Higher rates for Columbia SC flood insurance under the National Flood Insurance Program took effect on April 1st. The increase hiked individual policy premiums for homeowners in high-risk areas by as much as 25 percent.
The Homeowner Flood Insurance Affordability Act of 2014 carries some premium increases of up to 18 percent for primary homeowners and 25 percent for owners of vacation homes or rental properties. A new surcharge will also be assessed.
Most homeowners' insurance policies don't cover flood damage, although many cover natural disasters such as hurricanes, with the most expensive policies tied to coastal properties that are most vulnerable to storm damage.
Most consumers in designated low-lying zones must buy special coverage to add protection against floods. The average premium for Columbia SC flood insurance is $650 a year, according to the federal flood insurance program.
Columbia SC Flood Insurance Isn't Mandatory
Columbia SC flood insurance isn't mandatory in most cases, especially if you own your home outright. But homes and businesses in flood-prone areas are required to have flood insurance to qualify for federally insured mortgages. Essentially, this means that flood protection is needed by a majority of homeowners.
Although Columbia SC flood insurance is not mandatory, like with windstorm coverage, flood insurance rates for some properties in high-risk areas can be much higher. About 5.2 million Americans carry flood insurance policies. The premium increases are estimated to affect about one million of these homeowners according to a spokesman for the Federal Emergency Management Agency, which administers the flood program.
Because of massive hurricane damage, from Katrina, Sandy and other destructive events — the flood insurance program has racked up billions of dollars in debt. But last year's Homeowner Flood Insurance Affordability Act (HFIAA) eases the impact of rate increases for many policy holders.
In passing HFIAA, Congress rolled back price hikes called for under previous legislation, the Biggert-Waters Flood Insurance Reform Act of 2012, after coastal property owners, state lawmakers and real estate interests complained.
Find more articles as they relate to Columbia SC flood insurance under our Columbia SC Insurance section of articles to your right under Columbia SC Real Estate Categories.
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Mortgage Rates Move a Bit Lower
Mortgage rates moved a tad-bit lower over the past week or so, basically remaining in a holding pattern.
Freddie Mac says the average rate on a 30-year fixed-rate mortgage in the week ending Aug. 29 was 4.51 percent, down from 4.58 percent the previous week. 30-year rates are still close to 1 percent higher than they were a year ago. Mortgage rates still remain low by historical standards.
A 15-year fixed averaged 3.24 percent in the week ending Aug. 29, up from 3.21 percent last week. A one-year adjustable-rate mortgage averaged 2.67 percent, up from 2.63 percent.
Separate reports on housing last week may indicate higher rates have sidelined some buyers.
New home sales fell more than 13 percent in July, while pending sales of existing homes declined 1.3 percent last month.
The Mortgage Bankers Association reports a continued decline in mortgage applications, with applications to refinance an existing mortgage at a two-year low last week.
Mortgage rates have been rising because they tend to follow the yield on the 10-year Treasury note. The yield also has surged on speculation that the Fed's stimulus will slow. But the rate on the 10-year note declined last week to 2.78 percent from 2.90 percent the previous week.
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Will Flood Insurance Cost You More?
Last year Congress passed, and President Obama signed, the Biggert-Waters Flood Insurance Reform Act of 2012. The law extended the National Flood Insurance Program for five years and calls on the Federal Emergency Management Agency (FEMA) and other agencies to make a number of changes to the way in which the National Flood Insurance Program (NFIP) operates. Some of the required changes have occurred already, while others will be implemented in the coming months and over time.
The most important provisions of the legislation are aimed at putting the program on a more solid fiscal foundation and building a catastrophic reserve fund to provide for claims in years with unusually costly flood disasters. To strengthen the NFIP financially, the new law requires FEMA to begin charging rates that reflect true flood risk. The vast majority (81%) of NFIP policies will not be affected by the new law, because their premium rates already accurately reflect their flood risk.
For more information about changes to FEMA’s Flood Insurance Rate Maps (FIRM) and to see if your property is affected, click here.
Rate Changes Already Underway:
Full-risk rates now are being applied to newly purchased property, to property not previously insured, and to policies that are re-purchased after a lapse.
Premiums for older (pre-FIRM) non-primary residences in Special Flood Hazard Areas (SFHA) will increase by 25% annually until they reflect the full-risk rate.
Beginning October 2013:
Premiums for pre-FIRM business properties, severe repetitive loss properties (1–4 residences) and properties on which claims payments exceed fair market value will increase by 25% annually until they reflect the full-risk rate.
