Flood insurance premiums set to increase in 2018
Millions insured by the National Flood Insurance Program likely to be affected.
More than 5 million homeowners and commercial property owners insured through the National Flood Insurance Program (NFIP) will have to dig deeper into their pocketbooks as premiums are set to rise around 8%.
iService, a National Flood Bureau and Statistical Agent, said some of the increases were slated to take effect on or after April 1. Preferred risk policies and properties recently deemed higher risk won’t see premium increases until January 1, 2019.
How high will premiums go?
Premium increases don’t include surcharges and fees charged by the government. An average policy will rise from $866 to $935 per year. However, when the added charges are factored in, premiums will inflate to approximately $1,062 for a typical policy.
Non-primary residential properties such as vacation homes and commercial properties have different measures of requirements where premium increases are concerned.
Policyowners with these types of properties can expect an up-to-25% increase until they reach full-risk rates. Properties that have previously suffered repeated flood losses can also expect up to a one-quarter rate hike.
What you need to know about the National Flood Insurance Program
The National Flood Insurance Program is a program run separately from private flood insurers. Congress established the program in 1968 to allow property owners in flood-prone areas to have more affordable financial protection against flood loss.
Property owners may have trouble securing private insurance in those areas. The program also acts as a buffer against rising and out-of-control private insurance premiums.
The FEMA-run program stipulates that communities participating in the program have to establish a way to downsize their risks in future floods.
Most of the participants are in Florida and Texas, two states prone to natural disasters and hurricanes. FEMA paid more than $7.6 billion in losses to more than 91,000 NFIP policyholders for Hurricane Harvey survivors alone.
Category 4 Hurricane Harvey dumped more than 50 inches of rain in parts of Texas last year. Eighty percent of those in Harvey’s path had no flood insurance.
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