Flood Insurance Premiums Not Increasing

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blog-author-clayjeffreys3

Flood insurance premiums are not increasing… for now at least. Congress passed a bill in 2012 (The Biggert-Waters Flood Reform Act for those who are curious about the bill’s name) that would increased flood insurance premiums to help bring FEMA’s flood insurance program out of its current deficit.

The housing industry (realtors and mortgage) argued this would hurt housing affordability and home values by slowing real estate sales and financing. With President Obama recently signing a bill that would delay those increases, it gives all sides an opportunity to come up with other solutions (and hoping a major natural disaster doesn’t occur in the meantime).

One of the proposed options to deal with flood zones would solve both problems – not needing the higher premium and less exposure for natural disasters. In Obama’s recently signed bill, there is money available to begin buying out homeowners in flood-prone coastal areas. The idea would be buyout homeowners, demo the homes to return the land to their natural states, and create a buffer zone against future flooding. Missouri worked through a similar program with FEMA that has offset millions in potential flood loss in the Mississippi River areas.

By keeping flood insurance premiums from increasing, it will continue to help the housing recovery without worrying about higher monthly payments from increased flood insurance – not to mention those who already own homes in flood zones who would see a dramatic increase in their monthly payments. So that part is good for the housing market… maybe not good for tax payers if there is another massive natural disaster.

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