A recent news article highlighted the likelihood that home insurance bills will rise for those living in areas considered at high risk of flooding. Whilst flood insurance is currently backed by the government, changes are afoot, and those changes will take place as soon as 2014, affecting millions of home and business owners in flood prone areas. Across the Capital Region, those home and businesses in flood areas near the river will be the worst hit – thousands of people rely on the subsidized insurance cover provided by the state.
What does Government Flood Insurance Provide?
Currently, federally backed flood insurance offers up to $250,000 building cover and $100,000 of contents cover for private residences, with businesses benefiting from $500,000 of cover. Most banks and private insurance providers simply won’t offer flood insurance as it’s seen as too much of a financial risk. Even worse, many people will struggle to gain mortgages in high risk flood zones, as without the backing of government flood insurance, banks won’t lend homeowners the money to purchase.
Increased Costs
Last year, a policy was signed to increase the cost of insurance premiums, in order to reduce the cost to the state of providing flood insurance. This means that premiums could rise by as much as 20 percent each year whilst the government backed insurance stays in place. Those buying a new home in a flood risk area won’t benefit from the subsidy at all and will experience the price increase in one hit. In fact, the average homeowner could see their policy rise to as much as $1,200. It’s a worry that these rising premiums will affect the prices of real estate in flood prone areas – it’s thought that people will be less keen to buy in the areas due to higher premiums.
Flooding
With winter weather advisory warnings remaining in place for Easter across the New York City and New Jersey areas, expect reports of water damage and flooded basements; in Saratoga, specialist disaster clean up companies are set to have a potentially busy week! With the middle of March seeing unusually heavy snowfall, some towns were reporting the worst incidence of flooding since Hurricane Sandy, with pooling water causing flooded basements in Saratoga and ground floor apartments across the Capital District.
For now, there’s nothing to be done about the possible phase out of federally backed flood insurance – residents can only wait to see what is decided for the future. But without relevant flood insurance in place to cover their homes, many people face an uncertain future at a time when global warming is causing higher rainfall, flood risks and more inclement weather across the country.
