Rate increases to be delayed until 2015
Federal lawmakers in the U.S. have approved legislation that will delay any large flood insurance rate increase throughout the country until 2015. This is being considered a major victory for homeowners in states like Florida and Louisiana, where flood coverage was quickly becoming impossible to afford. The approval of this legislation comes after several months of homeowners and businesses pressuring lawmakers to take action on the issue of flood insurance coverage. Lawmakers were not expected to take action on the issue until much later in the year, but the legislation has been approved as part of an overarching government spending bill that is expected to be signed by President Obama in the coming days.
Property owners receive some relief from growing insurance rates
Flood protection has been growing more expensive throughout the U.S. due to the Biggert-Waters Flood Insurance Reform Act of 2012. This law sought to rectify the financial issues that are associated with the National Flood Insurance Program. The majority of homeowners and businesses receiving flood protection get their policies from this federal program, but the program itself has been crippled by financial problems for several years now. The program’s financial instability often threatens its ability to pay claims adequately, especially in the wake of a major natural disaster.
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Federal law sought to alleviate insurance program’s financial woes
In an effort to restore the financial stability of the federal program, the Bigger-Waters law allowed for rates to be increased significantly. The Federal Emergency Management Agency, which manages the National Flood Insurance Program, has also been revising its flood maps alongside rate increases. These flood maps identify danger zones that are at risk of flood disasters. Properties found within these zones must have flood protection. Revised flood maps have put many more properties into danger zones, thereby forcing homeowners and businesses to pay for coverage they did not need in the past.
Delay may be a boon for homeowners and businesses alike
The legislation approved by Congress is set to delay any significant flood insurance rate increase until 2015. This will allow time for government committees to examine the potential economic impact higher flood protection rates would have. Many real estate associations have expressed concerns over growing insurance rates, suggesting that more expensive insurance coverage could damage the still fragile housing market.