By Pamela Pritt
A new state law, signed Thursday by Gov. Earl Ray Tomblin, will help residents with rising flood insurance costs by opening the market to private insurers. Flood insurance is now usually purchased through the National Flood Insurance Program, which recently hiked premiums because of high pay-outs from federally declared disasters like Hurricane Sandy in 2012.
The Biggert-Waters Act of 2012 was passed in order to phase out government subsidies of flood insurance for properties that are in floodplains, and to bring those premiums in line with the risk.
The state law, sponsored by Sen. Rocky Fitzsimmons, D-Ohio, will allow out-of-state insurers to offer policies to West Virginians, potentially at a cheaper rate than NFIP.
Fitzsimmons said Thursday that rates will never be as low as they were under the federally subsidized program, but insurers could more accurately assess the risk, which would not be tied to coastal properties that see damage from hurricanes. Inland risks are more predictable than coastal flooding, Fitzsimmons said.
“People who live in these areas know how to adequately prepare (for flooding),” Fitzsimmons said. “Hopefully, we can reduce those flood insurance premiums.”
The law also allows homeowners to cover their property for less than replacement value or for the remaining balance of their mortgages.
Fitzsimmons said because there is no private market at this point, premiums are driven higher by lack of competition.
While others are happy that President Barack Obama recently signed a law that delays the rate hikes in NFIP, Fitzsimmons said that essentially “kicks the can down the road.”
“You may see a hindrance in the development of the private market because of that, but it will still be there in the end,” he said.
The new law goes into effect June 5.
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