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Flood insurance rate hikes take effect

By Crissinda Ponder · Bankrate.com
Wednesday, October 2, 2013
Posted: 9 am ET

Amid the disarray generated by the federal government shutdown and hiccups with the new health insurance exchanges sits a very expensive new reality for many Americans: steep flood insurance rate hikes.

A protested provision of the Biggert-Waters Flood Insurance Reform Act of 2012, aka BW-12, delivers a direct blow to homeowners and business owners in flood-prone areas of the U.S. through an annual 25 percent increase in rates, until those rates reflect "true risk." And that's if you remain in your home and keep renewing your policy. If you sell, the rates could immediately skyrocket by as much as 3,000 percent for the next owner, according to the Miami Herald.

The provision took effect Tuesday, despite bipartisan efforts to delay its implementation.

Bill to delay rates hits snarl

The White House and congressional leaders' inability to approve a budget for the 2014 fiscal year overshadowed a proposal to postpone the rate increases.

The Associated Press has reported that the proposal calls for the rate hikes to be postponed until 2014, and is sponsored by Sens. Bill Nelson, D-Fla.; Robert Menendez, D-N.J.; David Vitter, R-La.; Mary Landrieu, D-La.; Elizabeth Warren, D-Mass.; and Brian Schatz, D-Hawaii.

BW-12's purpose is to revamp the National Flood Insurance Program and "make the program more financially stable," which means the eventual phasing out of subsidized rates for most residential and business properties, according to the Federal Emergency Management Agency, or FEMA, website.

Tens of thousands affected in Fla.

With the rate increases now in effect, 13 percent of the 2 million homeowners in Florida who have flood insurance policies will be hit. They are among nearly 20 percent of policyholders across the country, reports the Herald.

"My legislation to fix this is being blocked right now by partisan politics and those who continue to oppose the existing health care law," Nelson told the Associated Press in an email.

Other rate changes resulting from BW-12 are not scheduled to take effect until late 2014, after flood hazard remapping is complete.

Whether the proposal will make its way through Congress and to the White House remains to be seen.

Follow me on Twitter: @CrissiPonder.

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