Routine rate revisions will include a 5% assessment to build a catastrophic reserve fund.
Anticipated in Late 2014:
Premiums for properties affected by map changes will increase by 20% each year to reach full-risk rates.
Who Won't Be Affected:
Owners of primary residences in SFHAs will keep the subsidized rates until the home is sold; the policy is allowed to lapse; a new policy is purchased; or a string of severe losses is experienced.
Post-FIRM rates for all zone classes will be unaffected by Section 100205 of the Biggert-Waters Act.
Phase-out of Other Discounts:
The new law calls for phasing out discounts, including grandfathering. Grandfathering allows homes that were constructed according to an earlier standard to retain that insurance rating when new maps are issued. Because of the complexity of this issue, FEMA is conducting an analysis before full implementation can take place, scheduled for late 2014. Many discussions are taking place in Congress that may further affect the implementation of this provision.
Premiums also will increase for properties insured by the Preferred Risk Policy (PRP) Eligibility Extension, which had allowed structures mapped into a high-risk area to remain insured at lower PRP rates.
Phase-out of both grandfathering and the Preferred Risk Eligibility Extension will begin in 2014. Rates are anticipated to rise 20% per year over a 5-year period until they reach full risk rates. The CRS discount rates will not be affected by the Biggert-Waters Act..
Preparing For The Next Big Storm
So far, the 2013 hurricane season has been eerily quiet. There's no telling whether the rest of this hurricane season will bring anything like Superstorm Sandy, which flooded more than 150,000 homes, killed more than 140 people, and left about 8.5 million homes in 20 states without power. A relatively minor storm can also cause major damage if it includes high winds, heavy rain, or tree-snapping ice or snow.
Even a simple blackout can happen at any time and last for days. More than a half-million residents were still without power three to four weeks after Sandy struck. And if you think most homeowner insurance policies cover disasters, think again: Flood insurance is just one of the "extras," assuming it's even available in your area.
Some areas are obviously more prone to hurricanes and tropical storms than others. But whether it's hurricanes, tornados, earthquakes, or just a plain old severe thunderstorm, no one is 100 percent immune from Mother Nature. There are some things you can do well in advance of a hurricane, or other super storm.
Things To Do Now, Well in Advance of the Next Big Storm:
Build an Emergency Kit
It should have a whistle to attract help, dust masks for each member of your family, duct tape, a wrench or pliers to turn off water if needed, flashlights and batteries, and local maps. Plan on 1 gallon of drinking water per person per day for at least three days. Include moist towelettes, garbage bags, and plastic ties for personal sanitation. Also consider changes of clothing and sleeping bags or blankets.
Be Prepared for Injuries
A first-aid kit should be stocked with bandages in various sizes, sterile dressings and gloves, hand sanitizer and antibiotic towelettes, a thermometer, pain medicines, tweezers, and scissors.
Check Your Fire Extinguishers
You should have one with a minimum classification of "2-A:10-B:C" on each floor. Check the dial or pop-up pin for adequate pressure each month. Professionally repressurize extinguishers older than six years, and replace any older than 12 years.
Have the Right Phones
Keep at least one corded phone because cordless phones require AC power. A post-Sandy survey also found that cell phones were more reliable than landline phones, though we lack data on differences for fiber and cable vs.older copper-wire systems. Be sure cell phones are charged. And have an out-of-town contact you can call, because long-distance phone service can be more reliable than local service during and after a storm. Be sure to have emergency numbers already pre-programmed into your cell phone. You don't want to be scrambing around trying to find emergency numbers when an actual emergency occurs.
Have Some Ready Cash
Banks and ATMs could be out of service, assuming you can get to them.
Stay Safe During a Storm
Find the safest place. Stay in a central room without windows. Have kids? Ease the fear factor with books, a toy or two, and if you have power or a generator, some movies and video games.
Avoid Electrocution Risks
Don't use any plug-in device if flooding or wetness is nearby. Landline phones can also be a shock hazard in an electrical storm. If you must make a call during a storm, use a cell or cordless phone if possible—or use a landline phone's speaker mode to reduce contact with the handset. Avoid baths and showers until the storm passes. And watch out for downed power lines and live wires.
Use Cars Safely
Obey emergency crews and follow designated routes. If your vehicle stalls in water, shut off the ignition and seek higher ground; the leading cause of Sandy-related deaths was drowning.
