After the hurricane damage in recent years along the Atlantic and Gulf Coasts, the national flood insurance program was left nearly bankrupt. Hurricanes Katrina and Sandy left the program in debt to the tune of about $24 billion. Then, along came legislation to address that. The Biggert-Waters bill, passed in 2012, ended federal subsidies for buildings in flood-prone areas.
Sounds good, right? Maybe... until people started getting their revised flood insurance bills. And just to clarify, these people getting the bills aren’t just wealthy people being taxes higher on their vacation homes. These are people who live in a wide variety of price ranges of houses... Some are expensive, but some are extremely modest homes, some even below $30,000. Perhaps it’s easy for legislators who live in the middle of the country in non-flood prone areas to formulate plans that on the surface sound good, but please explain the end result to the homeowners who are receiving their revised flood bills that have increased astronomically. One such bill in Delaware went from a bill that was around $500 to one that is now over $8,000. Increases as drastic as this, and this is far from an isolated case, will effectively evict homeowners who won’t be able to afford the cost. And if they can’t afford it, how will anyone want to assume it, should the house go on the market? If this legislation is allowed to come into full force and effect, I do believe the effect will be devalued properties and a general decline in the real estate market. We’ve just started into the recovery and now this may grind it to a halt.
I’m reminded of legislation that was presented some years back here in Delaware. Someone in the legislature must have had a family member who was struck by cancer because legislation was introduced that would have made Sellers test for the presence of radon... Get this... One YEAR prior to putting their property on the market for sale! That is wrong on several levels. First, I believe in the rights of buyers. The method of testing should be left to the Buyer so they are assured of the quality of testing. Second, which Seller knows they’re going to sell one year in advance? Third, is a radon test from a year ago accurate today? Good intentions behind the radon legislation but a bad solution. The solution that WAS arrived at was to formulate a Radon disclosure document that Sellers and Buyers sign at the time of contract.
I feel that we’re at that same place with the flood insurance legislation. Good intentions, bad solution.
The alternatives to Biggert-Waters as it stands are to rebuild your house much higher and thus face lower rates. That’s possibly doable for someone whose home was destroyed by say, Hurricane Sandy, but for someone whose home is perfectly fine, never was flooded, and just happens to be in the flood plain (and yes, the maps are another area of dispute), rebuilding the house may not be feasible. There is also Senate legislation currently at work to delay implementation of Biggert-Waters for four years. That’s a start, but merely delaying something that’s wrong isn’t the answer either.
I urge you to contact your legislator and ask them not to implement the Biggert-Waters bill. We need something, but this legislation isn’t it. And if legislators truly never meant for homeowners to pay ten times as much as they do now for flood insurance, now is the time for those same legislators to fix what they broke.