Flood protection will become significantly more expensive for coastal homeowners
Flood insurance rates for coastal properties throughout the United States will rise in April. Rates will rise as a result of the Homeowners Flood Insurance Affordability Act of 2014. The legislation was meant to address the growing issue of expensive flood insurance coverage. One of the provisions of the legislation was meant to delay rate increases for a time, but coastal properties are expected to see significant rate increases due to the other provisions of the law.
Coastal properties are exposed to serious flooding risks
Coastal properties represent a serious risk due to their exposure to natural disasters that can cause flooding, such as hurricanes. In the past, hurricanes and heavy rainfall have proven to cause significant damage to properties, placing the National Flood Insurance Program under considerable financial strain. The federal program is typically the only place that homeowners can find the flood insurance coverage they need, but the program has been struggling to overcome financial setbacks that were caused by powerful storms in the past.
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Insurance premiums expected to rise by an average of $500
Exactly how much flood insurance premiums will increase depends on numerous factors. According to estimates from 2013, some coastal homeowners could see their annual premiums reach $20,000 a year. For the majority of homeowners, however, premiums are expected to rise by an average of $500 a year. For some, their flood insurance premiums may become more expensive than their current mortgage, which may present significant financial problems for consumers that are already struggling to pay for their expensive flood protection.
Government subsidies may no longer help homeowners afford the flood insurance protection that they have
Premium increases are expected to affect more than 1 million homeowners that are currently living in coastal regions. The vast majority of these people already have flood insurance coverage, part of the cost of which is being covered by government subsidies. The federal government is phasing out these subsidies, however, which will make flood insurance coverage more expensive in coastal regions.