If you haven’t heard about the changes that were implemented to the National Flood Insurance Program, now is the time to start reading.
The changes have rate premiums soaring sky high for most Key West home owners.
Florida Keys
homeowners are being hit very hard
with the rate changes. The rate increases are a result of FEMA’s National Flood
Insurance Program, which kicked into effect October 1st as part of the 2012
Biggert-Waters Flood Insurance Reform Act.
This new law is attempting to stabilize the National Flood Insurance Program which is running a $24 billion deficit since Hurricane Katrina hit in2005. Most Keys homeowners who have a mortgage are dependent on rates that are subsidized by the NFIP. These subsidies allow homeowners to obtain affordable flood coverage. But those who have purchased a second home and pre-FIRM houses are being hit the most with the new rates. Pre-FIRM
houses are those that were built
before January 1975 which is when FEMA’s first flood insurance rate map was
established. Many of these homes are built at or below base flood elevation.
The city of Key West’s FEMA coordinator spoke recently at a
meeting at the Harvey Government Center on Truman Avenue. He explained that
since record keeping began in 1978, there have been a total of 4,000 flood
claims, give or take a few hundred, which are paying out $170 million. $164
million of those claims were directly tied to Hurricane Wilma in 2005. During
the same time frame, around 8,000 current policy holders in Key West have paid
$279 million in premiums. That’s a profit of $110 million.
The same coordinator said that there might be some relief
coming. FEMA’s Community Rating System requires a municipality to
comprehensively document regulations, warning, response and public information
campaigns. If the documentation is accepted by the feds, the result could be a 10 percent discount.
A representative from St. Petersburg-based Wright Flood
agreed with the Key West FEMA coordinator.
Patty
Templeton-Jones said “I don’t know how to put this…
Florida is a donor state. We have more premiums coming in than we
have claims being paid.” In Key West, out of the 8,185 policies, 3,007 will be
affected by the rate change.
Some state officials have called for a delay in Biggert-Waters taking effect and the state of Mississippi has filed a lawsuit against the federal government to stop the new regulations. It’s possible that a local solution may help ease the situation but such a solution will be many years in the making.
For current Key West homeowners, the best thing you can do
is be informed. Call your insurance company to find out what your current rates
are and if you should be expecting an increase. Before buying or selling your
Key West home,
check with me,
Jimmy Lane, at
Key West Real Estate to
find out what your insurance situation will be before making a change.
