Flood insurance rates expected to rise in wake of Hurricane Sandy
More than six months have passed since Hurricane Sandy barreled into New York and New Jersey. The two states suffered horrendous damage from the storm, but not from its strong winds. Floods caused the majority of the damage associated with Hurricane Sandy, which has proven to be a problematic issue for the victims of the powerful storm, especially those without flood insurance protection. The uninsured and the uninformed suffered serious losses due to the storm, with most believing their homeowners insurance policies offered some protection against floods. While many people continue to struggle for recovery, the costs of flood insurance are expected to get significantly higher in the wake of Hurricane Sandy.
National Flood Insurance Program continues to face financial turmoil
Flood insurance is well within the jurisdiction of the U.S. government. The National Flood Insurance Program accounts of the vast majority of the country’s flood insurance policies and manages the costs related to flood disasters throughout the U.S. Since 2005’s Hurricane Katrina, the National Flood Insurance Policy has been immersed in an ongoing financial struggle. Years of constant storms that have produce heavy rainfall and storm surges have added to this struggle and the National Flood Insurance is ill equipped to continue handling such disasters at a high frequency.
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Rates may be affected by powerful storm
The financial problems of the federal program have slowed the recovery process in New York and New Jersey considerably. Though many consumers have flood insurance protection through the program for their homes and other property, some claim payments have been delayed due t the financial fragility of the National Flood Insurance Program. These delays have been harshly criticized by state officials, but the federal program can do little to address the issue effectively, apart from raising rates on coverage.
FEMA to revise flood maps to address rate issue
The National Flood Insurance Program is managed by the Federal Emergency Management Agency, which does not operate the federal program as a for-profit business. FEMA determines rates for flood insurance based on the region in which homes are located. Costs are typically higher for properties in risk-prone areas than they are elsewhere. FEMA does not typically raise rates on flood insurance coverage outright, but the federal agency has been working to revise its flood maps to effectively raise the cost of coverage in some parts of New York and New Jersey. According to these revisions, those that do not make drastic adjustments to their properties will face higher flood insurance costs, with some premiums reaching as much as $1,000.