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The ‘Downton Abbey’ flood fix

By Jay MacDonald · Bankrate.com
Friday, January 17, 2014
Posted: 6 am ET

Emily and Brian Craig were not to the manor born. They reside with their two daughters in a 1,400-square-foot ranch home in St. Petersburg, Fla.

But because of the merry mess that Congress has made of flood insurance reform, the Craigs are now covered by Lloyd's of London, which has been insuring the British upper crust since the 1600s. And regardless of what happens this week with pending congressional moves to delay the overzealous Biggert-Waters flood reform act, the Craigs will vicariously live one small part of the "Downton Abbey" lifestyle for the next year at least -- without the footmen, of course.

A jump from $2,300 to $21,000

Because the Craigs purchased their home after the overhaul of the National Flood Insurance Program, or NFIP, took effect, they watched in disbelief as their annual flood insurance premium jumped from $2,293 to more than $21,000 overnight.

That's because Biggert-Waters does away with subsidized low flood rates for homes built before the mid-1970s. The phaseout comes slowly, over five years, for most existing policyholders, but immediately upon sale of a home, as the Craigs found out the hard way. Why? Because NFIP is $25 billion in the red, thanks mostly to 2005's costly twin sisters, Hurricanes Katrina and Rita.

"Had we known any of that, we would never have purchased this home," Emily Craig told the Tampa Bay Times. "We're not going to put ourselves in a position where we can't afford something."

Just imagine trying to sell it now.

As luck would have it, the Craigs were able to prove that part of their land was above what the NFIP flood map showed, and thus they could obtain from Lloyd's of London the coverage they needed to satisfy their lender, for an annual premium of $3,300.

Not quite fit for his lordship

The policy wouldn't pass Lord Grantham's inspection -- it doesn't cover possessions and, because Lloyd's is a surplus lines carrier, it does not fall under the purview of Florida insurance regulators. But it allows the Craigs to afford to remain in their home while Congress wrings its hands over how to fix Biggert-Waters.

Congress this week took up two proposed patches. One, tucked inside a $1 trillion spending bill, would delay Biggert-Waters rate hikes through September; the other would prevent flood rate increases for four years, to allow time for a NFIP affordability study.

Rarely content with Capitol Hill solutions, Florida lawmakers are pushing to establish a private flood insurance market within the state as an alternative to NFIP, despite the fact that 83 percent of homes in the Sunshine State will be unaffected by Biggert-Waters.

And so, like the characters in "Downton Abbey," the Craigs watch and wait and hope that this unexpected plot twist will have a happy ending.

Follow me on Twitter: @omnisaurus.

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