Sunday, July 13, 2014

Obscure law causing flood coverage to spike

November 21. 2013 3:31PM

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The Homeowner Flood Insurance Affordability Act would:

• Delay rate increases for homes and businesses currently “grandfathered” — those built to code and later remapped into a higher risk area. Prior to Biggert-Waters, these policyholders were not penalized for relying on inaccurate FEMA flood maps.

• Delay rate increases for all properties whose owners purchased a new policy after July 6, 2012, but before they were legally required to purchase insurance.

• Delay rate increases for all properties sold after July 6, 2012. New homeowners and business owners will continue to receive the same treatment as the previous owner unless they trigger another provision in Biggert-Waters such as Severe Repetitive Loss, non-primary residence, substantial damage, etc.

• Seek assurances of FEMA’s ability to accurately determine flood risk.

• Establish a flood insurance advocate within FEMA.

• Allow FEMA to use the National Flood Insurance Fund to reimburse costs of appeal to policyholders who successfully appeal a map determination.

Learn more about the Biggert-Waters Flood Insurance Reform Act of 2012 at Follow a national movement against the Act on the “Stop FEMA Now” Facebook page.

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People living in flood plains in the Wyoming Valley and across the nation may not realize it, but their flood insurance premiums could be increasing by thousands of dollars because of a little-known law.

Jeff King, of Regent Street in Wilkes-Barre, was one of those people. His flood insurance premium will increase nearly 600 percent over five years, from just under $1,000 to more than $6,000.

King has been trying to sell his three-story, four-bedroom home, just down the street from Solomon Creek, since July, before he even knew about the increased rates being put in place because of the Biggert-Waters Flood Insurance Reform Act of 2012.

“I received an offer (on the house) a month and a half ago. … The lady contacted (her insurance company) and they gave her an estimate of $7,015 a year. She had to back out,” King said, because the premium rate would go into effect immediately upon sale of the home.

According to the Federal Emergency Management Agency, key provisions of the legislation require the National Flood Insurance Program to raise rates to reflect true flood risk, make the program more financially stable and change how Flood Insurance Rate Map updates impact policyholders.

The changes will mean premium rate increases for some — but not all — policyholders over time, FEMA states on its website.

After thoroughly researching the issue, King is convinced that FEMA pushed uninformed members of Congress to pass the legislation so the agency could shore up its $24 billion deficit attributed to Superstorm Sandy. Now, some of those same members of Congress are working to have the act repealed, he said.

King said that while some smaller local banks only require flood insurance coverage in amounts equal to the balance of a mortgage, larger banks require full replacement value coverage.

“If you don’t get flood insurance, they will take out a policy for you and tack it on to your mortgage,” King said. “It’s not affordable. It’s just impossible. There’s no way anyone could do this.”

U.S. Sen. Bob Casey said Wednesday that he’s backing legislation that would prevent such major flood insurance hikes, noting that Pennsylvania is the seventh most-impacted state in the country.

The Homeowner Flood Insurance Affordability Act would put off rate increases and create an extra step in the review process FEMA uses for determinations about flood insurance. The legislation has been proposed as an amendment to the National Defense Authorization Act, which is on the Senate floor this week.

“Passing this legislation would provide relief for thousands of Pennsylvania homeowners who have seen a significant rise in their flood insurance bills,” said Casey, D-Scranton. “FEMA has to strike the right balance on this issue. Homeowners should be able to get the flood insurance they need without the risk of facing skyrocketing rates.”

Casey said high flood insurance rates “will be a burden on families in Luzerne County. I’m hopeful that Congress will come together and pass this legislation to make the flood insurance process more fair.

King said the act is not much of a help “because it’s only a four-year delay.”

Casey’s office confirmed the legislation would be in effect only until 2017, at which time “another authorization from Congress would be required if additional action was necessary.”

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