While I understand your question was actually rhetorical, I have to say something. I don’t like going to the beach. I hate sand and all the creepy crawlies in the water. Yuck! (oh, I grew up on the beach, I know what a beach is like)
I live in a flood plain area in Kentucky. I was informed by my mortgage holder in 2009 that I was not required to have flood insurance, my house was above the flood elevation. I continued to carry my flood policy for $870 per year. The Flood Insurance Reform Act has revised the flood elevation to 4′ inside my house. I am trying to sell my house now and have signed a contract with a potential buyer. The buyer got a quote under the new flood insurance act of $7300.00.
The buyer wants out of the contract, and needless to say will never be able to sell. The new rates are totally unfair.
I have a home in Cape Haze Florida. I paid 300,00 dollars for seven years ago. It now apprised for half that.
The home was built in 1963 and has never flooded to date! Because of this act, I have been informed my flood insurance rates will increase approx. $400 the first year and twenty five percent a year until I am paying per year flood insurance rates of somewhere between $12 and 15,000 dollars per year!!!! Who can afford that?
The proposed delay in implementing the increase in flood insurance rates – for a select group among all exposed to floods – means politicians who want to kick the can down the road agree the hikes are needed. But they don’t want the rate hikes to go through before they, or members of their party in coastal and inland water boundary areas, are re-elected.
Homeowners who complain about large rate hikes fail to realize that past experience and prior rates aren’t always reliable predictors of future exposure to floods. They assume prior rates were adequate, and increases for future exposure is excessive.
I am one of these homeowners. I don’t feel that we fail to realize that flood insurance is like fire insurance. You carry it for the “what ifs” because no one plans for catastrophes. You are obviously someone who does not have a primary residence effected by B-W. We purchased our home 5 years ago and were in Zone C with the property never having a flood claim in 60 years. We were told we don’t have to carry flood insurance.
A year ago we had to pay out $1000 for flood insurance because the maps were updated and then our mortgage went up because we had to escrow the costs for 2014.
We were just informed that our $1000 policy is not going to be renewed and it will be a $5000 policy when we renew it next week until we get an elevation certificate. We are in the process of this but because of B-W the home we have been raising a family in for the past 5 years may be taken away from us. FEMA will not guarantee that the elevation certificate will even help us because of the new expectations. Even though we budgeted and pay our bills on time, the government decided that we are now in a flood zone and we will be expected to get $5000 out of thin air and continue to pay a mortgage that just increased by over $400 a month in order to save for next years policy.
Disgusting
That’s very sad, I’m sorry to hear you’ve been put in this situation. On an individual level the rate hikes have created many of terrible situations and produced thousands of sad stories which make it very easy to oppose the hikes. However, should the millions of homes that currently pay into the NFIP through flood policies be put at risk of a flood taking away the homes those people have built & spent years and decades raising families if the NFIP can’t afford to pay out claims because several thousand are upset that they’ll have to pay more? Is it fair to expect the taxpayers at large, most of whom have no chance of ever seeing a benefit from the NFIP and chose to live outside of flood zones, to pay for the claims that the NFIP can’t because a couple hundred thousand people don’t want to pay higher rates for the homes they willingly purchased in flood-prone areas? The program is already $34 Billion in debt, money that every taxpayer has paid to cover homes such as yours who’s owners thought paying more was unfair. To me, expecting people who’s homes are not covered by the NFIP, receive little to no benefit from the program, and are at a low risk for flood to pay the money you don’t want to to pay flood claims and return the program to solvency isn’t any better than the NFIP expecting you to pay more. Neither is putting the millions of other policyholders at risk of their claims not being paid despite paying their premiums for years because the NFIP is insolvent.
