Q&A | Rising flood insurance rates
Why are flood insurance rates rising?
To more accurately reflect the risk of flooding, the Biggert-Waters Flood Insurance Reform Act passed last year calls for eliminating some artificially low rates and discounts.
Will everybody's rates go up sharply?
No. In fact, the biggest rate hikes focus on just 20 percent of flood policies, those covering older properties in low-lying areas (called a Special Flood Hazard Area, or SFHA) for which owners have been paying cheaper, subsidized rates. The affected properties date back to before Flood Insurance Rate Maps (FIRM) were adopted in the 1970s and 1980s and are known in government lingo as "pre-FIRM" properties.
Some property owners could face 25 percent annual increases for several years?
• Owners of investment properties that have been subsidized with lower rates already started paying the higher rates on policy renewals after Jan. 1, 2013.
• A subsidized property that has experienced severe or repeated flooding will see the higher rates kick in Oct. 1.
• Owners of businesses and non-residential properties with subsidized rates will see the higher rates effective Oct. 1.
What if I live in my home and currently benefit from subsidized rates on my flood policy?
If you continue to live in your home and don't sell, you most likely will be able to keep the lower, subsidized rates.
However, you could face the higher rates if the property is sold, the policy lapses, you file severe or repeated flood losses, or a new policy is purchased.
How do I know if I get subsidized rates now?
Check with an insurance agent. But there are two main clues: Is the home in an "A" or "V" zone requiring flood insurance and is it at least a few decades old?
What if I have a subsidized policy in a flood hazard area and I sell my home or business property?
The buyer of a subsidized property will have to pay the full risk rate for any policy issued or renewed on or after Oct. 1. That could more than triple the rates immediately. If you bought a subsidized property after the Biggert-Waters Flood Insurance Reform Act became law a year ago, you could have to pay the full risk rate for a policy renewal starting in October.
Is there any other trigger for a large rate increase?
Owners of older homes in low lying areas could face rate increases of up to 20 percent a year for five years if a community adopts a new flood insurance rate map as part of the program overhaul laid out in the Biggert-Waters act.
Can I do anything to fight higher rates?
Check into obtaining an elevation certificate to show your particular property is sufficiently elevated. There is an initial cost, but it may help reduce your rate. Review your flood zone maps to see your property's current flood risk and how close it is to a potential change in risk status if a new map is adopted.
And don't let your policy lapse, which could be a trigger for a big rate increase.
Where can I find more details?
Go to floodsmart.gov. Or contact your insurance agent.
Jeff Harrington, Times staff writer