Flood Insurance Part 1
Are you ready for October 1 flood insurance changes? In Florida, it’s anticipated that the changes will affect a number of properties and the premiums that are being paid for flood insurance.
Here’s why your flood insurance rates may be going up. The Flood Insurance Act of 2012 also known as the Biggert-Waters Flood Insurance Reform Act of 2012 was passed in July 2012. What it requires is that FEMA and other emergency agencies make changes in the administration of the National Flood Insurance Program.
There will be changes to all the major parts of the Flood Insurance program such as the flood insurance premium, flood hazard maps, grants and funding. One big change is that the National Flood Insurance Program will be required to raise rates to reflect true flood risk which will make the program more financially viable and stable. The primary goal is to make sure that FEMA is fully funded and ready to respond to disasters without having to ask the Federal government for funding to cover these disasters. The good thing is that these changes are not all happening at once but rather are being phased in, starting this year, and over several years.
The National Flood Insurance Program was established in 1968 by Congress as most insurance companies were specifically excluding flood insurance coverage from the policies that they were writing for homeowners insurance. In communities that adopted floodplain management and minimum standards for new construction the home and business owners were able to buy flood insurance. The problem began when the owners of these properties didn’t have to rebuild their properties to the updated higher standards and then were also getting subsidized rates for these under qualified properties.
The National Flood Insurance Program became unsustainable and the costs of flooding and natural water disasters have only continued to increase. The only way to make sure that the program was kept in place is to have the premiums it’s charging reflect the real costs and risks associated with flooding and insuring properties that may flood in the future.
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