We’ll see if this goes into effect. Some homeowners will get large rate increases, they will squawk about it, and the government will relent and forgive them under the “it’s always somebody else’s fault and others will pay for it” legislative bill.
Another stick it to the rich plan. Why should value have anything to do with premium if the person that owns a home worth $1mil gets the same $250,000 in coverage as the the person with a $250,000 home?
Well, for one thing, the amount of damage required to meet that 250k limit. A 5 million dollar house with minimum damage may rack up a 250k bill because of the luxury materials, whereas, a 250k house would have to be a full loss.
PML don’t just mean “Pardon Me, Lady”. Probable Maximum Loss – easier to lose 100% of value on my little house in the swamp, than 25% of value on Mr. Big’s home on the bayou.
FEMA flood insurance is a government subsidy to make flood insurance more affordable for people in high risk zones. The original intent was to provide assistance for people who needed flood insurance in order to get into a home they could afford. What is happening now is that people are building/buying homes in high risk flood zones and utilizing that subsidy because they want an ocean view or lakefront property. Those high value home owners or not being asked to pay more…their subsidy is just being reduced because that was/is not the intent of the program.
I live in Pearland, TX. When we purchased our home 3-years ago, it was not located in a flood zone. Nor did any of the homes in the neighborhood flood during catastrophic hurricane Harvey rains. We had street flooding and full drainage areas, by design, but not one home went under water. Now FEMA has moved us into a 100-year flood zone despite not paying any claims in our subdivision. It is just another attempt at a government money grab. We should be able to get out of it, but we have to have a flood elevation survey completed, which will be expensive. Fortunately our MUD district is paying for those, but that will ultimately come back to us again when it is time to pay our MUD taxes. Thanks again for your help, you overreaching government hacks…..
The fact that sea levels are rising faster and faster is why you’re now in a 100 year flood zone (not government overreaching). Unless you can prove FEMA’s risk rating 2.0 wrong, you have no case. I’m pretty sure they’re prepared for such arguments and are ready to stand by their numbers. Considering that every time we’ve heard some prediction about how soon and how bad things are gonna get with global warming, it’s only a year or two later and they’re like” oh w8 we were wrong, it’s gonna be 3x worse by then etc.”. Maybe they’ve been sugar coating it, or maybe FEMA suddenly figured out the facts about “how bad and when”, or maybe you’re actually in a 50 year flood zone and research still has it wrong. I’m betting on the latter.
Everyone is in a flood zone. You are special hazard (A or V) or you are low to moderate risk (B,C,X) where your lender will not require you to have flood insurance.
The value of the structure affects the cost of repairs. the higher the value the higher the repair costs.
FEMA has tried such responsible risk rating initiatives like this many times in the past but when impacted property owners feel the direct impact to them they raise hell with their congressional representatives which has historically resulted in the congress forcing the reversal of the rate increases. Lets see how long these increases last. With a deficit of about $20 billion, this is long overdue, if allowed to remain in effect. As sea level rises and global weather patterns change, regardless of the causes, this initiative is long overdue.
I spent almost 40 years with that program in D.C. so I speak from experience with such actions, or attempted actions.
JoeC, FEMA data tell us that approx. “27% of flood claims occur in non-SFHA zones”. Isn’t their inability to identify the high risk zones more quickly an epic failure on their part as well?
Or how about only raising rates in areas that have had issues? If your home has been flooded in the past, then you should no longer be located in a non-flood zone and should expect your rates to rise accordingly since one of the best indicators of future loss potential is still past loss history. But they can’t seem to figure that out. Rather, just move every area located within one mile of a creek into a flood zone now, without regard to home elevation. Simply put, if we didn’t flood in Harvey, then it ain’t gonna happen!!!!! I mean, wasn’t that considered to be a 500-year storm?
That would only work in areas where maps existed when the homes were built. It’s complicated. The easy solution is for the government to force flood coverage onto homeowners policies. All of them. An extra $50 premium on every single homeowner policy in the nation could pay for the losses, and then after about 10 years we would have an extremely clear picture of where the REAL high risk flood areas are.
The ACA individual mandate holds they key to this. If a government can force you to buy health insurance they can force you to buy flood insurance. The latest ruling upheld the dissolution of the mandate but who knows in a stacked court.
April 6, 2021 at 9:10 am
William B says:
Like or Dislike:
0
1
Will this effect homeowners or commercial businesses as well? Assuming rates will be going up for both in high risk zones?
Like most governmental programs, this knee jerk reaction to a $20 billion deficit continues to show the lack of understanding about what insurance is supposed to be. The “flood” peril should be treated like all other “insured” perils in order to create the “spread of risk” necessary to properly fund losses. The Western US wildfire insurance cancellation scenario is much the same. The California Fair Plan is destine to become insolvent while, at the same time, the value of homes in high brush areas will likely drop as people discover the difficulties of finding reasonably priced insurance. Not that everyone should be penalized with higher insurance costs but a true actuarial analysis would likely reveal a modest premium component assigned to all homeowners policies would be a more equitable solution much like what was done with terrorism coverage. After all, we’re paying premium for all the other perils which is, in essence, pooled by the insurance companies and can be done for flood and/or any other catastrophic exposures.
This article does not tell me much because it does not specify the actual zones. I am in an “X” Zone which is low to moderate risk in DFW and I pay 412 / year for 250K Building and 100K personal property. I have long believed I am subsidizing higher risk properties due to the fact I have such a low probability of flooding. Anyone know if I am likely to experience a decrease?
