Costly flood insurance expected to devalue many city properties


The city’s tax assessor doesn’t question that the soaring cost of flood insurance will negatively impact the value of waterfront homes, but until that can be quantified, she can’t see how the city could lower these assessments, and thus taxes.

That’s not what Ward 5 Councilman Edgar Ladouceur wants to hear.

Last week, Ladouceur said he has received numerous calls from constituents who are reporting dramatic increases in their insurance premiums. Some say they will be forced to sell, although they wonder if they can find buyers.

With the elimination of government subsidies, and depending on the elevation and the flood zone where a house is located, some premiums are projected to go from $800 to $25,000 a year for $250,000 in building and $100,000 in content coverage.

Ladouceur says the law ending subsidies should be changed. He’s talked to representatives in the offices of Senators Jack Reed and Sheldon Whitehouse and Congressman James Langevin.

“Roll it back,” he said of the law. “How can you dump this on people?”

With 39 miles of shoreline and 1,871 homeowners with flood insurance, Ladouceur predicts the city will see a “mass exodus” if some sort of relief isn’t provided to homeowners.

Last week, he appealed to Tax Assessor Evelyn Spagnolo to extend the deadline for property owners to contest their property valuations. The deadline was Oct. 15.

But Spagnolo said the deadline is set by state legislation.

Even if the deadline could be extended, Spagnolo says, it’s premature to determine how flood insurance will impact home values. She said rates are unknown at this point.

Nonetheless, she’s certain they will have an impact.

“We do know they will affect values,” she said.

She pointed out that the higher rates will translate into higher overall monthly costs for homeowners.

“It may mean that only millionaires can buy waterfront property,” she said.

But even if that is the case, Spagnolo can’t justify altering values now.

“It has to happen before we can adjust for it,” she said.

The end of subsidized insurance also has realtors concerned.

Donald Morash of Abbott Properties reported he received two flood insurance quotes on a North Kingstown property he had listed. One was $10,000 and the second was $29,000.

“That’s absurd,” said Morash.

When potential buyers learned of the quotes, they backed away from a deal. The property has subsequently been taken off the market.

“I think ramifications of this is going to be devastating for anyone in a flood zone,” Morash said.

He speculated that virtually all of Oakland Beach is in a flood zone. One of those already feeling effects of the legislation is Jody King, who lives on Ottawa Avenue. His flood insurance has always cost more than his homeowner’s, a fact he finds difficult to accept. He said he paid about $1,300 for flood insurance this year but expects it to double next year.

When told some property owners are being quoted premiums of $25,000, he was incredulous.

“You’re going to pay more than the house is worth,” he said. King argues that the premium should be based on actual experience. In the 20 years he has lived in Oakland Beach, King said he used flood insurance only once and that was in 2010 when heavy March rains flooded his basement. Although the contents of his basement were lost, he received only $1,900.

With six years of mortgage payments left, King said he would entertain paying off his mortgage and self-insuring.

Morash concludes that the high insurance rate will render many lower-cost homes worthless. He thinks deductibles should be built into the program so that, in effect, the homeowner is assuming a portion of the losses.

On the other hand, he doesn’t see the higher rates as dramatically impacting multi-million dollar properties.

Although, he added, “Anything like that is going to have a detrimental effect on property values.”

Lawrence Yun, chief economist for the National Association of Realtors, touched on the issue in an interview prior to speaking at the Rhode Island Real Estate Expo on Oct. 17.

He said homeowners shouldn’t be faced with the “sudden shock” of premium increases and it would be best to have some “time out.”

“You can’t expect homeowners to manage this,” he said, calling for a proper balance of what is affordable and the need for the government to get out of the business of subsidizing insurance of properties in flood prone areas. He said limits should be placed on building where homes are susceptible to flooding.

