30a Real Estate Reality Check: What’s New with Flood Insurance?
On April 1, new flood insurance policies were enacted in an effort to combat the increasing federal flood insurance fund deficit; these changes impact commercial property owners and renters most substantially; however, they also affect residential owners. Despite these mandates, Florida lawmakers are doing their part to ensure that coastal living remains affordable.
Flood Insurance Rates to Rise with the Tides Though there are mostly positives to coastal living, flood insurance has always been one of the biggest drawbacks to residing on the Florida Gulf Coast due to high rates. Now, because the federal flood insurance fund is “underwater” with a substantial amount of debt, rates have risen by a significant amount. The rate change, which was enacted under the Homeowner Flood Insurance Affordability Act (HFIAA), officially went into effect on April 1.
Who is Impacted?
The primary parties impacted are commercial, vacation, and rental property owners who will see their rates rise by as much as 25 percent; primary homeowners will not see a rise over 18 percent (“average rate homeowners” will not see rate increases in excess of 15 percent). These changes impact coastal property owners nationwide from the Florida Panhandle to the East Coast and to the West Coast.
Location, nature of property, and other factors impact the overall percentage of a property owner’s rate increase, so it’s important to consult one’s flood insurer to determine the level of impact HFIAA will have.
- Insurance misratings classify as exceptions
- Severe Repetitive Loss and significantly damaged or improved properties will be subject to 25 percent premiums
Additional measures include:
- New and renewed policy surcharges in the amounts of $25 for primary residences and $250 for other policies
- A Federal Policy Fee (FPF) that will not be part of the afore-mentioned premium percentage increase
- There will be a $5,000 to $10,000 deductible limit raise for residential properties; though, higher deductible policies will be as much as 40 percent cheaper.
There are contingencies such as the nature of the structure, the area in which it is located, and the owner’s ability to fortify the structure (for example, placing a home on stilts will contribute to lower rates).
Some may be surprised to learn that flooding accounts for as many as 90 percent of all natural disasters in the U.S. As unappealing as rate increases are, they are an essential measure in the eyes of the federal government as per FEMA’s National Flood Insurance Program’s descent into debt. At this point, it’s not feasible to insure the multiple waterfront property owners to the extent they need to be insured.
This measure is supported by conservation groups who feel that those who choose to establish or to purchase established structures so close to the water should be held accountable; obviously, property owners with oceanfront structures feel differently as some claim that the rise in insurance premiums may cost more than their property mortgages.
What Does this Mean for Florida Property Owners?
Property owners in Florida should investigate to learn if they will be impacted by the changes. Property owners in Florida who are concerned about the modifications should contact their local lawmakers to find out who is working to help landowners through the state’s flood insurance plan, which will permit private insurers to the local market. This intervention could be extremely useful in maintaining affordable flood insurance for coastal Florida residents.
One of the keystones to Florida living is the coastal lifestyle. Coastal living is, after all, part of the romantic and charming appeal of 30A. The idea of insurance bureaucracy impeding such a lifestyle is unpleasant. Existing property owners need to reach out and do their part, so that rental properties and personal residences can continue to be fairly affordable, and so that subsequent generations of buyers can feasibly consider coastal living when looking to invest in buying a home.
With powdery-soft white sand beaches and crashing turquoise ocean waves, 30A coastal living is a little slice of heaven. There’s nothing more wonderful or relaxing than the 30A beach lifestyle. For those who want to make getaway living every day living, contact local coast living expert, Melissa Clements, and find the right 30A community and home to make those beach-front dreams come true.