According to FEMA, only 20% of Americans are covered by flood insurance. If you have a need for flood insurance in your area, you may want to listen up. Flood maps are changing, mortgages, individual home ownership and communities are being remapped. Whether you’re under private or national flood insurance flood insurance could play a major role in your life and your future move or relocation.
What is considered flooding?
The National Flood Insurance Program says that flooding is when two or more acres of normally dry land, or two or more properties (one must be yours) are taken with an overflow of inland water from a variety of sources. The cause of these floods matters greatly. Landslides, hurricanes, earthquakes or other disaster which influence flooding are some of the scenarios accounted for.
How is flood insurance dictated?
Flood insurance is dictated by the propensity an area has to flood. Adverse selection is opposed by most private insurers because federal government most often supplements a stratagem to deal with the occurrence. The federal government also can requires flood-prone areas to purchase flood insurance with a mortgage. This can hike home ownership prices dramatically as we will explain bellow.
Where are we now?
First of all, a hunk of home buyers feel that flood insurance is provided in homeowner insurance. This is not true. As of now, the National Flood Insurance Program is tens of billions of dollars in debt. In place now is a bill from 2012 that makes people in flood-prone areas pay more taxes for their personal coverage. The issue at hand is this. While the government began to transfer their debt directly to homeowners everywhere in taxation, FEMA came out with flood maps. Essentially these flood maps categorized the most “At Risk” areas and skyrocketed premiums for them. The new bill will spread the taxation to people in non-risk areas. Fair? That’s an issue.
What does this mean?
Depending on what is voted upon, these new flood maps will do a few different things. If the bill implemented then people will be allowed to build in areas where floods once consumed houses and still pay low premiums. If the plan is overturned premiums will rise steadily in those areas. (That’s a short-term solution.) Essentially it’s a large taxation issue and could wreck certain long-time owners in those particular areas.
Wherever the vote goes, pay close attention. If you live in a flood state, or are planning on moving towards one seek out your map here and see what private and federal insurance is available. The costs may be so absorbent that you’d put moving there aside for good.