters Act are going to create tremendous rate increases for thousands of homeowners and small businesses along the entire gulf coast along with coastal properties around the country. This action doesn’t seem to be justified when you consider the fact that over the last three years FEMA approved Letters of Map Revision (LOMR) on Alabama’s Gulf Front condominium buildings that they had previously placed in the NFIP Repetitive Loss Program. These condominium buildings received millions of dollars in NFIP claim payments yet FEMA decided they are not in velocity flood zones and reduced their flood premiums by an average of almost 93%?

    2009: In 2009 a company out of South Florida, Flood Zone Corrections (FZC), started submitting condominium buildings located in very unfavorable “V” flood zones to the NFIP/FEMA in an attempt to have them changed to more favorable “A” flood zones. FZC also operates as Flood Risk Solutions. All of these buildings were located on the beaches of Orange Beach and Gulf Shores, Alabama. FZC submitted the buildings even though they were located in high velocity flood areas. Local flood engineers said these buildings would not qualify for LOMRs and most refused to attempt any rezoning. Many of these buildings had been heavily damaged from flooding during Hurricanes Erin and Opal in 1995, Hurricane Danny in 1997, Hurricane Georges’ in 1998 and all of them suffered massive flood damage during Hurricane Ivan in 2004. If approved for LOMR’s these condominium buildings would pay flood premiums that were a very small percentage of what they were currently paying.

    Unbelievable: The Flood Plain Managers from Gulf Shores and Orange Beach assumed the NFIP would decline the request for LOMR’s because the NFIP was operating at an $18 billion deficit at that time and many of these buildings had already been placed in the NFIP Repetitive Loss Program. Both Flood Plain Managers disagreed with the information FZC was submitting to the NFIP and each one of them refused to sign concurrence letters that were required when applying for a LOMR. The NFIP ignored these Flood Plain Managers and approved the LOMR’s anyway.

    June 6, 2011: The NFIP/FEMA approved LOMR’s for four condominium buildings located on East Beach Boulevard in Gulf Shores. One of the buildings had received over $400,000 from the NFIP for their Hurricane Ivan flood claim. The other three were new buildings that were built on lots where the prior building had been destroyed by flooding during Ivan.

    June 2011: The offices of Alabama Senator Richard Shelby, Mississippi Senator Roger Wicker and Alabama House Representative Spencer Bachus were notified of the negative financial impact approval of the LOMR’s were having on the NFIP. All of these Congressmen were working on new legislation that would extend NFIP funding and each one had expressed considerable concern that the program was operating at a deficit of $18 billion. Their representatives contacted representatives of the NFIP and were assured the flood zone changes were justified. All three offices dropped the issue soon afterward.

    2011: The NFIP/FEMA was approached and asked to put a moratorium on future LOMR approvals until the new flood mapping project was completed for Alabama. The NFIP said they would review the issue. No moratorium was ever put in place and now the program operates at more than a $24 billion deficit.

    October 4, 2011: 14 more Gulf Shores condominium buildings are approved for LOMR’s

    June 4, 2012: 7 more Gulf Shores condominium buildings are approved for LOMR’s

    March 11, 2013: Although Biggert-Waters had already been passed with intent of making the NFIP actuarially sound, 41 more Gulf Shores condominium buildings are approved for LOMR’s

    June 17, 2013: Another Gulf Shores condominium building is approved for a LOMR

    December 6, 2013: Another Gulf Shores condominium has been approved and the LOMR will be effective on 12/6/2013

    September 2013: Based on the most recent edition of NFIP/FEMA flood maps there are 72 residential condominium buildings located in very unfavorable “V” flood zones in Gulf Shores alone. As of September 2013, FZC has obtained LOMR’s on 66 of these Gulf Shores condominium buildings while 2 were declined. FZC is currently working to secure LOMR’s on the remaining 4 buildings. There were also 4 or 5 high rise condominium buildings approved for LOMR’s in Orange Beach during that time.

    It appears the total combined annual revenue loss to the NFIP/FEMA for the condominium buildings in Gulf Shores and Orange Beach is somewhere between $5,500,000 and $6,000,000 a year.

    If the intent of Congress is to make the program actuarially sound why did they, and do they continue to allow the NFIP/FEMA to approved these buildings for LOMR’s without investigating this issue in detail?

    After LOMR approvals, the average flood premium for the approved gulf front condominiums is approximately $.069/$100. Most homes located in “X” non-hazard flood zones pay a minimum of approximately $0.12/$100. How can FEMA possibly justify charging these homes twice the rate?

    The new preliminary flood maps for Alabama and NW Florida are not scheduled for release until December of 2014. The new permanent maps will not be put into effect until 2015 but we already know the stillwater elevation is going up by 4′ along the entire Alabama Gulf Coast. With this knowledge there is no justification for FEMA to overlook the actions of the NFIP.

