Flood insurance could become costlier in Vermont and elsewhere
With the Eastern U.S. having been battered by recent storms, flood insurance is at the forefront of many homeowners’ minds. Before the summer is over, the East Coast is likely to experience further storms, though the severity of these potential disasters is impossible to determine currently. While natural disasters may be unpredictable, Vermont officials are preparing for the worst case scenario, and that means warning residents of the potential for rising flood insurance rates.
Regulator warns of impending rate increase
The state’s Commissioner of the Department of Financial Regulation, Susan Donegan, has issued a warning to homeowners throughout the state concerning the dramatic increase in flood insurance rates that may be on the way. While Vermont managed to avoid the worst of the damage caused by 2012’s Hurricane Sandy, the storm dealt a heavy financial blow to the National Flood Insurance Program. Because flood insurance is well within the jurisdiction of the federal government, a powerful storm that strikes one state can have an impact on the flood insurance policies in others.
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Flood insurance sparse in Vermont
According to Commissioner Donegan, water is a problematic issue when it comes to insurance coverage. Typically homeowners insurance policies offer some protection when it comes to the matter of storm damage, but these policies usually only cover damage caused by wind and, in some cases, fire. These policies also protect against theft, but do not offer any form of protection when it comes to flood damage. Instead, homeowners are required to purchase flood insurance coverage from the National Flood Insurance Program, which has been burdened with financial struggles since 2005’s Hurricane Katrina. The problem, however, is that the majority of homeowners do not know that flood damage is not covered by their homeowners insurance policy.
FEMA may determine higher rates for flood protection
Commissioner Donegan has begun to warn homeowners throughout Vermont that flood insurance rates are likely to spike in the near future. Exactly how high flood insurance rates will go is impossible to say. The Federal Emergency Management Agency is responsible for the National Flood Insurance Program and is, therefore, somewhat involved in introducing higher rates for coverage.