Annual flood insurance rate increases would be capped at 9% under a bipartisan bill to reform the national flood insurance program due to be presented on Friday, the ninth anniversary of the super storm Sandy.
The National Flood Insurance Reauthorization Act of 2021 is introduced by we Senator Bob menendez, D-New Jersey, where the 2012 storm damaged or destroyed more than 70,000 homes and caused billions of dollars in damage statewide.
This is the senator’s latest attempt to craft a long-term renewal of the flood insurance program that would emphasize mitigation and limit what he called the “rate shock.” the sharp increase in premiums that he believes many policyholders will experience under a new federal method of calculation. risk of flooding.
The Federal Emergency Management Agency The 2.0 risk rating could result in rate hikes of 5% to 18% per year – or 25% per year for vacation homes – until the cost is in line with what FEMA said is the actual flood risk and the value of each individual property.
FEMA manages the flood insurance program; approximately 217,200 households in New Jersey are covered by flood insurance policies.
The average premium in the state is around $ 1,000 one year.
Homeowners living in flood-prone areas are required to have flood insurance if they have a mortgage.
The 2.0 risk rating came into effect for new buyers on October 1st, and will have an impact on current policyholders of flood insurance from April 1, when the policies are renewed for the year.
“I sounded the alarm before they turned it off,” Menendez said of the 2.0 risk rating. “By having a rate shock, you are creating a group of people who cannot afford it. “
Rising Flood Rates: Buying a New Jersey Home in a Flood Zone? Your flood insurance rates are about to climb
“Rate shock” insurance: “rate shock” entering into flood insurance premiums: Sen. Bob menendez
More rain and wind: More heavy rains at the tap for Halloween weekend winds up to 45 mph expected
He said that 77% of New Jersey landowners will see their flood premiums increase in the first year under the new system.
Menendez said skyrocketing rates will lead more residents of flood-prone areas to drop their flood insurance coverage, making policies even more expensive for those who stay.
The senator noted that impartiality Congress Budget Office estimated that 900,000 homeowners will cancel flood policies as the 2.0 risk rating is implemented.
That’s nearly 20% of the estimated 5 million we flood insurance policies.
FEMA The new rating plan aims to forecast flood risks more precisely and reverse financial losses. Over the past 50 years, the agency has collected 60 billion dollars in flood premiums, but paid $ 96 billion in complaints.
FEMA says her new note is transformational. Until now, flood insurance rates were determined by maps FEMA created to predict which homes have a 1% annual flood risk.
The rates were determined by pooling the risk of groups of properties in designated flood zones; this means that the owner of a $ 100,000 house would pay the same rate as the owner of a $ 1 million house with the same flood risk, although replacement costs are much higher for the more expensive house.
The new program uses map data and science to charge premiums on individual homes based on each property’s value and its unique flood risk.
The story continues below the video.
Some coastal residents and officials have complained in recent years that FEMA the flood maps did not take into account the significant mitigation efforts that have taken place since Sandy, while others believe the flood maps do not take into account potential increases in flooding as the sea level is rising.
Advocates say raising flood insurance rates without providing funds to help homeowners raise their homes or pay for other mitigation efforts will not help reduce the risk of higher financial losses due to storms.
More: Is your Shore home prone to flooding? Your wallet won’t like the new FEMA insurance plans
Disaster loans canceled: towns in NJ Sandy will not have to repay $ 26 million in disaster loans
FEMA officials counter that the new rating system is designed to more accurately reflect flood risk and flood costs, while lowering premiums for lower value homes, where they say homeowners are currently paying more than their own. fair share for insurance. At the same time, premiums will rise on higher-value homes, which are currently paying their fair share, according to the agency.
Under the 2.0 risk rating, around two-thirds of policyholders will see their premiums stay the same or increase up to $ 10 per month, according to FEMA. About one in four policyholders will see an immediate drop in premiums of about $ 86 per month, depending on the agency.
Around 11% of policyholders will see their premiums increase by more than $ 10 per month, according to FEMA.
But Menendez and we Senator Bill Cassidy, a republican from Louisiana who is one of the co-sponsors of the Flood Insurance Reauthorization Bill, estimated that flood insurance premiums on some properties could double within four years based on the 2.0 risk rating .
Menendez’s repeated efforts to reform the flood insurance system have already partially failed, he said, because Republicans on the of the Senate Bank, Housing and Urban Affairs Commission did not allow a hearing on the bill.
He said he believed we Senator Sherrod Brown, D-Ohio, who now chairs the committee, will hear the bill.
“I think the combination of bipartisanship now and the combination of the risk rating going into effect and many members hearing their constituents,” gives the bill a better chance to move forward, said Menendez.
Menendez is expected to officially announce the introduction of the flood insurance bill today at a press conference in Paterson which will also include we Senator Cory booker, we representing Bill pascrell, the two D-New Jersey, as well as Sandy’s defenders.
Jean Miklé covers Tom River and many others Ocean County cities and writing about local government and politics on the Jersey Shore for nearly 37 years. She is also passionate about the legendary Shore music scene. Contact her: @jeanmikle, [email protected].
© 2021 www.app.com. Visit app.com. Distributed by Tribune Content Agency, LLC.