Posted: Oct 24, 2013 10:06 PM by Erin Steuber
Updated: Oct 24, 2013 10:52 PM
In a state where flooding is as common as rain, hearing flood insurance rates are on the rise comes as no surprise. But how about when the cost of coverage is doubling, tripling, even quadrupling?
That's exactly what is happening to some here in the state. As of October 1st, under the Biggert Waters Reform Act, those with older homes not up to code, living in flood zones, will start feeling a pinch in their pocket book.
Louisiana's congressional delegation met yesterday at the state capitol to figure out if anything can be done to stop this. Lawmakers say the changes mean some homeowners could pay as much as $24,000 in flood premiums. But Louisiana will be fighting back, by suing the federal government.
"These huge rate increase amount to a taking of peoples property, their property rights, the value of their property, without the due process of law," said LA Insurance Commissioner James Donelon.
But why are these changes going into effect? And what does this mean for homeowners?
It's a program that's been around since the late 60's, and now the National Flood Insurance Program, run by the federal government, will no longer provide subsidize on insurance, no matter your provider.
"The main change is that your property will now be rated actuarily, which is by the elevation of the home," said insurance broker Mark Fontenot.
But it won't affect all homeowners; Only homes, or businesses, in a flood zone built prior to their parish joining NFIP. In Lafayette, that means before the 1980's.
"Most of the newer construction is not built in flood zones. But the ones that are should be rated according to what their elevations are, and they should be rated correctly right now," said Fontenot. "Flood insurance on those properties is steadily going up, but it's not going to see the drastic increases the older homes will."
The rate changes will only go into affect if you're buying an older home, or renewing your policy. Some homeowners are already feeling the pinch. A policy that once cost $820 now costs $2,819. That's an increase of 233 percent.
"Well it's going to be on a case by case basis. The higher you are above the base flood, the better the insurance rate will be. If you're at, or below, base flood the insurance rates will be much more," said Fontenot.
The reason for these sudden hikes? Because storms like Katrina and Superstorm Sandy have crippled FEMA, leaving them completely broke.
"They're now trying to get the right rate, for the risk," said Fontenot.
With the changes flood insurance will be treated just like any other insurance, but with a bigger price tag.
"In the past if you had multiple flood loses you were still paying the same rate as someone down the street that had no flood loses," said Fontenot. "So now they are going to actuary rates. If you've had prior claims, especially multiple claims, then you are going to pay more for the flood insurance."