First the good news: Flood insurance will be available for at the next five years through the National Flood Insurance Program [NFIP]. Congress approved the five-year extension a week and a half ago, and President Obama signed the legislation Friday.
The not-so-good news: many Tampa Bay area property owners may see the cost of flood insurance more than double over the next five years.
"We're looking at a 20 percent increase each year for the next five years," said flood insurance expert Bob Adams of Plant City.
So today's $1,000 premium could reach $2,500 five years from now. The new law also specifically requires rate adjustments for properties with a history of flood claims, commercial properties, and second homes.
Adams predicted those property owners will see the maximum rate hikes.
"Do the premium increases need to be there? Absolutely," Adams argued. "The program's running a deficit right now."
NFIP has an $18 billion deficit, most of it racked up after Hurricane Katrina. Since that 2005 catastrophe, Congress has passed more than a dozen short-term extensions of the program, with every impending deadline causing stress in the real estate market.
Treasure Island real estate broker Jim White thinks the five-year extension will offer more stability, and he is optimistic second home buyers will not run away.
"I think it's a number that will affect us, but I still don't think it will slow down," White said. "We're in a market now that's starting to head up, and the buyers now seem to think it's a great time to own real estate."
He estimated up to 30 percent of the real estate transactions on Pinellas's barrier islands are for vacation homes.
The impact on commercial properties may be more daunting. According to Tradewinds Beach Resort general manager Keith Overton, the resort paid $160,000 for NFIP insurance this year. If that increases 20 percent a year five years, the same coverage will cost $400,000.
However, a spokesman for the national program told FOX 13 News it is too soon to predict exactly who will be hit with rate increases, and by what percentage.
FEMA press spokesman Dan Watson said that agency "...is carefully reviewing the language..." of the new law, and how it will affect policy holders.
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