Large Flood Insurance Rate Hikes Loom On Horizon
MIAMI (CBSMiami) – Thousands of homeowners across Florida are set to see major increases in their flood insurance costs if the federal government doesn't act to delay or cancel the rise in rates.
The rate hikes are part of the Biggert-Waters Flood Insurance Reform Act that was passed in 2012 with bipartisan support in both houses of Congress.
The bill was originally drafted to keep the national flood insurance program solvent after a large number of claims following Hurricane Katrina. The law ends all federal subsidies for flood insurance for properties in flood zones.
According to the law, most people who live in their homes won't see major rate hikes until the house is sold. In addition, anyone who has suffered severe or repetitive loss on their property will see a 25 percent increase annually until the rates are in line with the average. Subsidized policy holders in high-risk flood zones can also see rates rise between 16-17 percent next year and after that anywhere up to 20 percent, according to Reuters.
A Florida House subcommittee received several options earlier this week that could help residents fend off the federal subsidies ended. The proposals included lifting state laws and regulations to attract more private insurance to setting up a state backed agency similar to the Florida Hurricane Catastrophe Fund, according to the News Service of Florida.
House Insurance and Banking Chairman Bryan Nelson, R-Apopka, said the immediate need is to get Congress to postpone implementation of the Biggert-Waters Flood Insurance Reform Act. The postponement would give the state time to review the impacts of the change, Nelson said.
Gov. Rick Scott has asked U.S. Sens. Bill Nelson, D-Fla., and Marco Rubio, R-Fla., for help to ward off "the potential impact to Florida's economy" of the act.
Senator Bill Nelson filed legislation to delay the rate hikes, but Senator Marco Rubio has not said how he would handle the rate hikes mainly because he feels none of the plans offer "long term solutions."
The fear among real estate experts and economists is that the large hike in rates could depress home values, decreased sales from buyers not willing to pay the larger bills, and even some foreclosures in coastal communities.
Mississippi has taken the government to federal court looking for an injunction that would stop the rate hikes from taking effect next week.
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