If you've ever been in or near a flood, you've seen how nature turns things upside-down. Suddenly, what's below you is no longer ground, and the goal is to keep your feet in the air until the waters recede.
Many homeowners across the country are about to experience a similar disorienting feeling when they receive notice that their National Flood Insurance Program, or NFIP, premium is going up.
Big flood insurance hikes, particularly in Fla.
Florida's low-lying Pinellas County on Tampa Bay where I live figures to be hit hardest nationally, with nearly 51,000 properties, or roughly 1 in 8 homes and businesses, expected to see flood insurance increases of up to 25 percent in the coming months. An estimated 268,000 policyholders in Florida alone could face similar rate spikes as well.
Why? After all, Florida has been relatively dry for decades. Well, prepare to lift those puppies 'cause here comes that upside-down feeling I mentioned.
According to a 2011 analysis by the University of Pennsylvania's Wharton Risk Management and Decision Processes Center, Florida has paid $16.1 billion into the federal flood insurance program since 1978, yet collected just $3.7 billion in flood claims during the period. Compare that to, say, Louisiana, which paid in $4.4 billion over the same period yet collected more than $16 billion in flood claims. Texas ($5.5 billion), New Jersey ($4.8 billion) and New York ($4.4 billion) all collected more payouts than Florida.
In fact, it can be argued that flood assessments in the Sunshine State have kept NFIP afloat in recent years, if one can call an agency that's been some $18 billion in the red since the 2005 double-whammy of Category 5 hurricane Katrina and Rita "afloat."
Rates rising thanks to new law
To try to right the good ship NFIP, Congress passed the Biggert-Waters Flood Insurance Reform Act last year, part of which calls for the elimination of the relatively cheap, subsidized flood insurance premiums that longtime Floridians have enjoyed for years. As a result, older homes in neighborhoods that adopt new flood maps as proposed by the act could see their flood insurance rates double in five years.
While logic might suggest that Florida should be given a break, rather than a bump, on its flood rates based on its lopsided contribution to NFIP's disaster fund, the reality is that, with 1,200 miles of coastline, the FLA remains the state most at risk of catastrophic flooding. NFIP's risk models look both ahead and behind, and every flood-free year that passes brings a big flood that much closer. Just ask Sandy-ravaged New Jersey.
Despite the wear on our wallets, it's still reassuring to know that NFIP is there to keep our lives from being permanently turned upside-down by flooding.
Follow me on Twitter: @omnisaurus
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Jay MacDonald is a Bankrate contributing editor and co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters.