Homeowners are finding that their flood protection costs are increasing rapidly
Reforms to the National Flood Insurance Program have been passed, but these changes may have little impact on the actual cost of flood protection in many parts of the U.S. The reforms were meant to limit the rate at which flood protection becomes more expensive, but homeowners in many parts of the country could face “extreme costs” when it comes to their coverage in the coming months. In Winona County, Minnesota, for instance, homeowners are being told to brace for rate shock as flood protection becomes more expensive.
Homeowners in Winona County report that their insurance rates are doubling
In Winona County, some homeowners are seeing their flood insurance rates double. This is largely due to the changes that have been made to the National Flood Insurance Program and how the Federal Emergency Management Agency revises its flood maps. Recent reforms to the federal program place limits on how quickly insurance rates can be increased, but these reforms place no limit on how much rates could be increased at a time.
FEMA revisions to flood maps make coverage more expensive
Notably, many homeowners in Winona County are never affected by flood disasters. This means that many of these homeowners never use their insurance protection, but are still subject to higher rates for their coverage. FEMA has been revising flood maps for much of Minnesota in order to better account for the risks that the state faces when it comes to natural disasters. Homeowners that were not previously located in areas that were subject to a high risk of flooding are now finding themselves located in so called “risk zones.” This means that their coverage is becoming significantly more expensive and will continue to grow more costly in the coming years.
Expensive flood protection could hurt the housing market
Flood insurance reform has been sparked by outcry from consumers and real estate groups, but reforms may not be able to address the consumers that many people have concerning the costs of their insurance coverage. In states like Florida, insurance rates are growing at a rapid rate, and real estate groups suggest that growing insurance rates may have a powerful, negative impact on the housing market.