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The Florida Flood Insurance Disaster

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Today I’m writing off topic from the usual addiction and substance abuse articles that I have done for years as a professional writer in the field. While this article isn't necessarily a 'health' article, it affects the mental health of many Florida residents. This is also a personal piece and one that affects not only my family but thousands of families in the state of Florida. The topic I’m talking about is the rising flood insurance rates in the state of Florida. The specific law I’m referring to is the FEMA [Federal Emergency Management Agency] Biggert-Waters Flood Insurance Reform Act of 2012. Under the law, passed in July of 2012 a number of changes have been made on how the National Flood Insurance Program (NFIP) is run. It calls for increases in insurance rates for older homes that are deemed “high risk.”

What the law didn’t say was just how high the premiums would be increased; however this is something that many homeowers have personally found out when it came time to renew their policies.

The Flood Insurance Policy Fiasco

A few months ago I had "a friend" who received the first in a series of letters to renew her flood insurance policy. When she purchased her home her flood insurance rates were around $1,000.00 a year; a price that was fair for the size, contents and location of my home. When she opened her bill this she was shocked; it was over $4,000.00. A 300% increase within just a year? This must be a mistake. She made calls to her insurance company who let her know about this new law that she had never heard about in the news or online beforehand. Nor had she received any information from her insurance company or mortgage company warning her about the increases beforehand. Following this "my friend" received a letter from her mortgage company about the rate increase and an outline of my future mortgage bills; at double or more per month from what she was already paying for my home. Then, if that wasn’t the worst of it, a third letter followed that there was a mistake; and that "my friend's" flood insurance was now sitting at $8,000.00 per year instead of the $4,000.00 she was originally quoted.

FEMA’s “Rules”

According to the FEMA Website in the Frequently Asked Questions Section under “Insurance Costs Rates Section,” there is one question that made this whole change clear:

“3. What changes to insurance operations are anticipated?

Answer: Many of the proposed changes are designed to increase the fiscal soundness of the NFIP.”

Source: http://www.fema.gov/media-library-data/20130726-1912-25045-9380/bw12_qa_04_2013.pdf

So now it is up to Florida home owers to alleviate the financial weakness of the National Flood Insurance Program (NFIP); A program that is now running on a $20 billion-plus deficit following Hurricanes Katrina and Sandy.

I did some additional research on the laws and spoke to several Florida insurance agencies. What I found was that FEMA has an entire series of “rules” that not only lock consumers into these rates but force them in; limiting any power of choice to do anything but pay them. Some of these include:

• The inability to cancel your policy until the time comes to renew it. (For some this could be a one-year wait while they struggle with higher rates.)
• Rules on how much insurance you have to have for your home (tied in with the mortgage company rules).
• Limits and regulations on what insurance companies can write flood policies as well as an approval process to do so. (This minimizes the free marketplace causing a homeowner handicap in their power of choice regarding who to work with on purchasing their flood insurance.)

Are Florida Homeowners Going to Lose Their Homes

Now what? Are a percentage of Florida homeowners with homes deemed 'flood hazards' now going to lose their homes? Or go bankrupt facing the criminal premiums that they have been handed without any real solutions to pay them besides just figuring out how to foot the bill. Florida is also home to many elderly people on fixed incomes. Should they just be pushed out of their homes because of an inability to pay a bill that has gone up several hundred percent without warning?

Freedom of choice in our society is one of the things that make this country one of the best places to live in the world. But, now, with this new Flood Insurance Reform Act what is happening with the government? The passing of this law; the unjust way that FEMA is treating homeowners affected by this policy, the insensitivity of those who many of us have talked to from my mortgage company who say, “well there’s nothing you can really do about this” doesn’t feel free. Laws like this shouldn’t be able to be passed that take the decision and power of choice away from the CONSUMER and from the marketplace.

Sources:

http://www.fema.gov/flood-insurance-reform-act-2012

http://www.floodsmart.gov/floodsmart/pages/bw-12.jsp

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