California homeowners may soon contend with higher flood insurance premiums
A sudden increase of flood insurance rates in the U.S. may soon force people from their homes. Rising flood insurance costs have become quite common in states like Florida and Louisiana, both of which experience a high degree of exposure to natural disasters. Homeowners in the San Francisco Bay Area may be feeling a great deal of financial pressure from the latest hike in flood insurance rates, however. For many, this coverage may soon become too costly to manage.
Rates growing by 500% in the Bay Area
The National Flood Insurance Program, which accounts for the vast majority of flood insurance policies in the U.S., has a long history of financial turmoil. In an effort to address the program’s ongoing financial issues, federal lawmakers approved sweeping reforms of the program last year. Many of these reforms are set to take effect at the beginning of 2014 and could cause a 500% increase in flood insurance rates for homeowners in the Bay Area.
FEMA continues to revise flood maps
Some homeowners in Contra Costa County have reported that their flood insurance premiums have jumped from $2,100 a year to over $12,600 a year. Some have reported rates increasing to over $40,000 a year. According to the Federal Emergency Management Agency, which manages the National Flood Insurance Program, adjusted rates are meant to reflect “true flood risk.” The agency has been making drastic changes to its flood maps in recent months in order to better accommodate the changing risks associated with climatic phenomena.
Lawmakers may soon take action on flood insurance woes
As reports of major flood insurance rate increases continue to come in, some federal lawmakers are beginning to question whether the reforms designed to solve the National Flood Insurance Program’s problems are actually beneficial. Many lawmakers are keen to wait and see how much of an economic impact the reforms will have before they take action to address any of the potential problems that these reforms could cause.