Flood insurance Premiums going up April 1st

Nomad.2nd · Jan 19, 2015

As much as 24% (And yes, down in a couple categories) Also a couple fees.

Congressional action, eliminating SOME subsidies. I believe some areas here still have "holds" on the rate increase.

Check with your agent.

JBP55 · Jan 19, 2015

.....

Nomad.2nd · Jan 19, 2015

Meaning?

CatCam · Jan 19, 2015

So, FEMA and the National Flood Insurance Program (NFIP) state that these rates are necessary because the program is broke because the payouts after Katrina bankrupted the program. What they don't tell you are:
1. The program should be in a surplus of money but in years without flooding all residual money is turned back to the US Treasury.
2. Almost 30% of your flood insurance premium NEVER gets to NFIP -- Independent Insurance agents/companies who "administer" the flood policy take 28% and 2% goes to taxes.....that's right they take 28% WITHOUT any risk because FEMA pays! What a scam. -- but our Fed. government allows it!

Where is the NFIP money for the last 2 hurricane seasons - no storms, very little national flooding? Yeah, gone.

No accountability of this program run by Mr. Craig Fugate. Mr. Fugate's background is that he was an EMT. - no sh!t. Now he is the director of FEMA. Just wow.
http://en.wikipedia.org/wiki/Craig_Fugate

LACamper · Jan 19, 2015

In the insurance agent's/ company's defense there is a LOT of service work that goes into writing and maintaining those policies. Service work takes man hours which equals payroll.

The biggest increase coming is going to be on rental properties. There is a considerable surcharge about to be applied to each policy for homes that are not owner occupied.

Don't blame your agent. The rates are set by FEMA and Congress. We just manage the policies.

CatCam · Jan 19, 2015

Maybe I don't understand the service work as you have stated. All I know is that I call my agent, tell him/her I want (insert tier of coverage) pay bill, rinse, repeat......
When it is time to submit a claim, it never went to State Farm - NFIP sent an independent adjuster to view the flood damage and it went to NFIP. I never dealt with the agent that the home owner's portion of the dwelling. The only thing I get from State Farm is the renewal notice.

Yeah - the real pisser about this is for people who have a vacation house or a rental that are getting hammered by this.

This whole thing is a bunch of Bullsh!t -- It would be like telling everyone who has 2 cars that the 1st one is insured for $1,000/yr, but the 2nd one (same model, year, location, etc.) is $4,000/yr. -- Makes one think about getting a paper divorce so you can each take a house as primary residence.

LACamper · Jan 19, 2015

Service: every time your mortgage company changes there is service work. Mortgage companies call all the time for corrections also (more coverage, map zone changes, etc). Occasionally a map changes and that creates tons of work. Every policy has to be manually reviewed. We also have to review policies to make sure you still have enough coverage (if your coverage drops below 80% of replacement cost you loose part of your coverage). Every time someone calls to complain about the rates or review their coverage. If a storm shows up in the gulf about 25% of my clients call in to make sure they paid their policy... and that all takes time.

Homeowners policies are intended to 'make you whole' ie back like you were before the storm, fire, or other claim. Flood doesn't make that promise. Its goal is to get you back up to liveable. Coverage is sparse on luxury goods. It doesn't pay additional living expenses, which is my biggest gripe (FEMA disaster assistance covers that but its treated like they're doing you a favor, not an insurance guaranteed coverage. I don't like it.). Jewelry and fine arts coverage is almost nonexistant. Antiques are depreciated horribly. Contents are always depreciated. After a flood you can survive but it won't be as good or as much as what you had.

With their attitude in mind think about how they feel about 2nd homes! They don't care. You can survive. A 2nd home is a luxury, live in the other one and fix it yourself. Rental flood insurance goes up, but landlords are going to raise the rent to cover that. Or drop the coverage.

The paper divorce would work but it would be a mess come claim time. If they think you are commiting fraud they will make your life hell. Not worth it for a few hundred bucks.

EJAIII · Jan 19, 2015

All I know is that every agent wants to write flood because it pays 15% and service work is minimal.

