Flood insurance premiums will be on the rise for many in 2013
Homeowners in New Jersey are finding that it may not be long before the cost of flooding coverage increases.
The Federal Emergency Management Authority (FEMA) held a meeting on January 10, 2013, which was attended by leaders and representatives from local municipalities from New Jersey, at which they were informed that the owners of non-primary residences that were constructed before 1968 would soon see a whopping 25 percent increase to their flood insurance premiums.
The rate increase was set to become effective as of January 1 in order to offset a federal premiums subsidy.
Though those non-primary residence owners have been enjoying that flood insurance subsidy for many years, FEMA has decided that it can no longer be afforded. This has occurred as a result of the very recently enacted Biggert-Waters Flood Insurance Reform Act of 2012. A key provision to this act requires the reduction and eventual elimination of subsidies that would be provided to non-primary homes.
The changes to the flood insurance subsidy apply to pre-FIRM non-primary homes.
The structures that were constructed before the Federal Insurance Rate Maps (FIRM) were established in 1968 had been provided with a subsidy to their flood insurance premiums until this year. Though primary residences may still receive this assistance, non-primary structures will no longer benefit from these subsidies.
A FEMA coastal engineer, Ed Curtis, explained that the non-primary residence subsidized rates will now be phased out over time. He stated that “It’s not all pre-FIRM structures, just those that are non-primary.” He went on to add that “artificially low annual flood insurance premium that does not reflect the true risk of that structure because it’s located on our map in a special flood hazard area.”
Curtis stated that the subsidized rates would be phased out over a period of several years. He shared that the pre-FIRM rates would change when the property owners renew their flood insurance coverage. At that point, there will be an 25 percent increase to the premiums that they pay. He also stated that the owners of those structures had been advised that this increase is on its way and that it had nothing to do with the new flooding zone maps or with Hurricane Sandy.