Homeowners fear 'nightmare' from flood insurance increases - WRBL

Homeowners fear 'nightmare' from flood insurance increases

Posted: Updated:
ST. PETERSBURG, FL (WFLA) -

Shore Acres homeowner Chris Dailey feels like a massive increase in federal flood insurance premiums has put his neighborhood between a rock and a hard place.

"Our homes are worth nothing right now,” Dailey said Wednesday. “Nobody is buying or selling any houses. We're stuck. We're stuck in our houses forever."

Dailey said when he bought his house in 1994 flood insurance cost him $230. He remembers it well. He kept the bill.

But since 2006 he’s seen about a $300 increase in premiums each year. This year’s bill was nearly $1600. Nothing could’ve prepared him for what to expect for next year – except for when a neighbor, who has almost exactly the same property value, received his bill.

Dailey knows his bill will likely now be $8,000 too.

"The structure of my house...I could probably rebuild it for about $30,000,” Dailey said. “It doesn't make any sense for FEMA to charge us $8,000 and none of us have been flooded really since hurricane Elena back in 1985."

The changes are coming because of the new Biggert-Waters Insurance Reform Act. It took effect in early October and ends flood insurance subsidies on hundreds of thousands of older houses. The changes are supposed to strengthen the finances of the federal flood insurance program, which has been struggling with about $30 billion in debt after storms like Hurricane Katrina and Sandy, according to CNN.

Because of it, some homeowners will have to pay thousands more for their premiums.

"I have children who live in the flood area,” said Sonny Friedman, who lives near Dailey. “It might be coming to a point: Do they walk away from their house? Do they lose their equity?"

Friedman said he’s above flood stage. But he’s worried about what the hikes will do to the value of his community and houses like Dailey’s, which sits 4.7 feet below the base flood elevation.

"We have a nightmare here,” Friedman said. “Somebody better do something before we see another loss of homes, bankruptcies, and foreclosures."

In a town hall meeting Wednesday night Rep. Dwight Dudley (D-St. Petersburg) urged homeowners to back him in asking the state legislature to push the federal government to delay the hikes.

"That would be the first move sort of [to put a] tourniquet on the wound immediately,” Dudley told News Channel 8. "By getting a delay by a year or two at least we can put this thing under the microscope or at least a magnifying glass and look at this more completely."

Panelists Wednesday night, including the Pinellas Co. Property Appraiser, said misconception around the country is that others are footing the bill to help subsidize flood insurance for rich people on the beaches. While in fact, county records show, out of more than 30,000 properties impacted by the hike, only 253 are homes with a market value over $1 million. Nearly 700 are occupied by veterans and 1,100 by low income seniors. About 22,000 are homes with no water front or view at all.

"It's not mostly rich people affected by this. It's the common people,” said Jake Holehouse, of Holehouse Insurance in St. Petersburg.

People who have a mortgage in a flood zone are required to pay for flood insurance. So Holehouse says a lot of clients are left scraping by.

"One of the worst ones we have is … a customer going from $2,300 to $23,000,” he said.

He said that homeowner only has $200,000 in coverage, so in ten years she could pay the house off every year based on her flood premiums.

He suggests that homeowners get an elevation certificate to know exactly what their elevation is versus the base flood elevation.

"We have some home owners in 1920s homes in flood zones and their premium rates are going down because of this and we have other people that are going severely up. So really without that elevation certificate, it's hard to know what the future of your house is,” he said. "If you're a foot below base flood elevation, you're not going to see severe rate increases because you already pay a higher rate in the … category. If you're 5 feet or 6 feet below, that's when you start to have a problem. That's when you start to see these premium rates of $8,000 to $10,000."

Holehouse said people who bought their homes between July 6, 2012 and Sept 30, 2013, are the most caught off-guard by this because they had no idea the hikes were coming. In all, about 35 percent of county flood policies are directly affected by the hike, which means roughly 10% of homeowners are impacted, he said.

He, too, is hoping the government will delay the increases.

"In partnership with FEMA the state of Florida can work to find a way to be able to make house-lifting grants or do something,” he said.

Follow Josh Green on Twitter: @WFLAJoshG

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