Even with the overhaul of the federal program, the prices homeowners will pay will still be higher.
Millions of homeowners across the country were breathing a sigh of relief when the flood insurance law was reformed in order to bring down some of the skyrocketing rates for that coverage, but many continue to face much higher premiums than they have seen in previous years.
The rising cost of this coverage may not be as high for some homeowners as expected, but it’s still going up.
The subsidies through the National Flood Insurance Program caused it to face a severe deficit and a 2012 law was designed to help to ensure that the premiums better reflected the risk presented by a specific homeowner’s property. What hadn’t been anticipated is that the premiums would spike to the point that bills were doubling, tripling, and quadrupling. In fact, there were instances of premiums that were fifteen times higher than they had previously been.
The latest reform to the flood insurance law has rolled the premiums back from where they’d jumped.
As of Friday, that bill was signed by the president, bringing much needed relief to many homeowners. At the same time, up to 1.1 million policyholders who are continuing to receive the government subsidy will still be seeing increases to their rates that will gradually go on rising over time.
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Though no one is quite certain as to how high the rates will eventually rise, concern is returning to the towns and cities that are dependent upon affordable protection to keep their housing markets alive and to keep their businesses going.
Despite the fact that the premiums are nowhere near where they would have been if the previous version of the law was left in place, the rates are still increasing by a large amount, and they can continue to do so with each passing year. On average, rates can rise up to 15 percent per year (with no individual policyholder facing an increase of more than 18 percent per year).
This has essentially delayed the flood insurance premiums that would have gone into effect all at once if the previous form of the law had been left alone. Now it is a matter of discovering what this extra time has bought for at risk homeowners.