Flood insurance rates could skyrocket October 1 - FOX 13 News

Flood insurance rates could skyrocket October 1

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TREASURE ISLAND (FOX 13) -

Florida real estate brokers are pounding on Congressional doors, hoping to put a dam in front of rapidly rising flood insurance premiums. Treasure Island broker James White is in touch with U.S. Representative Bill Young, who voted in favor of the higher rates.

"We're telling him it's going to cause a big collapse in the market. It's going to hurt the real estate business," White said. "From St. Pete Beach to Clearwater Beach, you're looking at homes that were built on the water, on the land, they weren't elevated, so they're all going to be affected tremendously."

Last year, Congress renewed the National Flood Insurance Program for another five years, but required FEMA to start collecting risk-based premiums. Until now, despite dissimilar risks, homes in similar flood zones paid the same price. In one example found in a FEMA publication, three homes each paid $3,600 a year for flood insurance.

But starting October 1st, a home with a first-floor living space four feet above the 100-year flood plane would enjoy a new rate of $553, while a home four feet below the 100-year flood plane would pay $10,723 a year.

"If they're right on the beach and they're subject to wave action, and their house was built right on the sand, I think they're going to see a pretty significant increase because they're at significant risk," Dolores Glass of Wright Flood confirmed.

Glass quoted FEMA, which runs NFIP, as estimating 20 percent of flood insurance policies will be impacted. That equates to 1.1 million policies nationwide and nearly 30,000 policies in Pinellas County.

The rates for existing policies will increase 25 percent a year until they reach a risk-based rate. Policies on second homes and newly-purchased homes will pay full price immediately.

"The new rates don't go in until October 1, so that's when folks are going to be subject to these new rates," Glass pointed out.

However, within a couple of weeks, people will be able to get an estimate from insurance agents. That is advised in two new disclosures being added to standard Florida real estate contracts.

"Once they start seeing...what the rates...are going to be when they attempt to buy that house, they're not going to be able to afford it and it's going to be a devastating blow," White predicted. Congress is considering legislation that would dampen the increases, but opponents argue NFIP should pay its own way. Numerous national sources claim NFIP has received $24 billion in subsidies since its inception in 1975.

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