Most but not all homeowners celebrating flood insurance reprieve

March 22, 2014 

Most homeowners are celebrating congressional legislation that backtracks on an onerous 2012 law making national flood insurance policies unaffordable.

They are the winners, with sanity restored to rising premiums -- now capped at 18 percent annually.

Grandfathered rate subsidies have returned, too, and they can now be passed on to home buyers. Plus, refunds are in order for the higher payments that have been required for months.

But there are losers, too.

Owners of older commercial properties in flood-prone areas did not get a reprieve on the loss of subsidies. Small businesses on Anna Maria Island and elsewhere face financial and business challenges.

Owners of investment properties could encounter difficulties when selling older homes in flood zones as buyers might be socked with paying full-risk premiums immediately. The impact on the real estate market will most certainly be negative. Before the new legislation, many homeowners with subsidized rates could not secure buyers.

Even with an 18-percent annual cap on rate increases, homeowners have to be concerned about the future. Premiums will doubtless rise for years until reaching the "actuarial sound" rate.

That is still to be determined. FEMA is contracting out a rate study while the agency remaps flood zones around the nation. We won't know the full impact of this "fix" legislation until those key details become available.

Today's winners could be joining the losers, though.

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