We’ll see if this goes into effect. Some homeowners will get large rate increases, they will squawk about it, and the government will relent and forgive them under the “it’s always somebody else’s fault and others will pay for it” legislative bill.
Hidden due to low comment rating. Click here to see.
Well, for one thing, the amount of damage required to meet that 250k limit. A 5 million dollar house with minimum damage may rack up a 250k bill because of the luxury materials, whereas, a 250k house would have to be a full loss.
The rich can afford to self insure, it will hit the middle class homeowners since they have a mortgage.
PML don’t just mean “Pardon Me, Lady”. Probable Maximum Loss – easier to lose 100% of value on my little house in the swamp, than 25% of value on Mr. Big’s home on the bayou.
FEMA flood insurance is a government subsidy to make flood insurance more affordable for people in high risk zones. The original intent was to provide assistance for people who needed flood insurance in order to get into a home they could afford. What is happening now is that people are building/buying homes in high risk flood zones and utilizing that subsidy because they want an ocean view or lakefront property. Those high value home owners or not being asked to pay more…their subsidy is just being reduced because that was/is not the intent of the program.
I live in Pearland, TX. When we purchased our home 3-years ago, it was not located in a flood zone. Nor did any of the homes in the neighborhood flood during catastrophic hurricane Harvey rains. We had street flooding and full drainage areas, by design, but not one home went under water. Now FEMA has moved us into a 100-year flood zone despite not paying any claims in our subdivision. It is just another attempt at a government money grab. We should be able to get out of it, but we have to have a flood elevation survey completed, which will be expensive. Fortunately our MUD district is paying for those, but that will ultimately come back to us again when it is time to pay our MUD taxes. Thanks again for your help, you overreaching government hacks…..
The fact that sea levels are rising faster and faster is why you’re now in a 100 year flood zone (not government overreaching). Unless you can prove FEMA’s risk rating 2.0 wrong, you have no case. I’m pretty sure they’re prepared for such arguments and are ready to stand by their numbers. Considering that every time we’ve heard some prediction about how soon and how bad things are gonna get with global warming, it’s only a year or two later and they’re like” oh w8 we were wrong, it’s gonna be 3x worse by then etc.”. Maybe they’ve been sugar coating it, or maybe FEMA suddenly figured out the facts about “how bad and when”, or maybe you’re actually in a 50 year flood zone and research still has it wrong. I’m betting on the latter.
Everyone is in a flood zone. You are special hazard (A or V) or you are low to moderate risk (B,C,X) where your lender will not require you to have flood insurance.
The value of the structure affects the cost of repairs. the higher the value the higher the repair costs.
FEMA has tried such responsible risk rating initiatives like this many times in the past but when impacted property owners feel the direct impact to them they raise hell with their congressional representatives which has historically resulted in the congress forcing the reversal of the rate increases. Lets see how long these increases last. With a deficit of about $20 billion, this is long overdue, if allowed to remain in effect. As sea level rises and global weather patterns change, regardless of the causes, this initiative is long overdue.
I spent almost 40 years with that program in D.C. so I speak from experience with such actions, or attempted actions.
JoeC, FEMA data tell us that approx. “27% of flood claims occur in non-SFHA zones”. Isn’t their inability to identify the high risk zones more quickly an epic failure on their part as well?
Or how about only raising rates in areas that have had issues? If your home has been flooded in the past, then you should no longer be located in a non-flood zone and should expect your rates to rise accordingly since one of the best indicators of future loss potential is still past loss history. But they can’t seem to figure that out. Rather, just move every area located within one mile of a creek into a flood zone now, without regard to home elevation. Simply put, if we didn’t flood in Harvey, then it ain’t gonna happen!!!!! I mean, wasn’t that considered to be a 500-year storm?
That would only work in areas where maps existed when the homes were built. It’s complicated. The easy solution is for the government to force flood coverage onto homeowners policies. All of them. An extra $50 premium on every single homeowner policy in the nation could pay for the losses, and then after about 10 years we would have an extremely clear picture of where the REAL high risk flood areas are.
The ACA individual mandate holds they key to this. If a government can force you to buy health insurance they can force you to buy flood insurance. The latest ruling upheld the dissolution of the mandate but who knows in a stacked court.
Will this effect homeowners or commercial businesses as well? Assuming rates will be going up for both in high risk zones?
Like most governmental programs, this knee jerk reaction to a $20 billion deficit continues to show the lack of understanding about what insurance is supposed to be. The “flood” peril should be treated like all other “insured” perils in order to create the “spread of risk” necessary to properly fund losses. The Western US wildfire insurance cancellation scenario is much the same. The California Fair Plan is destine to become insolvent while, at the same time, the value of homes in high brush areas will likely drop as people discover the difficulties of finding reasonably priced insurance. Not that everyone should be penalized with higher insurance costs but a true actuarial analysis would likely reveal a modest premium component assigned to all homeowners policies would be a more equitable solution much like what was done with terrorism coverage. After all, we’re paying premium for all the other perils which is, in essence, pooled by the insurance companies and can be done for flood and/or any other catastrophic exposures.
This article does not tell me much because it does not specify the actual zones. I am in an “X” Zone which is low to moderate risk in DFW and I pay 412 / year for 250K Building and 100K personal property. I have long believed I am subsidizing higher risk properties due to the fact I have such a low probability of flooding. Anyone know if I am likely to experience a decrease?