CatCam · Jan 19, 2015

Maybe the sting would be less if every policy had a set "administrative rate" but they don't, it is % based -- If a policy cost $500/yr or $5,000/yr. the service work is the same! The way the system is set up, insurance agent would want the $5,000 policy strictly because it is a money maker for them. Trust me man, I see the homes/cars/boats/toys my insurance agent has.......and I haven't seen one insurance company go broke -- not after Katrina or Sandy........

But the bigger problem is not with the insurance companies who administer the policy - it's with NFIP/FEMA and the mortgage "rules"

Here's a situation: Vacation house purchased for $100,000 - going to eventually be a retirement getaway, but purchased about 10 years ago so it can be paid off by retirement time. Flood Insurance rates were very affordable, $900/year at time of purchase. Now the NFIP changes the "rules" and the mortgage company REQUIRES you to carry flood insurance. I have too much equity locked up in the house to just walk away and go to foreclosure -- but now the flood insurance rates are going to climb exponentially to well over $10,000/yr. If you only had $10,000 in the place you would walk away and let it go into foreclosure. And you can't pick up the phone and find another flood insurance co. NFIP is the only game in town.

How was the buyer supposed to foresee these kind of astronomical rate increases? He enters into a mortgage without this information but is forced to pay....or else

Kcabear · Jan 19, 2015

Well this is awesome! First La Citizens goes up 1200% and now flood.

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bwalke1 · Jan 19, 2015

the high rates have to have an impact on the real estate business also, I have been house hunting since September and I have had to back out of two purchase agreements because of flood insurance in excess of $2400 a year for the north Denham springs area that has never flooded. these are 4-6 year old houses. very frustrating to say the least. I really feel sorry for the sellers out there.

Jack · Jan 19, 2015

I personally don't understand how anyone who rails against welfare can also complain that the subsidies that were paying for their flood insurance are going away. Subsidy, government assistance, welfare, etc. It is all the same to me. For people seeking new homes, the flood insurance increase is going to cause a devaluation on the home meaning you can get the home for less money. Simply put, you'll be paying more on the flood and less on the mortgage.

LACamper · Jan 19, 2015

From what I'm hearing the rate increase this year on non-owner occupied properties is about an extra $250 to $300 a year. I haven't dug too far into the rate changes yet (I think I have a webinar in Feb... oh, year the company is providing that at their expense...).

With the revisions in the biggert waters laws I haven't seen any of the huge increases that were predicted (10K to 20K). Some policies are more than they were, but nothing horrendous.

Citizens increased quite a bit, as did other carriers. OTOH, so did roofing. Roofing in the NO area jumped on average from $125 a square to $225. HO rates doubled. Our most frequent storm claims are roofs. Hmmm...

Nomad.2nd · Jan 20, 2015

LACamper said:
. Antiques are depreciated horribly. Contents are always depreciated. .

Antiques are insured for their functional value, (Particularely if you've hit your $2,500 elsewhere) and contents are NOT always depreciated.

You are free to seek non-federally funded flood insurance.

bwalke1 said:
the high rates have to have an impact on the real estate business also, I have been house hunting since September and I have had to back out of two purchase agreements because of flood insurance in excess of $2400 a year for the north Denham springs area that has never flooded. these are 4-6 year old houses. very frustrating to say the least. I really feel sorry for the sellers out there.

Here's an idea:
Don't build where it's likely to flood!

Jack said:
I personally don't understand how anyone who rails against welfare can also complain that the subsidies that were paying for their flood insurance are going away. Subsidy, government assistance, welfare, etc. It is all the same to me. For people seeking new homes, the flood insurance increase is going to cause a devaluation on the home meaning you can get the home for less money. Simply put, you'll be paying more on the flood and less on the mortgage.

EXACTLY!

Just a second, I'll post the increases:

Federal Policy Fee ($25) increase.
Note: Non Primary Residences will receive a $250 surcharge.
Surcharge will be regardless of policy premium.

