Some home flood insurance rates could spike this year
HOUSTON - A research group says homeowners in flood-prone areas could see much higher flood insurance rates starting later this year.
FEMA also just launched a new tool to help determine a home's true risk of flooding and will release new flood maps later this year.
A report by research group First Street Foundation suggests hundreds of thousands of U.S. homeowners could face major rate hikes, phased in over time, including in greater Houston.
"Sometimes it's as much as four times higher what people are currently paying, so it is a wake-up call as reform is being brought to the national flood insurance program," said Ed Kearns, Chief Data Officer with First Street Foundation.
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That reform includes the Federal Emergency Management Association's launch of a new tool, called Risk Rating 2.0-Equity in Action, which is more specific about each home's flood risk.
"When you look at it in a property-by-property basis, you can really look at those homes that have to be at a low elevation near a creek," explained Kearns.
Rates are expected to go up for some homes, down for some others.
New National Flood Insurance Plan rates will take effect for new policyholders starting October 1, followed by existing NFIP policy holders, when their plan renews.
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The Government Accountability Office released a report calling on Congress to consider requiring FEMA to evaluate how its new flood risk information could be used to determine which property should be required to have flood insurance.
"What we have seen more and more is many people outside flood hazard areas have had flooding," said Alicia Cackley, Director of Financial Markets and Community Investment for the GAO.
A FEMA spokesperson issued the following statement in response:
"We agreed with the findings (see page 76) and are working to respond with updated information to the GAO.
It’s important to note mandatory purchase requirements pertain to certain property owners in Special Flood Hazard Areas are required to purchase and retain flood insurance for the life of their mortgage loans. Risk Rating 2.0 is a ratings methodology.
The Mandatory Purchase Requirement (MPR) was part of the Flood Disaster Protection Act of 1973 and requires owners of buildings located in Special Flood Hazard Areas to maintain flood insurance as a condition for holding federally-backed mortgages or receiving direct housing assistance, such as federal loans and grants. It is one way to increase participation in the National Flood Insurance Program (NFIP).
The MPR is not impacted by Risk Rating 2.0: Equity in Action."
The Insurance Council of Texas points out some private insurance companies now offer flood insurance.
"You're wise to shop around, see who can offer you the best flood insurance rate. Remember your flood insurance is not part of your home insurance. It is a separate insurance policy," said Albert Betts, Jr, Executive Director of the Insurance Council of Texas.
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A tool called HelpInsure.com can help you compare flood insurance rates.