Posted on 09/26/2013 12:55:01 PM PDT by Theoria
When Colin and Joyce Elston bought their Florida dream home in May, they were confident they could afford the three-bedroom, two-bathroom ranch with a pool and a backyard overlooking the Intracoastal Waterway.
Now they are not so sure.
The retirees said they had enough in savings and investments to pay the mortgage and the $1,482 yearly flood insurance on the home, which sits on palm tree-lined Paradise Boulevard on Treasure Island, a barrier island in the Gulf of Mexico.
But within two months of moving in, they received a stunning surprise: Due to a recently passed federal law, their flood insurance was slated to jump from less than $1,500 to $12,000 a year.
The rate hikes, which go into effect on Oct. 1, are due to the Biggert-Waters Flood Insurance Reform Act of 2012. The measure was passed to keep the National Flood Insurance Program solvent after an onslaught of claims from Hurricane Katrina in 2005. Essentially, what it does is remove federal subsidies from properties in flood zones.
"Everyone's going to pay more for flood insurance," said Lee Gorodetsky, an insurance agent in Fort Lauderdale. "It's just a question of how much. And we've seen so many floods now: Colorado, last year, hurricane Sandy, before that, other parts of the country. And it's obvious the ... program is bankrupt."
The Elstons and others who bought property in flood zones after the act was signed into law on July 6, 2012 will see their premiums increase nearly tenfold. Residents and businesses that already owned property in flood zones will see incremental increases of 25 percent annually.
(Excerpt) Read more at timesleader.com ...
Taxpayers should not be rebuilding your house when you live in a flood plain or anywhere else.
I live in the woods in north central floriduh and it is a constant battle each year to keep insurance. They always raise it or cancel and there is also a hurricane fee tacked on as well. Its just crazy!
You want to live there, you pay the price, why should my money be used to bail you out? The only issue I have is that it treats home-owners differently, with respect to the premium rate hike.
Yep. Time they payed for their own insurance. Nobody is paying mine now nor will they in the future If you can not afford to live in a flood zone then don’t. i don’t nor would I. Although my insurance is pretty high without being in a flood zone.
I’m wondering just how much a three-bedroom, two-bathroom split level with a pool on the intercoastal waterway goes for. In round numbers.
Just for a bit of perspective.
I mean, any house built in this particular neck of the woods is subject to getting the Wizard of Oz treatment during hurricane season.
Sure. Perhaps getting rid of the subsidies will make it more ‘affordable’.
This law makes way too much sense. How did it ever pass?
Not following you here, Theoria.
“The retirees said they had enough in savings and investments to pay the mortgage and the $1,482 yearly flood insurance on the home”
Retirees who need to take out a mortgage to buy a house ought to consider downsizing so they can pay cash and have the peace of mind knowing the bank cannot foreclose them.
Now this couple is facing an insurance bill they cannot afford and may default on the house.
That sounds like a much better idea than whining. I don't want to pay for their insurance through taxes. IMO it's a private matter between the Elston's and those they transacted business with.
Flood insurance used to be offered in the private insurance market and then the government took it over. Now, the rates are willy nilly as it has transition to a “transfer of risk” to a funding entity of FEMA and therefore a redistribution monster for the Feds!
Expect the exact same with health care.
“Insurance” - is a bet against a loss. All who have similar policies share the risk (spread it out).
If I am a high-risk driver (at-fault accidents, excessive speed/moving violations) - then I pay a SIGNIFICANTLY higher rate than a good driver, IF I can even GET insured.
If my home has experienced several expensive homeowner’s insurance claims, my rates are going to go through the roof.
It’s about RISK.
So - if I live where flooding isn’t a matter of “if”, but “WHEN” and “HOW BAD” - the risk is clear... there WILL eventually be claims - and usually VERY EXPENSIVE claims. Should the decision to live in a flood-prone area come with insurance rates that reflect that risk?
Wait until a tree falls on your house, or it burns down in the middle of the night, then go take out a policy to cover it.... (and to add insult to injury, not only expect the new policy to cover the pre-existing damage, but also to come at a price tag lower than your neighbors).
Oh - but this isn’t much different than any “government insurance”... Apply ObamaCare mentality to flood insurance (or homeowner’s insurance, or car insurance) -
You don’t even have to take out flood insurance and when a hurricane or flood comes - go buy flood insurance AFTER the disaster. Foot - you don’t even have to do that - FEMA will bail you out (oh - wait -that has already happened....)
Don’t buy auto insurance - just wait until you have a claim, THEN buy insurance (and expect to receive the same rate as everyone else, even though you are a high-risk driver).
Back in our grandparents’ day, people remained in their original homes in retirement. By then the home was usually paid for. Now we see 70 yr olds taking out mortgages. Ridiculous!
Parents in my case. The loans may be imprudent in the real world, but don’t forget, age discrimination is illegal.
They could afford the insurance as quoted. They will never be able to sell without huge losses because of change in government policy.
Their plight is emblematic of the horrendous market distortions in all aspects of our lives, the consolidated government has inflicted on us these past 80 years.
Obamacare is just the latest distortion.
On the bright side, maybe more NY, NJ, MI yankees will stay out of Florida.
OK, but I was asking for a rough figure of what a home - like the one described in the article - goes for.
See, my suspicions are aroused when read the AP article, which lists the characteristics of the property without giving the price of the property, which is probably fairly easy to ascertain. Like by asking Colin and Joyce Elston this question: "what did you pay for your home, Mr. and Mrs. Elston?"
A minute or two of looking on Google reveals that there are homes with similar description - on Treasure Island Florida, on Paradise Boulevard - that go for nearly one-half million dollars.
If it should happen to be the case that Colin and Joyce Elston's little three-bedroom domicile cost upwards of $400K, the average Joe Sixpack across the fruited plain might be just a little less sympathetic to their plight than the owner of a typical three-bedroom, two bath duplex in - say - Sheboygan, Wisconsin.
I did just the opposite. Took out as much equity as I could and refi'd at 3.5 fixed for 30 yrs. Plan to repay with Baraqqi/Bernanke/Geithner/Lew minibucks.
Rush talked about that issue years ago.
His rate would have paid for his house in a couple of years.
He said screw it - no mortgage on the house so didn’t need flood insurance.
He said if a Hurricane knocked it down he’d build another out of pocket. Of course he added the house was built to withstand something like a Cat 5.
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