Without naming names, Ladouceur said he learned from one realtor that a buyer backed out of a sales agreement when the projected cost of flood insurance came to light. He also talked of a constituent who recently bought a 1,600-square-foot house on the water whose premium is now $26,800. He said he doesn’t know what the family will do since they can’t afford the insurance, which is required in order to have a mortgage.

From Ladouceur’s perspective, the premiums are arbitrary as many of the properties they affect haven’t been flooded in decades, if ever. And, he’s angry that there wasn’t notice of the effects of the law.

“I just found out about it in June,” he said. “I still don’t think they are doing an adequate job getting the word out.”


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$800 to $25,000 jump. Cash buyers only need apply. Terrible blow for the city and all its taxpayers. The lost revenue from lower valuations on homes in flood zones is going to have to be made up somewhere. Because the mayor and city council don't know how to cut spending. I wouldn't be surprised to see the city ask the general assembly for a waiver to raise the rates more than 4.25%. We are so screwed.

Tuesday, October 29, 2013

$25,000 a year for $350,000 in coverage is ridiculous.

you might as well just cover your losses out of pocket figuring there's likely a very small chance you'd ever have that much damage every 14 years.

Banks and insurance companies in bed with each other for requiring it vs common sense.

No one regulating these clowns so they have fair business practices.

Tuesday, October 29, 2013

Herb, if you have a mortgage the bank can make you carry flood insurance. The tax assessor shouldn't need much time to reassess the affected homes. Plenty are going to be foreclosed quickly if congress doesn't act.

Tuesday, October 29, 2013

You can blame Global Warming. I know most of these writers are Tea Party associates based on what I've read so you won't want to hear about Global Warming however much of the world does including insurance companies! They have been dealing with billions of dollars of pay outs due to natural disasters. Yes the 38 and 54 hurricanes were devestating but look at the past couple of decades and the amount of natural disasters both locally and nationally. I won't go through the list of all the storms and floods. Hurricane Sandy was such a close call devestating CT,NY,NJ and parts of RI. Oakland Beach was spared this time. It is only a matter of time that a hurricane or super storm floods Oakland Beach again. Do you think the puny small sea wall will protect it? The walls built in New Orleans didn't protect them against Katrina.

Tuesday, October 29, 2013

Tea party associates? My post are about losing tax revenue and only cash buyers being able to afford houses in flood zones.

Wednesday, October 30, 2013

It's not like these companies are going broke despite needing to cover losses.

For example Allstate had a profit last year of over 33 BILLION.

They make enough just in return in investment on their cash reserves to cover their losses from major disasters.

It comes more down to greed than anything else.

Wednesday, October 30, 2013

Four year reprieve agreed to yesterday.

Wednesday, October 30, 2013

its about time the feds runs flood ins you can buy it were ever there only running 24tril in the red. were do you think all of the money is comeing to fix all of the homes in nj and up and down have anybody gone down to or state beach in south or even better caprio place in naragt coast guard house. now you will see people living far way from the water. and if cash buyers come in the still have to pay taxes don,t worry there tax bill will not go down to much . 2 more yrs full rev. Stop your crying

And say go FEDS speed more money. Its all going to come to the door.and just make us a 3rd world country thank you. Try to live happy.How many people got killed in that strom. can you put a price on that.

Wednesday, October 30, 2013

wow did I spell bad. SORRY PEOPLE

Wednesday, October 30, 2013

Good points FastFred

Wednesday, October 30, 2013

While I feel for these folks, we have been helping people to rebuild in flood zones for too long. Time to stop the craziness.

Wednesday, October 30, 2013

Between the flood insurance and the pending charges for sewer connections there is a process of gentrification going on in these areas. This is something that the city/state/Fed government for sure knows is happening and wants to happen just look at the quote from Warwick Tax Assessor Evelyn Spagnolo “It may mean that only millionaires can buy waterfront property,” the government could care less if the house has been in your families for generations. They will say sell but how these people are going to get raked over the coals when and if they sell…

Wednesday, October 30, 2013