President Barack Obama signed into law a bipartisan bill that will delay flood insurance rate hikes for property owners nationwide.
The Homeowner Flood Insurance Affordability Act repeals the Federal Emergency Management Agency’s authority to increase premium rates when a property is sold. It also refunds the excessive premium to those who bought a property before FEMA warned them of the rate increase. The bill limits premium increases to 18 percent annually on newer properties and 25 percent for some older ones. The senate approved the bill on March 13, and the House of Representatives March 4.
“Today, many months of hard work, negotiation and bipartisan compromise have culminated in a law that will end skyrocketing flood insurance costs for hundreds of thousands of home owners,” says U.S. Rep. Maxine Waters, D-Calif. “Though the measure isn’t perfect, it ensures there will be no more dramatic rate increases for families currently facing unaffordable premiums.”
The rate hikes were part of the 2012 Biggert-Waters law, which had set out to gradually phase out flood insurance subsidies in an effort to shore up finances for the National Flood Insurance Program, which stands about $24 billion in debt, mainly due to catastrophic storms like Hurricane Katrina in 2005. As a result of the phase-out, some home owners who were not required to pay the full actuarial cost of their insurance were being faced with tens of thousands of dollars a year in flood insurance hikes.