No one can say FEMA didn’t warn us. Its website offers pages of information about how flood insurance rates might go up in 2013 due to the Biggert-Waters Flood Insurance Reform Act of 2012. Every homeowner’s case is different, but in extreme cases, FEMA projected that individual premiums could go up to $20,000.
(By the way, could you get a more perfectly ironic name for a flood-related law? It’s named after its Congressional co-sponsors, Rep. Judy Biggert, a Republican from Illinois who is no longer in Congress, and Rep. Maxine Waters, a Democrat from California.)
Until recently, this law attracted little public attention. But October 1, 2013 marked its first actual effective date.
The results aren’t pretty. Nor are they surprising, given that the purpose of the law was to put the National Flood Insurance Program (NFIP) on a firmer financial footing by, among other things, raising insurance rates to reflect true flood risk levels. For example, homes whose lowest floor elevation is below the Base Flood Elevation (BFE) will no longer receive subsidized rates, and homeowners who were grandfathered in under old flood maps will no longer be able to take advantage of this.
Now we’re hearing that even Congresspeople who voted for the law are worried about how it will impact some homeowners. Homeowners themselves are complaining; The New York Times reports “rallies, petitions and concern among state governors.” And real estate agents report home deals falling through when the new owners get a look at the new price tag for insurance.
Some members of Congress are, in fact, looking into ameliorative or delay measures. (If there’s anything Congress is capable of doing effectively, it’s delay!)
In the meantime, if you’re buying a home, you might want to add an insurance contingency to your contract, specifying that closing be made conditional on obtaining acceptable insurance coverage. See Nolo’s Essential Guide to Buying Your First Home for details on contract clauses, insurance and other aspects of home buying.