As Flood Zone Maps Change, Insurance Rates Increase for Homeowners

A new federal law will force homeowners in many areas of Massachusetts to experience increases in their flood insurance rates.

Last year the Biggert Waters Act was approved in response to FEMA having to pay out claims due to major disasters like Katrina, Irene, and Sandy. The Act made changes to The National Flood Insurance Program (NFIP) which offered government-subsidized policies for properties in flood risk areas. This legislation requires the NFIP to raise rates to reflect true flood risk. Federal flood maps are also in the process of being updated, which means thousands of properties that may not have been considered at risk for flooding in the past now will be.

Insurance rates for homes in newly designated high-risk areas will start going up as much as 25% a year until rates reach levels that would reflect the actual risk from flooding. These policies are not state-specific, and will still be in effect regardless of the homeowner’s insurance company.

The new flood zone maps not only affect homes in coastal areas like Cape Cod and the North Shore, but also homes in areas near marshes, ponds and small rivers. Even if the home in a newly designated high risk zone hasn’t flooded in 100 years, insurance premiums will increase.

Created by Anthony Lamacchia on 11/12/2013 05:32 AM

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Posted to Real Estate Industry

flood insurance, nfip

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This post has been included in Massachusetts Real Estate News

25 Comments on As Flood Zone Maps Change, Insurance Rates Increase for Homeowners

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NOV

Thank you for the information. I always advice buyers to call for estimate for insurance costs at the time of making an offer.

Anthony, There is a possibility that the adoption of the act may be put on hold. A number of Senators and Congressman have found that the act called for FEMA to provide Congress with an economic analysis of the financial effects of the act on insured. Apparently this study was never done and will take two years to complete. Richie, The insurance companies only receive commissions on the policies. The premiums go to the NFIP which is the government. The NFIP is responsible to pay claims.