The Register-Herald, Beckley, West Virginia

Local News

March 30, 2014

Flood insurance rates 20 percent high and rising

Recently signed affordability act to ease financial strains

With the expiration of government subsidies on flood insurance come higher rates for state residents, who now have to cope with the increase, as well as a potential flooding threat.

Last week, President Barack Obama signed the Homeowner Flood Insurance Affordability Act into law. While the act repeals a portion of the law that caused the rates to rise, the Biggert-Waters Flood Insurance Reform Act of 2012, residents can still expect increases, although more gradual, in flood insurance premiums. Biggert-Waters was passed because of the increased property loss due to flooding, which had outpaced premium revenue, and to reflect the real potential loss from flooding.

According to the Federal Emergency Management Agency (FEMA) website, in order for the National Flood Insurance Program, established in 1968, to remain sustainable, the premium structure should “reflect the true risks and costs of flooding.”

Wyoming County’s numbers reflect the changes in the both the initial law and its subsequent partial repeal. The southern West Virginia locale where significant flooding last occurred in 2010 had 333 flood insurance policy holders receiving rate discounts in December 2012. Of those, 26 percent of policy holders faced an 18 percent increase, while 74 percent of those were looking at the higher 25 percent increase.

Since the county, including the cities of Mullens, Oceana and Pineville, joined the flood insurance program in 1984, NFIP has paid more than $13.2 million in claims, with more than $79 million in insurance in force, or the value of the property covered. For that $79 million in real property, annual premiums totaled $517,218.

Nationwide Insurance Agent Jody Cook has seen a “big increase in base premiums, and also some unnecessary expenses for potential home buyers.”

Cook said the new law that stalls those rate increases is a good move, since Biggert-Waters caused some problems its sponsors may not have anticipated.

Flood Zone A is an area “subject to inundation by the 1-percent-annual-chance flood event,” according to FEMA’s website. Property owners in Zone A generally have the most expensive flood insurance. Cook said homeowners have to purchase an elevation certificate, sometimes costing as much as $500.

And that’s a benefit to some homeowners who have elevated their homes above the base flood elevation. Some of those homeowners have seen their premiums cut by half, Cook said.

But homeowners in Flood Zone A with a basement, either finished or unfinished, have rates automatically set at the lowest elevation, he said.

Cook said some of his clients had purchased elevation certificates only to have the discount be in the neighborhood of $30 annually, even though the home had never flooded. Those certificates must be purchased before insurance rates can be estimated, he said.

Oceana resident Garrett Prichard is purchasing the home where he lived with his mother and stepfather in 2001, the flood of record which destroyed 360 homes in Wyoming County. The basement of the home did flood then, but the main structure of the house did not take water, nor has it in the years the family has lived beside Clear Fork. His parents paid $800 a year for flood insurance, Prichard said, but now, even with an elevation certificate showing the first floor of the house is 1.2 feet above the 500-year floodplain, his flood insurance will cost $5,033 a year, adding about $300 in monthly premiums to his mortgage payments.

Prichard said he’s repeatedly called FEMA.

“No one would ever really talk to me,” Prichard said. “I was just kind of left out in the dark.”

Prichard said he’s “really not excited” about paying such a high premium, but is left with few alternatives even though he doesn’t think he’ll ever file a flood insurance claim.

“I really don’t have any choice but to pay,” he said. “I feel as though this house that I live in is 10 times more likely to burn to the ground than to ever get water in it.”

Longtime homeowners aren’t exempt from the threat of rising insurance costs, either, Cook said.

“Those rates are going to be increased upward of 20 percent a year for five years, trying to phase out the old grandfathered rate,” he said. “(FEMA) is trying to phase out that old grandfathered rate — trying to have every property in the flood zone have an appropriate premium.”

Prichard said he’d spoken with other homeowners who have paid for their homes, but can’t manage the flood insurance to protect them in case of disaster.

“Several people in Oceana had to drop their flood insurance because they couldn’t afford it,” he said. “When they started the National Flood Insurance Program, it was supposed to be affordable, but it’s not.”

Emergency Services Director and Floodplain Coordinator Dean Meadows said since 2001, Wyoming County has had six presidentially declared emergency flooding events. The last, in 2010, resulted in $1 million in property damages, he said.

Wyoming County officials and residents have done their part to reduce those costs to insurance companies by reducing the amount of real property in flood zones.

The county has participated in FEMA’s hazard mitigation program, with 130 structures purchased and those properties turned into green spaces where the floodwaters can flow, decreasing damage to other properties.

“It’s been a significant mitigation project for us,” Meadows said. In addition, Meadows said about 15 residents have taken advantage of Increased Cost of Compliance funds and raised their homes above the base flood elevation.

“We’ve also strengthened our floodplain ordinance and we’re making sure folks are compliant,” Meadows said. “We’ve seen a significant decrease in the amount of flooding.”

Cook said he thinks ultimately the legislation the president signed last week will give everyone some time to work out the confusion brought on by Biggert-Waters. But, he said, the eventual double-whammy of Biggert-Waters may mean that homeowners in Flood Zone A will not be able to sell their property when potential buyers see the cost of elevation certificates and annual premiums.

“I think it will change their mind,” Cook said.

Prichard agrees.

“If premiums are going to stay this high, then people who want to move who have a house in the floodplain, I don’t think they’re going to be able to sell,” he said. “If they continue to let FEMA have control, it’s going to be extremely difficult to have a home in a classified floodplain.”

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