I get it, the way the rate increases happened and the unintended consequences were handled in the worst way possible. They waited far too long and therefore had to raise premiums way too much way too fast, and the rules of the hike are absurd. The bill’s writers were clearly not very bright and didn’t understand insurance. The impact to families has been horrible, but that said, the alternatives are just as bad or worse. There are alternatives available that Congress hopefully pursues, but before you characterize someone as uninformed or uncaring think of the overall impact to the program as a whole and millions of other policyholders who depend on it.
I am wise enough to not buy a home in or near a flood plain. If I had a remote possibility of such exposure, I’d set up an emergency fund to pay NFIP premiums or other unexpected expenses that arise. Why can’t you take money out of savings to pay those premiums?
Are you admitting you aren’t financially responsible to your family, and don’t have savings for emergencies? If so, you are living too large for your income.
I consider flood plain ruling surprises to be the same thing as a tree falling on your home and you claim you can’t pay the deductible to repair your insured home because you have no emergency savings.
The prior NFIP premiums were not adequate, and the recently approved increases are intended to make the few tens of thousands of people who are exposed to floods pay their own way. It reduces or eliminates subsidies passed onto taxpayers with no flood exposure.
Your comment is non-sense. How could someone plan for insurance in a flood zone when their home has never been in a flood zone until recently? Yes I can pay the increased rates out of saving, but only for a few years before they run out. How many years could anyone pay an extra $10,000 to $15,000 per year of unknown expenses before their savings run out? How do you now sell a home that is in this situation? After my savings run out in a few years, then what? I’ll still have a worthless piece of property and no money left for the insurance.
Anyone who says they won’t personally be impacted are wrong. Many people who live in coastal flood zones work in either the shipping or petroleum industry (or support in some way the people who work in those indurtries). You will see in increase in cost to imported products you buy, the increase as the gas pump, or the decrease in goods you manufactur that get exported in order to fund their flood insurance. Water is life, either for drinking or shipping / commerce.
Also, my house and contents are valued around $150,000. At $15,000 per year in flood insurance, I will have paid off the full amount in 10 years. What is the point of that when I live in an area that, according to FEMA, would only flood once every 100 years (and has never flooded to date)?
January 9, 2014 at 12:53 pm
Mike Meoni says:
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Wait a minute. A lot of the people who bought homes older homes in established neighborhoods in florida were not in a flood zone till the flood maps changed in 03, so the arguement that they knew what they were getting into is bogus. The rise in premiums and the decrease in the values of these homes is a travesty. The subsidy issue is also a joke since the government spends a lot more money to subsidize oil, defense, farming etc… not to mention corporate welfare. These are average americans for the most part that are going to be bankrupted by this right along with local governments.This law needs to be repealed.
Delay is a first step to fixing a broken statute. The main source of the NFIP deficit is that only 44% of premiums have gone to pay losses, with 30% going to WYO insurers for administrative fees. This will get worse under B-W, as it will more than double premiums without touching the insurers’ 30% cut. It is also unfair to make current policyholders pick up the full $24 billion pre-existing NFIP debt, much of which stems from political damage control decisions and poor fraud control following Katrina, costs that have NOTHING to do with the future actuarial risk of a particular property which the public as a whole should share. Looking at how B-W spreads the impact of this old debt on insureds, most of the burden gets dumped on a relatively small subset of owners unlucky enoght to draw higher elevation on new maps, resulting in the absurdity of $10k+ annual premiums for $250k in coverage on homes that, at most, are likely to experience only one $40k claim every 40 years. The federal mandate that mortgaged properties carry insurance traps this subset of owners, most of whom do not enjoy subsidies and are already paying actuarial rates, into having to fund the NFIP debt. Finally, B-W is a tremendously inefficient means of raising revenue because the premium increases have a disproportionate negative impact on property values. In some areas there has already been a 20% hit. NFIP insured properties are probably worth over $3 trillion in property. Even if B-W only has a 1% negative impact on property values overall, it will end up costing insured $54 billion to collect a $24 billion debt.