    When you look at the facts you question how the NFIP/FEMA, with a program operating at a $24 billion deficit, can justify any premium reduction on these high risk properties then proceed with the implementation of sections 205 and 207 of Biggert Waters? Obviously FEMA officials and Congress expect innocent homeowners and small business owners that followed FEMA’s rules to make up this deficit. Why doesn’t Congress or FEMA initiate an internal investigation and get to the bottom of this issue? Why don’t they delay the implementation of sections 205 and 207 until this investigation is complete? These condominium owners are receiving what appear to be extremely low unjustified flood rates at the expense of coastal homeowners around the entire country. No individual homeowner or small business owner should have flood premiums raised until Congress and FEMA get to the bottom of this issue.

    • October 24, 2013 at 4:44 pm
      jack says:
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      unjustified flood rates – I’ve heard about those myself. You know some pockets got lined with those changes. Follow the money!

    • October 24, 2013 at 5:38 pm
      Kathy says:
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      Can you cite your sources for this information?

      • October 25, 2013 at 11:54 am
        jack says:
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        Kathy- go to the FEMA flood map site and pull up LOMR for the areas. There is the only source you need. Anyone that really cares about fraud in the government has it sitting right in front of them. Fact remains- they don’t care.

  • October 24, 2013 at 4:30 pm
    Bryan says:
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    Forcing flood insurance upon all property owners will not fix the problem this article states. Or using an all-perils policy form, or whatever verion of a solution you choose. Yes, there will be more premium and yes there will be some subsidizing. But, everyone will still pay actuarially justified rates. Coast dwellers will still have extremely high premium because they have extremely high exposure. That is the only way flood insurance can work. Want to live on the coast, then pay the price. I live in tornado alley, thus I pay a much higher premium for wind coverage than someone living in the Northeast (not on the coast), for example. Yes, there is pooling of premium. Yes, that is how insurance works. But everyone pays a premium amount directly related to their exposure level.

    • October 27, 2013 at 6:45 pm
      Jason J. Marchi says:
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      Bryan.
      Not everyone who lives on the coast is rich. The house I’m trying to sell “on the coast” in New Haven, CT is ONLY worth $110,000. It’s NOT a rich area. In fact, it is an area that is affordable for FVA, HUD, and other first time buyers who want to OWN and build equity and not throw money away making a slumlord rich. A $100,000 fair market value house SHOULD NOT have a $5,000 plus flood insurance premium, period. Add that $5,000 plus to the $5,000 a year in property tax on that house AND then add a 30 year mortgage payment and the scales are cost is unreasonable and asinine. And there is NO WHERE ELSE near good employment that one can buy a $100,000 sound, GOOD house in Connecticut. If one is a multi-millionaire “living on the coast” that person should be on his or her own when it comes to flood insurance, but the little guy HAS to be protected and subsidized.

      • October 28, 2013 at 9:52 am
        jw says:
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        Jason J. Marchi – I don’t see that Bryan stated or even implied that all coastal dwellers are rich. In fact, Bryan just pointed out that people should pay the rate that reflects the risk.

        If you live near the coast, the risk is higher, therefore, the rate is higher. I understand the rates seem excessive to you. I don’t know if they are or aren’t.

        Sadly, you probably won’t find much sympathy in the comments on IJ. The majority of insurance people understand the rating process and why rates go up the more risk you face.

        • October 30, 2013 at 9:54 am
          julesga says:
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          I am sure the 30% commission insurers collect under the WYO program while not assuming any risk in no way affects insurance professionals enthusiasm for 5-figure premiums.

      • October 28, 2013 at 11:21 am
        InsGuy says:
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        The fact is that private insurance won’t work either. In order to use actuarially justified risk-based rates, they’ll likely have to be filed/approved. It might work for a few years but eventually, no one will be able to get approval for their actuarially justified rateincreases and the the market would eventually fracture (again) and drive the private carriers out. And this process will start all over again.

  • October 24, 2013 at 4:31 pm
    Unjustified Flood Rates says:
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    Spooky is a prime example of why sections 205 and 207 should be repealed. Spookys home was built well before the NFIP was established. Spooky did nothing wrong. There are much better ways to make the program actuarially sound.

  • October 24, 2013 at 4:36 pm
    Unjustified Flood Rates says:
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    Bryan I agree with some of what you say but forcing people to pay rates that are 10% to 15% of the residential value is wrong. I’m an agent and I make a lot more commission if they leave Biggert Waters alone but the fact is it’s wrong to force people out of their homes when they did nothing wrong.

    • October 24, 2013 at 4:51 pm
      jack says:
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      Unjustified- i feel the same way but you are leaving out the most important part of the equation. It’s a government program full of fraud and waste that will never change! It will never be actuarilly sound, never!

