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By Suman Naishadham And Michael Phillis<\/div><\/div>\n

Most homeowners won\u2019t see radical changes under new pricing guidance, but some may be surprised their flood coverage costs less \u2013 or maybe more.<\/span><\/span><\/p>\n<\/div>\n

WASHINGTON (AP) \u2013 In the past year, the southwestern Louisiana city of Lake Charles weathered two hurricanes, intense rainfall that sent water gushing down streets and a deep freeze that burst pipes. Yet Tommy Eastman may eventually drop coverage on his four-bedroom home \u2013 which has so far escaped damage \u2013 because the cost of his flood insurance is going up.<\/span><\/span><\/p>\n

\u201cOnce it starts getting over $1,000, I\u2019m gonna start thinking, \u2018Well, what am I doing?\u2019\u201d said Eastman, a real estate agent whose annual policy is scheduled to climb from $600 to $2,500 over the next several years.<\/span><\/span><\/p>\n

Under a revamped federal flood insurance program rolled out this fall, millions of homeowners are set for rate hikes that officials say more accurately reflect a property\u2019s risk. That includes the vast majority of the 1.7 million homeowners with relatively cheap policies in areas federal officials previously deemed low or moderate risk \u2013 and where coverage is voluntary.<\/span><\/span><\/p>\n

The overhaul is intended in part to make it more expensive to develop in risky areas. But some worry the price hikes will only make it harder to convince homeowners to voluntarily buy or keep flood coverage, particularly in middle- and working-class areas.<\/span><\/span><\/p>\n

\u201cWe have no high-rise condominiums, we have no sandy white beaches. It is a working coast in our state,\u201d said Jim Donelon, Louisiana\u2019s insurance commissioner.<\/span><\/span><\/p>\n

The Federal Emergency Management Agency (FEMA) says its new insurance program factors in the characteristics of individual properties, such as how close they are to water, how expensive they are to rebuild and whether they face multiple types of flood risk. In many parts of the country, such risks are growing as climate change increases the strength of hurricanes and the intensity of rainstorms.<\/span><\/span><\/p>\n

\u201cWe\u2019ve learned that the old way of looking at risk had lots of gaps, which understated a property\u2019s flood risk and communicated a false sense of security,\u201d said David Maurstad, a senior executive of the National Flood Insurance Program (NFIP).<\/span><\/span><\/p>\n

In spite of identifying more flood risk across the country, the new system doesn\u2019t change who is required to buy coverage. In areas FEMA deems highest risk \u2013 known as the 100-year flood zone \u2013 flood insurance is required on government-backed mortgages, and many banks also require it for mortgages in high-risk areas. FEMA has said the flood maps aren\u2019t meant to predict where flooding may occur, but where coverage is required to help communities make building decisions.<\/span><\/span><\/p>\n

In recent years, homeowners living in places where coverage isn\u2019t required have faced losses in the billions of dollars. Between 2017 and 2019, nearly 40% of the flood claims FEMA received were for properties that fell outside zones where insurance is required, an agency representative told Congress last year.<\/span><\/span><\/p>\n

Many properties outside the flood zones face risk \u201cthat has always been there but has never been identified,\u201d said Matthew Eby, executive director of First Street Foundation, a research firm that produces detailed maps of flooding risks.<\/span><\/span><\/p>\n

First Street estimates that 14.6 million properties across the U.S. are at substantial risk of flooding, far more than the number of flood policies the federal government insures. A Government Accountability Office (GAO) report this year recommended that the federal government update the rules on who is required to get coverage to protect more high-risk homes from flood disasters. A separate GAO report found FEMA\u2019s flood maps do not reflect the latest climate science or key flood hazards such as heavy rainfall.<\/span><\/span><\/p>\n

FEMA said it has not studied how the rate changes will affect voluntary take-up of flood insurance, and the agency has not publicly disclosed details on how high premiums will climb<\/a> beyond the first year. A Congressional Research Service report said Risk Rating 2.0 will more accurately signal a home\u2019s flood risk, but that the higher prices \u201cmay mean that insurance for some properties is considered unaffordable.\u201d<\/span><\/span><\/p>\n

Raising rates and having more people opt for coverage also matters for the financial health of FEMA\u2019s flood insurance program, which is $20.5 billion in debt. Since its launch in 1968, many insurance experts say the program has deeply subsidized flood insurance by not charging rates that properly reflected a home\u2019s risk. The federal government underwrites most flood insurance policies in the U.S.<\/span><\/span><\/p>\n

For new policyholders, FEMA\u2019s new rates took effect in October. For existing policyholders, new rates start taking effect in April.<\/span><\/span><\/p>\n

Since rate hikes are capped at 18% a year, it will take years for some to reach their new rates. Policyholders can call their insurers to get details on how their rates will change. Unlike before when broad groups of policies saw increases, Risk Rating 2.0 will adjust prices individually.<\/span><\/span><\/p>\n

Higher rates will make flood risks clearer, and ideally encourage more homeowners to get insurance in areas where coverage is voluntary, said Joel Scata, a lawyer at the Natural Resources Defense Council, an environmental advocacy group. He said that Congress should act to address affordability for lower-income families.<\/span><\/span><\/p>\n

Aric Pohorelsky, a Lake Charles resident, envisions another scenario. He pays $517 a year for flood insurance on a 3,700 square-foot home, but said the same policy would cost $5,000 for a new homeowner.<\/span><\/span><\/p>\n

\u201cIf people leave in vast numbers \u2026 I don\u2019t think it\u2019s going to be because of Risk Rating 2.0,\u201d he said. \u201cI think it\u2019ll be just because of the stress of dealing with major hurricanes.\u201d<\/span><\/span><\/p>\n

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. Phillis reported from St. Louis. The Associated Press receives support from the Walton Family Foundation for coverage of water and environmental policy. The AP is solely responsible for all content.<\/span><\/span><\/p>\n<\/div><\/div>\n

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\nAuthor: kerrys<\/p>\n","protected":false},"excerpt":{"rendered":"