Will New Flood Insurance Rates Affect Home Sales on The Jersey Shore?

Ten's of thousands of property owners on The Jersey Shore in Ocean County rely on the National Flood Insurance Program (NFIP) for flood insurance. A new law, the Biggert-Waters Flood Insurance Reform Act, will force major changes on the NFIP.

The Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) which calls on the Federal Emergency Management Agency (FEMA), and other agencies, to make a number of changes to the way the (NFIP) is run. Some of these changes already have occurred, and others will be implemented in the coming year. Key provisions of the legislation will require the NFIP to raise rates to reflect true flood risk, make the program more financially stable, and change how Flood Insurance Rate Map (FIRM) updates impact policyholders. The changes will mean premium rate increases for some—but not all—policyholders over time. 

Homeowners with subsidized insurance rates on non-primary residences and on structures built PRIOR to the first Flood Insurance Rate Map that have not been substantially damaged or improved (in most cases, more the 50% of assessed value) will see a 25% increase in premium rates each year until premiums reflect full risk rates.

Owners of business properties with subsidized premiums, owners of repetitive loss multii-family properties (1-4 residences) and owners of any property that has incurred flood-related damage in with the cumulative amounts of claims payments exceeded the fair market value of the property will also see a 25% increase in rates each year until premiums reflect full risk rates.

In late 2014, property owners, including non-subsidized policyholders that are affected by the map changes will be required to get full risk rates phased in at a rate of 20% per year over 5 years.

These changes could make it unaffordable for people in chronic flood zones to keep thier homes and they have put a damper on home sales in areas where benefits extended to current homeowners can't be passed on to prospective buyers.

Will this affect home sales on The Jersey Shore in Ocean County? Absolutely, the question remains, "how much?"