One sensible way to fix the problem would be to write off half the NFIP debt (a private insurer would not be able to pass ANY of this debt on to future policyholders). Paying the resulting debt over 10 years would require $1.2 billion a year. $540 million of this could be recouped from within current premiums by limiting WYO fees to the 15% cap imposed on health insurers (if a P-C insurer can’t be as efficient as a health insurer it shouldn’t get the benefit of the public’s business). The remainder would be paid by the 6 million NFIP policyholders at $110/yr. per insured, a figure that would not generate a property value hit.The key to NFIP reform is to spread the pain to all stakeholders, not just pile it on a small subset of captive insureds unfortunate enough to have their flood maps chagned.
That explains why most of your comments are so similarly incorrect & uninformed. Regurgitating talking points obviously doesn’t require any deep thought.
What most people fail to understand is that the Biggert-Waters Reform Act of 2012 mostly applies to Pre-Firm structures (structures built prior to their communities entering in the NFIP program). Prior the the BW Act, these structrues were being subsidized by the Governement. So the taxpayer was picking up the bill for these structures that were not adequately constructed to withstand a flood. SOOOOOooo…in a nutshell, the Government handout has ceased. They have pulled subsidies from many Government programs as they now have the overbearing weight of Obamacare…THAT is where your flood subsidy has gone!
Here is a flood quote for my house for someone to buy it. I currently pay $3800 a year… that was what was sent to me from FEMA Aug 31. Now for a $250,000 policy with no contents insured, just the structure… the premium is $30,000/yr. No joke. When I reach full risk, I will pay $300,000 every 10 years! For a 30 year loan that’s $900,000 just in premiums in which I will most likely never have to claim on! That is more than my mortgage. Who could possibly say that this is ok? In 100 years this neighborhood area/land has not flooded. NEVER!
What will a four year delay actually accomplish? People still wouldn’t be able to sell their homes or afford the new rates.
This bill needs to be eliminated and new lear thinking needs to be utilized to prevent the making of ghost towns and ruination of businesses.
Who doesn’t like going to the beach or playing on water. Everyone needs to bear the burden of these extreme storms!!!
While I understand your question was actually rhetorical, I have to say something. I don’t like going to the beach. I hate sand and all the creepy crawlies in the water. Yuck! (oh, I grew up on the beach, I know what a beach is like)
I live in a flood plain area in Kentucky. I was informed by my mortgage holder in 2009 that I was not required to have flood insurance, my house was above the flood elevation. I continued to carry my flood policy for $870 per year. The Flood Insurance Reform Act has revised the flood elevation to 4′ inside my house. I am trying to sell my house now and have signed a contract with a potential buyer. The buyer got a quote under the new flood insurance act of $7300.00.
The buyer wants out of the contract, and needless to say will never be able to sell. The new rates are totally unfair.
I have a home in Cape Haze Florida. I paid 300,00 dollars for seven years ago. It now apprised for half that.
The home was built in 1963 and has never flooded to date! Because of this act, I have been informed my flood insurance rates will increase approx. $400 the first year and twenty five percent a year until I am paying per year flood insurance rates of somewhere between $12 and 15,000 dollars per year!!!! Who can afford that?
The proposed delay in implementing the increase in flood insurance rates – for a select group among all exposed to floods – means politicians who want to kick the can down the road agree the hikes are needed. But they don’t want the rate hikes to go through before they, or members of their party in coastal and inland water boundary areas, are re-elected.
Homeowners who complain about large rate hikes fail to realize that past experience and prior rates aren’t always reliable predictors of future exposure to floods. They assume prior rates were adequate, and increases for future exposure is excessive.
I am one of these homeowners. I don’t feel that we fail to realize that flood insurance is like fire insurance. You carry it for the “what ifs” because no one plans for catastrophes. You are obviously someone who does not have a primary residence effected by B-W. We purchased our home 5 years ago and were in Zone C with the property never having a flood claim in 60 years. We were told we don’t have to carry flood insurance.
