Proposition 10: A Threat to All Property Owners and Investors
Skyrocketing flood insurance premiums sinking you?
Protect your deals from sinking by ensuring your property is covered under new flood insurance regulations. The Federal Emergency Management Agency (FEMA) is redrawing maps for properties across the United States, making some owners responsible for providing flood insurance unlike prior years. Just one year after Superstorm Sandy surprised us by hitting New York, FEMA is tightening regulations to identify high-risk flood areas like never before.
To top it off, the National Flood Insurance Program (NFIP) is cutting government subsidies to diminish $20 billion in debt, resulting in surging premiums for property owners. Depending on a property’s location within a flood zone, rates could nearly double or triple within the next few years. With unaffordable insurance, owners have few options. Lenders won’t sign on a deal without both fire and flood insurance – making a close as difficult as ever.
Legislation is underway to delay the rate hike, with a major push from U.S. Rep. John Garamendi (D-Fairfield) to pass the Flood Insurance Implementation Reform Act in the House. Undoubtedly, the four-year delay proposed by the bill would be beneficial, but is it a solution?
As a property owner, it is more important than ever to research your options. Finding a cost-effective answer can be challenging under the new conditions. To find if your property is located in a high-risk flood zone, check FloodSmart.gov, which provides a database of communities currently undergoing changes. In some cases, you may consider raising the ground floor of your property to reduce flood risk – which is costly, but will lower your insurance premium. Otherwise, secure your insurance with your agent. The NFIP, private insurance companies, or a combination of both can provide full flood coverage to satisfy your lender’s requirements.
With flood insurance legislation changing rapidly, it is difficult to predict what your premiums will be in the future. Make sure you have an insurance agent on top this important issue so your costs will remain above water!
Need more advice on your latest investment opportunity? Let us review your deal to make sure your interests are protected. No strings attached.
