Insurance Rates Are Up, But Hurricanes Are Down – What’s Going On?

Even though Florida has not had a major hurricane since Hurricane Wilma in 2005, property owners in Florida continue to face increasing flood insurance rates. The National Flood Insurance Program (NFIP) has issued more than 5.1 million policies across the nation. Of these, roughly 1.8 million policies, or more than a third, are issued to Florida property owners. Recently, the Federal Emergency Management Agency (FEMA) indicated that flood insurance premiums will go up an average of 9% nationwide.

Why are flood insurance rates increasing so much?

The main reason for the increase stems from the costs to repair damage from devastating hurricanes elsewhere in the United States. Hurricanes Sandy and Katrina left the NFIP roughly $24 billion in debt. Flood insurance rates first went up in 2015 when subsidies were ended for properties not listed in the United States Federal Emergency Management Agency’s Flood Insurance Rate Map (FIRM).

It took Congress three years to pass laws after Hurricane Sandy caused about $4 billion in damage to the East Coast, especially hard hit was Florida, New Jersey, New York City, and Long Island. The law attempts to force insurance rates to more accurately reflect the costs of covering areas in flood-prone, low-lying coastal and waterfront areas. In Florida, this means virtually all of the southern part of the state, especially areas between the Intracoastal Waterway and Interstate Highway 95. In 2015 homeowners complained loudly to Congress when premiums rocketed up thousands of dollars; in response, increases for 2016 are limited to no more than 18%. The properties most affected by these rate hikes are older homes in coastal zones that do not meet modern flood safety codes. That is generally homes built before the 1960s.

Despite the costs, buying flood insurance is still a wise decision

While it may seem to many property owners that they cannot afford flood insurance, the fact is, in a flood or hurricane, property owners can’t afford NOT to have this protection. Many believe that with Florida helping private insurers enter the Florida flood insurance market, costs of insurance will become lower, at least as far as future increases are concerned.

If you are engaged in any kind of dispute with an insurance company, a lawyer can be instrumental in holding the insurance company to the terms of its policy. For years, people across South Florida have relied on attorney David Farber of The Farber Law Firm to provide tough, intelligent representation in a wide range of insurance disputes.


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