President Obama just signed a flood insurance relief bill that will make flood insurance more affordable for American homeowners, especially those living along the Gulf and Atlantic Coasts. About two years ago, coastal homeowners saw their flood insurance premiums spike so high, it threatened their financial stability. With such high increases in flood insurance, it has also made coastal properties unattainable for new homeowners who don’t want to take on the financial burden. This, too, has slowed the NJ market.
The original intention of the Biggert-Waters Act was to make the National Flood Insurance Program more financially stable, but really, it placed strain on homeowners living in flood-prone areas. Some of these homeowners didn’t buy in original flood plains, but their homes were deemed at risk and not built to code, so they were impacted by high premiums as well.
When homeowners began voicing their concerns over significantly high premiums after Hurricane Sandy, Congress took up the issue. It’s understandable that making the National Flood Insurance Program more stable would be a major advantage and take pressure off tax dollars, but forcing people from their homes due to such high costs was not a fair alternative.
The new relief bill looks at several different aspects of flood insurance. First, flood insurance premiums are capped under the new bill, at an average of 15 percent. The maximum is 18 percent for primary homeowners, while secondary homeowners may still see their premiums rise by 25 percent. Second, people buying new properties that are on flood plains can have below-market rates passed down to them. Flood insurance may not be cheap, but at least it’s more affordable.
The flood insurance relief bill helps the NJ market by making coastal properties more practical. In recent years, these properties have slowed because people are afraid to foot a large insurance bill each month. The new bill should offer more financial stability for those living along the East Coast as well as people who are interested in purchasing a home off the coast.
In New Jersey, roughly 233,000 homeowners are now covered by federally subsidized flood insurance, with the majority of the properties coming from Ocean, Atlantic and Cape May counties.