The Chronicle - FEMA flood insurance changes for 2013

In light of the hurricane Sandy disaster that hit the US Eastern seaboard a couple days ago there's a lot of attention turned to the insurance claims, specifically flood insurance. For many people it's kinda late to pay any attention to it, since flood insurance administered by the Federal Emergency Management Administration should be in place at least 30 days before the disaster hit in order for the property to be eligible for a payout from the insurance fund. However it's no less important now for anyone living in flood prone areas, which include major populations centers in the United States, to know how to obtain coverage and what changes are made to the program in 2013 by the Congress.

Flood insurance unlike any other property insurance is not provided by the private insurers, but by the Federal government through FEMA. However any private individual willing to buy a flood coverage should deal with an independent insurance company that acts as a FEMA agent. The rates and coverage amount are fixed, so it doesn't really matter who you are buying your insurance from - for the same property you'll get insurance rate regardless of who your selling agent is.

However since hurricane Katrina hit New Orleans several years ago, the program is in real trouble - basically it's insolvent - the amount it gets from premiums doesn't cover all payouts it has to make under the policies it underwrote. Therefore the Congress had to step in and provide a line of credit to FEMA to cover the shortfall. Also the Congress allowed FEMA to raise premium rates for renewing or new policies.

When you get your new insurance or renew an existing one from October 1, 2012 your rate will be about 5% higher than it was the year before. Higher rates are also allowed for so called coastal high-velocity zones - to the tune of 8 to 10%. Preferred risk policies premiums will increase twice - 1st time in October and then in January 2013, cumulative increase should not exceed 10% though. There are some other minor changes, but those mostly are related to the secondary homes and insurances that are written based on the lender requirements.

Just to give you an idea of what you are looking to pay. In a preferred zone (i.e. your property is not on a 100 year flood plain) your premium for a policy with coverage of $250,000 and deductible of 1% will increase from approximately $365 to $405 per annum. While it seems like a lot of money, flood insurance is still a great deal to be had, especially if your house has a basement for example.

Be smart, get insured.

Source: http://xbohdpukc.livejournal.com/103610.html

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