More great news from the government! Many of the provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 are expected to be enacted in the coming months and, it could cost you thousands more each year in insurance premiums.  The legislation requires rates to be raised to reflect the true risk of losses from flooding. If you’re in a coastal area, close to a river-bed, or otherwise in an area where flooding is a risk, you may want to pay close attention to these changes. The new law is designed to make the program financially stable by dramatically increasing insurance rates to offset the risks associated with future flooding.

What will this mean to policyholders?  Most likely, policyholders will experience huge increases in Flood Insurance Premiums. Experts are predicting up to a 400% increase in policy premiums. In other words, if you’re presently paying $2,000 for flood insurance, you could see your flood insurance costs skyrocket to about $8,000!  The new provisions are expected to have a severe impact on 13% of all homeowners in Florida, where about 40% of all flood insurance funds have been paid. For single-family homeowners, the huge increase will soon begin to show up on new policies and policy renewals. Condominium owners should expect a dramatic increase in Association dues which usually include building insurance premiums.

Property owners living in coastal areas that are thinking about selling are encouraged to sell before the 400% increase in the cost of flood insurance takes effect, as the huge increase could have an impact on property values. Buyers may not be willing to pay as much for properties that have been impacted by the huge increase. In many cases, volatility in premiums creates uncertainty that works against home sellers. Home owners staying put, are encouraged begin to plan for the dramatic increase to avoid possible financial hardship associated with the dramatic increase.

The hits just keep on coming!