EDITORIAL

Skyrocketing flood insurance

Posted 3/6/14

It’s hard to imagine that, when the state Congressional delegation unanimously voted to bail out the National Flood Insurance Program by eliminating federal subsides, they didn’t foresee what it …

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EDITORIAL

Skyrocketing flood insurance

Posted

It’s hard to imagine that, when the state Congressional delegation unanimously voted to bail out the National Flood Insurance Program by eliminating federal subsides, they didn’t foresee what it would mean for thousands of Rhode Islanders.

The bill they passed – the 2012 Biggert-Waters Act – initiated a phase out of insurance premium subsides for primary residences and completely eliminated them for businesses and recent home buyers. And from a financial perspective, what they did made good sense. Primarily because of the devastation of Hurricane Katrina and Super Storm Sandy and what was paid in claims for those storms, the insurance program faces a $24 billion deficit. If the program was going to survive, it needed homeowners to carry a greater percentage of the risk [about 45 percent of those with flood insurance have subsidized premiums].

But what clearly wasn’t thought out was the impact such action would have on some of the older neighborhoods, such as Conimicut, Oakland Beach and Buttonwoods. Many newer homes in these communities were built in accordance with federal flood codes implemented in the 1970s. They were designed to have living areas above flood elevations as established by the Federal Emergency Management Agency and withstand storm surges.

But there are far more older homes in these neighborhoods. Many of them have survived multiple storms, including the hurricane of 1938 and Hurricane Carol.

Under the Biggert-Waters Act, these homeowners are being told they can expect premiums to skyrocket. We have heard of rates as high as $32,000 a year for $250,000 of coverage.

It is no wonder, at these costs, that homeowners are looking to sell, although it is doubtful they will get what they think their properties are worth. Others, we have been told, are resigned to losing their property and, rather than invest anymore, have ceased to pay mortgages, insurance and even taxes. We have also been told there could be more “accidental” house fires.

When the full picture of the Biggert-Waters Act’s effects came into focus, our Representatives and Senators joined others from across the country to put the brakes on the rapid escalation in insurance premiums. In the latest effort, the House approved an amendment Tuesday that recognized certain “grandfathered” properties and spread out implementation of higher rates.

It offers a breather, but not a long-term solution to insuring those faced with the risks of being flooded.

Such a breather is welcome, but it is also just as clear that, unless steps are taken to reduce flooding by raising the elevation of living spaces, homeowners are going to have to pay higher premiums or self-insure.

Our federal lawmakers misread the impact of phasing out the government’s financing of the program. Now, going forward, they need to seek ways for people to afford to stay in their homes and take the steps to minimize their losses when the next major storm hits, otherwise there will be a crisis of another kind – empty houses and blighted neighborhoods.

Comments

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  • JohnStark

    Two points here. First, the people who will be screwed by this are the very same people who will line up to re-elect this congressional delegation because democrats are for the "working people". Good grief!

    Second, flood insurance is only required if the homeowner has a mortgage. In the next 5-7 years, it is likely that many of these homes (and certainly those on the water) will be sold for cash to out of state buyers who will use them as vacation homes. Waterfront property in Warwick currently sells for about one-third of comparable waterfront properties on the Cape, southern Maine, and Long Island Sound.

    Sunday, March 9, 2014 Report this

  • patientman

    For the homes on or near the water cash buyers will come in and knock the old homes down. Rebuild to today's flood code and be able to sell at a nice profit. This will be an aggravation to the wealthy people living on the water. To the many working class homeowners this will be devastating.

    Tuesday, March 18, 2014 Report this