In the wake of recent flooding disasters, a nation already reeling from its losses suddenly faces extreme spikes in insurance premiums.


In response to events like Hurricane Sandy, a law called the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) implemented new legislation in effort to decrease the $25 billion deficit of the National Flood Insurance Program. Most notably this began by phasing out subsidized rates for older properties in flood zones.

Before BW-12, program shutdowns were costing up to 40,000 home sales each month in high-risk areas nationwide. While the National Association of Realtors is grateful that this is no longer the case, NAR president Gary Thomas noted that there are still major issues with the legislation: "Unfortunately, implementation of the new rate structures in BW-12 has caused serious confusion and hardship for some property owners. FEMA's continued delays and missed deadlines, in combination with the legally required transition to true-risk rates, has been a recipe for disaster."

These drastic increases in insurance rates threaten the financial stability and future re-sale of the affected citizens' homes. To combat these changes, the bipartisan "Homeowner Flood Insurance Affordability Act" was recently introduced in the Senate. Thomas explains, "The bill takes the crucial first step toward delaying further implementation of some rate increases in the Biggert-Waters Flood Insurance Reform Act of 2012. This will allow the Federal Emergency Management Agency (FEMA) to complete an affordability study that was mandated by BW-12, propose targeted regulations to address any affordability issues found in the study, and give Congress adequate time to review those regulations."

For more information on flood insurance rates affecting property value, click here.

For more information on the Homeowner Flood Insurance Affordability Act, click here.