Flood insurance rates skyrocket for Florida homeowners
TAMPA, Fla. - While home and car insurance bills surge in Florida, the federal government is driving up the cost of flood insurance, which consumer advocates warn could force people to drop the coverage, which is required by most mortgage companies.
The federal government subsidizes flood insurance, because if it didn’t, many working-class families could not afford to buy it and would face the risk of losing their homes in a flood.
In the past, FEMA has assessed risk and set flood policy rates based on a home’s distance to water. But, the agency said it has figured out how to more accurately project the chances that any given home will flood.
FEMA’S new formula uses ground elevation, height of the first floor, foundation type and other factors to assess risk based on factors unique to individual homes. The new formula aligns prices to actual flood risk, which should reduce rates for some and raise rates for others – and it is.
But across the Tampa Bay area and much of Florida, it is substantially raising rates for most – on average more than doubling costs.
"Sometimes it’s as much as four times higher," said Ed Kearns of the First Street Foundation. "It is a wakeup call as reform is being brought to the national insurance program," said Kearns.
On average, Hillsborough homeowners are paying $1,400 more a year when they renew their flood policies. In Pinellas, rates are up $1,700 more per year on average.
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Add in the rising costs of car insurance, homeowner’s insurance, rising utility costs, and the rising costs of everything else, homeowners are really getting squeezed.
Doug Quinn is a consumer watchdog with the American Policyholder Association. He said the cost will force many homeowners to drop their flood policies.
"FEMA’s own study shows over the next few years they will lose approximately 20% of their base, because they will be priced out of the market," said Quinn, noting that "for most people who have mortgages, this is a mandatory product."
Florida and several other states are suing, on the claim that re-pricing flood insurance in this way undermines the intent of Congress in creating subsidized insurance in the first place.
And, they said the new formula may not be more accurate as FEMA claims, because it does not factor in things like changes local governments have made to make their communities less likely to flood.
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But unless or until that lawsuit prevails, these new changes are in effect significantly driving up rates for most.
At the same time, the Florida legislature added a requirement that if you have state-run Citizens Insurance for homeowners’ coverage, you must buy this separate flood coverage.
So, starting in 2024, any Citizens customer with $600,000 or more in replacement costs will have to purchase this newly priced flood insurance. And all other Citizens customers will have to buy it within three years.