A year ago we had to pay out $1000 for flood insurance because the maps were updated and then our mortgage went up because we had to escrow the costs for 2014.
We were just informed that our $1000 policy is not going to be renewed and it will be a $5000 policy when we renew it next week until we get an elevation certificate. We are in the process of this but because of B-W the home we have been raising a family in for the past 5 years may be taken away from us. FEMA will not guarantee that the elevation certificate will even help us because of the new expectations. Even though we budgeted and pay our bills on time, the government decided that we are now in a flood zone and we will be expected to get $5000 out of thin air and continue to pay a mortgage that just increased by over $400 a month in order to save for next years policy.
Disgusting
That’s very sad, I’m sorry to hear you’ve been put in this situation. On an individual level the rate hikes have created many of terrible situations and produced thousands of sad stories which make it very easy to oppose the hikes. However, should the millions of homes that currently pay into the NFIP through flood policies be put at risk of a flood taking away the homes those people have built & spent years and decades raising families if the NFIP can’t afford to pay out claims because several thousand are upset that they’ll have to pay more? Is it fair to expect the taxpayers at large, most of whom have no chance of ever seeing a benefit from the NFIP and chose to live outside of flood zones, to pay for the claims that the NFIP can’t because a couple hundred thousand people don’t want to pay higher rates for the homes they willingly purchased in flood-prone areas? The program is already $34 Billion in debt, money that every taxpayer has paid to cover homes such as yours who’s owners thought paying more was unfair. To me, expecting people who’s homes are not covered by the NFIP, receive little to no benefit from the program, and are at a low risk for flood to pay the money you don’t want to to pay flood claims and return the program to solvency isn’t any better than the NFIP expecting you to pay more. Neither is putting the millions of other policyholders at risk of their claims not being paid despite paying their premiums for years because the NFIP is insolvent.
I get it, the way the rate increases happened and the unintended consequences were handled in the worst way possible. They waited far too long and therefore had to raise premiums way too much way too fast, and the rules of the hike are absurd. The bill’s writers were clearly not very bright and didn’t understand insurance. The impact to families has been horrible, but that said, the alternatives are just as bad or worse. There are alternatives available that Congress hopefully pursues, but before you characterize someone as uninformed or uncaring think of the overall impact to the program as a whole and millions of other policyholders who depend on it.
I am wise enough to not buy a home in or near a flood plain. If I had a remote possibility of such exposure, I’d set up an emergency fund to pay NFIP premiums or other unexpected expenses that arise. Why can’t you take money out of savings to pay those premiums?
Are you admitting you aren’t financially responsible to your family, and don’t have savings for emergencies? If so, you are living too large for your income.
I consider flood plain ruling surprises to be the same thing as a tree falling on your home and you claim you can’t pay the deductible to repair your insured home because you have no emergency savings.
The prior NFIP premiums were not adequate, and the recently approved increases are intended to make the few tens of thousands of people who are exposed to floods pay their own way. It reduces or eliminates subsidies passed onto taxpayers with no flood exposure.
Your comment is non-sense. How could someone plan for insurance in a flood zone when their home has never been in a flood zone until recently? Yes I can pay the increased rates out of saving, but only for a few years before they run out. How many years could anyone pay an extra $10,000 to $15,000 per year of unknown expenses before their savings run out? How do you now sell a home that is in this situation? After my savings run out in a few years, then what? I’ll still have a worthless piece of property and no money left for the insurance.
Anyone who says they won’t personally be impacted are wrong. Many people who live in coastal flood zones work in either the shipping or petroleum industry (or support in some way the people who work in those indurtries). You will see in increase in cost to imported products you buy, the increase as the gas pump, or the decrease in goods you manufactur that get exported in order to fund their flood insurance. Water is life, either for drinking or shipping / commerce.
Also, my house and contents are valued around $150,000. At $15,000 per year in flood insurance, I will have paid off the full amount in 10 years. What is the point of that when I live in an area that, according to FEMA, would only flood once every 100 years (and has never flooded to date)?