Pre Firm Non primary: +24%
Pre Firem Residences and Non Residential (NIN SRL Properties +14%

Standard Policies Post firm A Zone:
A1-A30 +9
AO, AH, AOB and AHB +10%
Unnumbered A +12% A99, AR +12%

Standard policies Rated B, C, or X +11%

Preferred Risk policies -2%

Newly Mapped (Formerly Preferred risk Extended Eligibility) -13%

Standard Polices rated with Post Firm V Flood Zone Rates +9%

Severe Repetitive Loss Properties +25%

There are some other changes too much to type. new deductible options ( I would think VERY CAREFULLY before changing that!)

New Federal Policy Fee of $45.

ALSO: There are changes to "Substantially improved buildings"
BE CAREFUL IF YOU RENOVATE A PREFIRM BUILDING.....
You can get a 25% increase

dixiejarhead · Jan 20, 2015

Screw them and their flood insurance. I just mitigate the damage by proper planning. Spending 300-1500 per season to replace paneling and to clean is way cheaper and less headache than paying 2400-3600 per year in flood insurance. And my home has flooded multiple times since it was build. 4 foot of water from Isaac. 2 from Katrina.

CatCam · Jan 20, 2015

The problem with increases is that we are being told that it will increase at 15%-20%%/year till it hits actuarial rates -- The unanswered question is who and how this rate is determined. SO - we enter into a legally binding mortgage contract and then the Federal government changes the rules midstream. Yeah, that seems fair.

Moreover, Craig Fugate states that FEMA is $24B in debt - throws this solely on those who have flood insurance in "newly created" zone areas and says, "here's you new rate"......no Mr. Fugate - OPEN YOUR BOOKS and show us what FEMA has done with the flood insurance premiums paid over the years - YOU SHOULD BE IN A SURPLUS OF MONEY!!! But incompetence and total mismanagement is now my responsibility to fund.

Nomad.2nd · Jan 20, 2015

dixiejarhead said:
Screw them and their flood insurance. I just mitigate the damage by proper planning. Spending 300-1500 per season to replace paneling and to clean is way cheaper and less headache than paying 2400-3600 per year in flood insurance. And my home has flooded multiple times since it was build. 4 foot of water from Isaac. 2 from Katrina.

You were smart enough to buy a house on piers.

Tall ones.

dixiejarhead · Jan 20, 2015

Nomad said:
You were smart enough to buy a house on piers.

Tall ones.

Guilty as charged!

CatCam · Jan 20, 2015

Mine is on piers too -- but will need to be raised to meet new BFE's since there is no grandfathering. NFIP essentially said too bad for you if you built to codes enforced at the time of construction.

What if the NFPA/NEC stated that all homes needed to be a minimum of 10 AWG wire and if your not in compliance your homeowners insurance will be $16,000/yr, no grandfathering of existing homes. Is this fair?

Okay, maybe this scenario - to own a firearm you must have a license to do so, it doesn't matter that you already own them - you must be in possession of a license and it cost $1,000/year. Is this fair? No you don't change the f-ing rules once somebody is "all in".

Kcabear · Jan 20, 2015

CatCam said:
Mine is on piers too -- but will need to be raised to meet new BFE's since there is no grandfathering. NFIP essentially said too bad for you if you built to codes enforced at the time of construction.

What if the NFPA/NEC stated that all homes needed to be a minimum of 10 AWG wire and if your not in compliance your homeowners insurance will be $16,000/yr, no grandfathering of existing homes. Is this fair?

Okay, maybe this scenario - to own a firearm you must have a license to do so, it doesn't matter that you already own them - you must be in possession of a license and it cost $1,000/year. Is this fair? No you don't change the f-ing rules once somebody is "all in".

I feel your pain. The property my house is on has been in my family for 80 years, and the closest we have ever gotten to flooding the house, the water would need to come up another two feet. Thankfully for my safety someone looked at the flood maps and decided since this area hasn't flooded in a century it's due for one so it needs to be a flood zone!
Please excuse my ranting, homeowners insurance is still a sore subject.

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Flood insurance Premiums going up April 1st

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