Next month in our October newsletter, we're going to cover additional items related to storms, like "Damage Control After A Storm", and "Home Insurance: Are You Really Covered?"
A new report details the cost and extent of one of the worst years for floods in recent history.
CoreLogic estimates flood losses in the U.S. this year at approximately $10.67 billion, three times the amount forecast for next year, based on various flooding and storm events recorded in the National Climate Data Center.
CoreLogic suggests that flood insurance coverage to be expanded to protect more territory. The floods of 2011 heightened awareness of the flood risk outside of the FEMA 100-year flood zones, the report states. There has also been an emphasized need to raise current flood protection standards for the critical and strategic infrastructures in the U.S.
Based on the trend pattern, 2012 should not be an extreme flood year – in fact, there should be several more years before the next extreme flood loss year. U.S. flood loss in 2012 is projected at approximately $3.53 billion.
Before the federal program was launched in 1968, few private carriers provided flood insurance because of the cost and destructive power of floods. Under the program, homeowners in FEMA flood zones are required to buy policies from insurance companies — about 90 provide it — and the government pays for flood damage with federal funds collected largely from homeowner premiums.
This year’s big losses could drive the program further into the red, or it could underscore the need to continue and possibly expand the program to protect property that does not qualify for coverage today.
Do you have flood insurance? We’d love to hear how you feel about the federally funded flood insurance program. Is it too costly for our government to continue funding, or do you think it’s something our government should offer at whatever the cost? Click the comment link below and tell us what you think.
Homeowner’s insurance can be a bit complicated. One of the best ways to make the most of your homeowners insurance is to have an up-to-date home inventory of your personal possessions.
You can also better protect yourself by knowing what’s covered and what’s not.
Here are the five most common misconceptions about homeowners insurance:
- Damaged items are replaced at cost. When surveyed, most policy holders did not know the difference between cash value vs. replacement cost. Actual cash value refers to the amount it takes to repair or replace a home’s contents after depreciation. On the other hand, replacement cost pays the amount actually spent to repair or replace the property. Replacement cost coverage for your personal items is included in some policies, but if your policy does not provide the coverage, it is typically available at an additional cost.
- Flood damage is covered. Not true. Most standard homeowners policies do not cover damage sustained by floods, even though 33 percent of policy holders think otherwise. Be sure to check your policy’s limits, and get flood coverage if you think you’re at risk.
- Mold damage is covered. Not true. Like termite infestation, mold damage is generally not covered under the typical policy, although some policies cover a limited amount of mold damage if the damage is the result of a covered water loss. Take measures to reduce your risk by:
*Moderating your home’s humidity level.
*Check for damp walls or carpets that could serve as mold breeding grounds.
*Repair water leaks promptly.
*Replace washing machine hoses on a routine basis to avoid accidental leakage.
*When leaving your home for an extended time, turn off water and drain pipes.
- Sewer backups are covered. Not true. Sewer backups are generally excluded from most policies, but some companies offer extra coverage for damage caused by water or sewage which backs up from off the homeowner’s property.
- Earthquake damage is covered. Not true. As with floods, standard insurance policies generally don’t cover earthquake damage, so if you feel your house is at risk, you may want to purchase a separate Earthquake endorsement to make sure you’re protected.
If in doubt, ask! Check with your insurance provider BEFORE disaster strikes and you find out you’re not covered for that.
The House of Representatives passed yet another short-term re-authorization of the National Flood Insurance Program. The most recent extension will keep the program going through November 18. This is just the most recent in a series of short-term extensions to the NFIP. Apparently there are legislative efforts to extend the program for the next five years.
No bank will lend on a property in a flood-prone area without flood insurance. So when the NFIP lapses (as it did last year), it makes it nearly impossible to sell a home in a flood area, and any scheduled sales are held up due to the lack of insurance. Regardless of whether it makes sense for the government to encourage people to build homes in a potential flood zone is a separate issue, because these houses already exist and are dependent upon the NFP. This is the system we are largely stuck with.
In light of this, some groups, such as the National Association of Realtors (NAR), are advocating for a long term extension of the NFIP. In a press release, the NAR stated that “the NAR strongly supports the NFIP and believes that a 5-year extension of the program’s authority to issue flood insurance is essential to a properly functioning real estate market”.
There really is no excuse for Congress not to extend the NFIP as the many real estate transactions are utterly dependent upon it. Since 2002, the program has been allowed to lapse 11 times, and then retroactively re-authorized.