Wait a minute. A lot of the people who bought homes older homes in established neighborhoods in florida were not in a flood zone till the flood maps changed in 03, so the arguement that they knew what they were getting into is bogus. The rise in premiums and the decrease in the values of these homes is a travesty. The subsidy issue is also a joke since the government spends a lot more money to subsidize oil, defense, farming etc… not to mention corporate welfare. These are average americans for the most part that are going to be bankrupted by this right along with local governments.This law needs to be repealed.
Delay is a first step to fixing a broken statute. The main source of the NFIP deficit is that only 44% of premiums have gone to pay losses, with 30% going to WYO insurers for administrative fees. This will get worse under B-W, as it will more than double premiums without touching the insurers’ 30% cut. It is also unfair to make current policyholders pick up the full $24 billion pre-existing NFIP debt, much of which stems from political damage control decisions and poor fraud control following Katrina, costs that have NOTHING to do with the future actuarial risk of a particular property which the public as a whole should share. Looking at how B-W spreads the impact of this old debt on insureds, most of the burden gets dumped on a relatively small subset of owners unlucky enoght to draw higher elevation on new maps, resulting in the absurdity of $10k+ annual premiums for $250k in coverage on homes that, at most, are likely to experience only one $40k claim every 40 years. The federal mandate that mortgaged properties carry insurance traps this subset of owners, most of whom do not enjoy subsidies and are already paying actuarial rates, into having to fund the NFIP debt. Finally, B-W is a tremendously inefficient means of raising revenue because the premium increases have a disproportionate negative impact on property values. In some areas there has already been a 20% hit. NFIP insured properties are probably worth over $3 trillion in property. Even if B-W only has a 1% negative impact on property values overall, it will end up costing insured $54 billion to collect a $24 billion debt.
One sensible way to fix the problem would be to write off half the NFIP debt (a private insurer would not be able to pass ANY of this debt on to future policyholders). Paying the resulting debt over 10 years would require $1.2 billion a year. $540 million of this could be recouped from within current premiums by limiting WYO fees to the 15% cap imposed on health insurers (if a P-C insurer can’t be as efficient as a health insurer it shouldn’t get the benefit of the public’s business). The remainder would be paid by the 6 million NFIP policyholders at $110/yr. per insured, a figure that would not generate a property value hit.The key to NFIP reform is to spread the pain to all stakeholders, not just pile it on a small subset of captive insureds unfortunate enough to have their flood maps chagned.
This conversation validates every thing the Tea Party stands for. If you don’t think so, SUCK it up and pay the premium.
I thought the Tea Party stood for “promote corporate profit at the expense of the public good.”
That explains why most of your comments are so similarly incorrect & uninformed. Regurgitating talking points obviously doesn’t require any deep thought.
Isn’t Waters a Democrat????
What most people fail to understand is that the Biggert-Waters Reform Act of 2012 mostly applies to Pre-Firm structures (structures built prior to their communities entering in the NFIP program). Prior the the BW Act, these structrues were being subsidized by the Governement. So the taxpayer was picking up the bill for these structures that were not adequately constructed to withstand a flood. SOOOOOooo…in a nutshell, the Government handout has ceased. They have pulled subsidies from many Government programs as they now have the overbearing weight of Obamacare…THAT is where your flood subsidy has gone!
Here is a flood quote for my house for someone to buy it. I currently pay $3800 a year… that was what was sent to me from FEMA Aug 31. Now for a $250,000 policy with no contents insured, just the structure… the premium is $30,000/yr. No joke. When I reach full risk, I will pay $300,000 every 10 years! For a 30 year loan that’s $900,000 just in premiums in which I will most likely never have to claim on! That is more than my mortgage. Who could possibly say that this is ok? In 100 years this neighborhood area/land has not flooded. NEVER!