  • October 24, 2013 at 4:40 pm
    Michael says:
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    How long before subsidies are going to disappear for ObamaCare.
    “A GOVERNMENT BIG ENOUGH TO GIVE YOU EVERYTHING YOU WANT IS A GOVERNMENT BIG ENOUGH TO TAKE FROM YOU EVERYTHING YOU HAVE.”
    Gerald R Ford address to a Joint Session of Congress, August 12, 1974

  • October 24, 2013 at 6:22 pm
    KentU says:
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    Kathy, are you asking me for my information sources? If so, just read the article under ‘Subsidy’. Any agent that has had active involvement with NFIP or WYO should be aware that flood insurance as been subsidized for decades by the federal government – that’s no secret. The justification was that it helped encourage development. The runoff flooding problem has been mentioned in almost every flood class (given by NFIB instructions) that I’ve attended the last ten years. The Dallas Morning News also mentioned it in their article about runoff flooding along Ten Mile Creek in Lancaster, Texas a few years ago – they got their information from NFIB. Flooding wasn’t that big of a problem until developers starting putting concrete slabs down for Walmart, Home Depot, etc., etc.. Rain water that would have taken hours or days to reach Ten Mile Creek now gets there within minutes because the water is now moving across concrete rather an grass. The rezoning areas that have never flooded was on the channel 4 daily newscast about two months ago when everyone in a neighborhood in Midlothian, Texas got notification from their mortgage company that they were now living in a flood zone. The newscast reported that this is a widespread situation. This has also been a topic of numerous discussions in the IJ over the past years involving agents like myself that write flood policies on a regular basis. I think the mindset of Congress is that they should expand the areas where people living close to flood zones are now listed as living in flood zones and must buy flood insurance (moving them into an A zone). FEMA won’t be taken by surprise if and when it floods in thoses area and those people will already be contributing into the pot of money that pays the flood claims vs seeking aid from the government because they didn’t have flood insurance.

  • October 25, 2013 at 2:02 pm
    Furrie Princess says:
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    There is one way many of the people in special hazard zones can keep their rates down. They can meet the elevation requirements (and for FL and wind areas-the hurricane construction requirements). I just had a client who is in an AE zone build a guest cottage on his property. It is properly elevated with adequate venting and qualified for a 0.28 rate on the new structure while his main home (over 50 years old)has a 0.77 rate which will be rising 20% a year.

    By the way, not everyone is in a flood zone. Those communities who have not participated in NFIP or who have left because they did not want to pay for flood control measures, are not in flood zones and don’t show up on FEMA’s flood zone maps.

    • October 25, 2013 at 3:10 pm
      jack says:
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      Furrie- just because you dont participate in the program does not mean you are NOT in a flood zone.

    • October 25, 2013 at 4:36 pm
      Unjustified Flood Rates says:
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      Furrie Princess: I thought the same as you until a few years ago when a couple built a 2 story home on the side of a very steep hill in Daphne, Alabama. There was a lake about 30′ below them at the bottom of the hill. They didn’t carry flood insurance because there was no way for them to flood. Turns out the lake was fed by natural underground springs. Two years later a natural spring burst through the ground on the hill 20′ above the home. The bottom floor of the home had 5′ of water by the time the spring was controlled. The home was not located in a FEMA flood zone.

      I never said all homes are in FEMA’s flood zones. I said all homes are in flood zones… it’s just to what extent. I don’t believe the so called FEMA flood experts have a clue when it comes to flood zones.

  • October 25, 2013 at 2:30 pm
    David W. D. Haynes says:
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    Dear “Unjustified Flood Rates” – you say “There is nothing Socialist about making people pay for actual risk. All areas are flood zones… it’s just to what extent. This is nothing like the Health Insurance Laws which are Socialist.”. when you make people that don’t want to purchase the coverage buy the coverage in order to bring down the prices over everyone, then it is socialist. Okay EVERYWHERE is a flood zone. But I should I be forced to buy if I don’t want. If I have a loss, it should be MY loss not the tax payers. Can the poor, who usually don’t have Renter’s insurance, be forced to buy Flood? Or will the tax payers pick up the tab when there is a loss? I’m told to eat healthy, then shouldn’t everyone be forced to buy heathier food? It will bring the costs down below junk food. I need transportation to work, shouldn’t everyone be forced to buy an automobile so auto cost come down?

    The socialists statement is about mandating for everyone and taking away my right to Assume the Risk. If not, it is just another tax that is not called a tax.

