| October 23, 2013
increases in flood insurance policy rates are looming for a small
percentage of property owners, especially those who own older houses
below base flood level or second homes in flood zones.
Flood insurance rates will spike for
some, but not all, property owners
By CATHERINE KOZAK
But most people won’t be facing the astronomical spikes in their insurance bills that some fear.
percent of the properties are going to be just fine,” said Fletcher
Willey, owner of The Willey Agency in Nags Head.
has been on a state panel dealing with flood insurance issues for 10
years, said that many of the remaining properties will not be subject
to large increases in rates as long as they are adequately elevated, or
until they are sold or are damaged substantially.
“So,” he said, “the sky is not falling.”
in July 2012, the Biggert-Waters Flood Insurance Reform Act (FIRM) is
eliminating subsidized payments in phases for commercial properties and
those with repetitive losses that are at or below base flood level,
until they eventually are paying the full risk rate for flood
Flood insurance is a required by banks on mortgaged property in flood zones.
As defined by the 2004 act, a property is
categorized as a repetitive loss if two or more claims of at $1,000
have been filed within a 10-year period, a severe repetitive loss
property would have four or more claims of more than $5,000, or two or
three claims that together exceed the value of the property.
Older homes that are on pilings should get an updated elevation certificate to qualify for a better rate, Willey said.
the law remains as it is now, he said, subsidies will disappear from
flood policies after about four years. Until now, about 1 percent
of policies have collected as much as 30 percent of the money paid out
in claims. And many of those properties have flooded over and over
“Should I write a policy for a bad driver who’s
going to have an accident every weekend?” Willey asked, comparing the
scenario to the 5 percent of flood claims that are repetitive losses.
Tom Thompson, chairman of NC-20, a group that represents the real
estate and construction industries in the state’s 20 coastal counties,
warns that except for repeat claims, the increases are inherently
unfair and could bankrupt numerous property owners.
“My main concern is to stop Biggert-Waters in its tracks,” he said. “It was conceived in complete ignorance.”
Carolina, he said, has contributed more in premium payments over the
life of the program than the National Flood Insurance Program has paid
to claims in the state: $1.2 billion in premiums versus just over $1
billion in claims.
“The question is, then, why are our premiums going up?” he asked.
January, notice of a 25 percent rate increase was sent to about 305,000
second home owners of pre-FIRM properties, that is, those built prior
to 1975 or before the community’s Flood Insurance Rate Maps were
drawn. Of them, about 4, 700 are in North Carolina, according to
the North Carolina Emergency Management Flood Plain Management
Section. Rates are expected to increase an average of 150 percent.
The law considers primary residences those that are lived in at least 80 percent of the time.
October, notices were sent to owners of about 90,000 commercial
properties – 2,143 of them in North Carolina -- and to about 11,000
properties – 707 of them in North Carolina – that have suffered
repeated flood loss.
And in late 2014, rates will no
longer be grandfathered according to what the flood rating, relative to
map zone and building elevation had been when the structure was built.
Those premiums will be phased in with 20 percent increases over five
years, starting with the effective date of the FIRM that identifies the
increased risk, until the rate reflects the actuarial rate based on
newly updated flood maps. Premiums for the 515,000 properties affected
statewide could increase 200 percent, according to the state.
pre-FIRM rates will not be continued on new flood policies, which could
result in steep jumps in premiums for new owners and make it much more
difficult to sell such property.
There are 10,015 flood
insurance policies for unincorporated Dare County, and 414 of them are
repetitive loss properties, said Donna Creef, the county’s planning
There are 4,501 flood policies in Kill Devil Hills;
3,716 in Nags Head; 1,502 in Kitty Hawk; and 1,300 in Southern Shores.
Hyde County has 1,479 and Currituck County has 5,428. As part of
the Community Rating System, which evaluates flood mitigation efforts,
all qualify for premium discounts.
Jenny Jones, administration
and project manager for grants and waterways for Dare County, said that
10 houses for year-round residents in unincorporated Dare were elevated
after Hurricane Bonnie in 1998 with FEMA funds as part of the Dare
County Hurricane Recovery Project. Since then, 42 more have been
elevated, and a new grant has provided funds to elevate 17 more. There
is also tentative approval to raise 27 more houses that were damaged in
Hurricane Irene in 2011.
All those residences that qualify must be lived in all year, and must be worth saving.
fare great, because we get them up as high as we can above base flood,”
Jones said. “I don’t know any of the ones we’ve elevated that
have ever been flooded again.”
Homeowners with flood insurance
coverage may also qualify for a portion of the cost to have their house
moved, demolished, or elevated, she said.
As for historic
structures that are subject to flooding – like the old Dare County
Courthouse in downtown Manteo -- the options can be complicated by
preservation strictures or difficulty in relocation.
some leeway in the law for historic properties,” said Renee
Gledhill-Earley, environmental review coordinator for the N.C. State
Historic Preservation Office.
When a building can’t be
moved, she said, flood risk could be mitigated with a barrier system to
keep the water out. But the risk can’t be ignored.
“It’s a public building,” she said. “And whenever it’s been flooded, it’s been getting public assistance.”
FOR MORE INFORMATION
to see a presentation by the North Carolina Emergency Management
Department Floodplain Management Section on the Biggert-Waters Flood
Insurance Reform Act of 2012.