    • October 25, 2013 at 4:52 pm
      Unjustified Flood Rates says:
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      David W. D. Haynes: I’ve read many of the statements on here concerning my idea as being socialist. I understand why people feel that way but as long as the federal government is going to declare these so called non-flood zones disaster areas, I’ll be in favor of requiring flood insurance for everyone with federally backed mortgages. When the federal government quits using taxpayer money to bail out homeowners that refuse to carry flood insurance then I’m strongly in favor of everyone making their own decision.

  • October 25, 2013 at 8:27 pm
    Paul says:
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    Most people think you have to buy flood insurnace with FEMA. They are not the only game in town.

    There is other flood insurance available in most states with Lloyds with better coverage and less $ than the FEMA Program (IMAGINE THAT) ):

    • November 27, 2013 at 4:15 pm
      Chad says:
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      Yes there is, and we provide it. It is actually a much better policy with a much better price. We are Flood Insurance Services in Brighton Colorado

  • October 26, 2013 at 12:30 am
    Rolf Vicker says:
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    My advice to Mr. Dockery is to sue the real estate agents and the prior owner for failure to disclose an issue that had a material effect on yhe value of the property.

    Agents may claim that they were unaware of the flood insurance issue but ignorance of the law is no excuse.

    Settle out of court for whatever the value that has been lost.

  • October 28, 2013 at 10:07 am
    David W. D. Haynes says:
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    Dear Unjustified Flood Rates. I hear and understand the issues. But we have a $5M building in an “X” zone insured through a standard insurance company, not the NFIP. In order for the NFIP to become more financially stable, people are calling for everyone to be forced to buy flood insurance. But that only works if we all are forced to buy from the NFIP. We pay $1,000 for the full $5M limit. Through the NFIP it would cost $2,000+ for just $500,000 limit. I will have to pay more if forced to buy some of the insurance through the NFIP. Is that fair? I agree, the government needs to stop throwing out money everytime there is a claim/situation. But they do it for two reasons: 1) protect their jobs by buying votes from the people that didn’t take care of their own property; 2) it’s not their money they are spending, it is ours and as a country, we keep electing these people.

    • October 28, 2013 at 11:15 am
      Unjustified Flood Rates says:
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      David W.D. Haynes: I couldn’t agree more with your statement

      “the government needs to stop throwing out money everytime there is a claim/situation. But they do it for two reasons: 1) protect their jobs by buying votes from the people that didn’t take care of their own property; 2) it’s not their money they are spending, it is ours and as a country, we keep electing these people.”

      I agree there are much better options than writing through the NFIP I would strongly support eliminating the NFIP all together. This program serves no purpose other than to create unnecessary jobs within the federal government. Private insurance companies have no problem writing this coverage on an actuarially sound basis but they are not going to compete with a government that overcharges some people yet pratically gives coverage to others.

  • October 28, 2013 at 12:22 pm
    John H says:
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    I had a certificate of elevation done, I am -10 at a 16′ base level. My insurance quote as of this week, went to $15.957.00 annually, for a $125,000.00 structure and $10,000.00 on contents, with a $2,000.00 deductable on both.

  • October 28, 2013 at 2:31 pm
    ljf says:
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    Let me guess…Maxine Waters didn’t think health insurance premiums would rise as a result of the requirement to insure for ‘essential health benefits’ coverage under the ACA?

    • October 28, 2013 at 4:12 pm
      Celtica says:
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      IJF: How clever of you to tie government flood insurance to government ACA insurance. Yet one is supported by the GOP and one is not. Makes me wonder if Florida is still a swing state.

  • October 29, 2013 at 3:25 pm
    RA Dundee says:
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    The government giveth (and everyone is happy) and the government taketh away (not such happy campers) the government needs to stayeth out of private business. They really flubbed insurance for your house….and now they are diving into health care…I shudder to think….

  • October 29, 2013 at 3:52 pm
    jack says:
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    All you have to do is look at the pork that was attached to the bill to figure out why it was passed. The same is true with Obumacareless. Follow the money! It’s always about the money!

  • January 12, 2014 at 4:42 pm
    gay isterling says:
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    come someone in the white house,governors office of florida CONGRESS miust have the sense to write a bill that helps seniors families get through the flood insurance fees to go up,this is an insult to retired homeowners work all their lifes to be able to retire in their dream home,way change the rules in the middle of the game,we cannot pay anything over 1,800.00 to 2,000.00 per/yr,we already have 6,500.00 property taxes,2,500.00 insurance on home a small mortgage but we have owned the home since 1996,,flood insurance started at 950.00 a year,now 1,350.00 per/yr.this is getting out of hand for 2 seniors to handle on a fixed income

    • January 14, 2014 at 4:10 pm
      KentU says:
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      TO: gay isterling – The best action is to sell your home and move to something that you can afford without a government subsidy. It isn’t fair for everyone else to help pay to subsidize the cost of your flood insurance.



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