Florida is currently between a rock and a hard place—overwhelmed on both sides by considerable insurance rate increases from the National Flood Insurance Program (NFIP) and Citizens Insurance Property.
It does not help that all this is happening during the wake of Hurricane Hermine—the latest weather event to befall Florida and the first hurricane to make landfall in the state in 11 years.
NFIP’s rate hikes began back in April, when premium increases on policy renewals were made. Currently, homeowners can expect their rates to increase on average between 9% and 20%. Properties in low-lying, high-risk flood zones are the ones most affected by the increases, but even homeowners who pay grandfathered low rates are being targeted by the increases as well.
The NFIP’s rate increases could be traced back to the Biggert-Waters Flood Insurance Reform Act of 2012, which was implemented after the NFIP was left with $23 billion in debt from handling claims related to Hurricane Katrina and Superstorm Sandy. Although the bill sought to restore the financial capacity of the NFIP, it came at the cost of putting homeowners at risk of losing their homes due to being unable to paying the increased premiums.
To mitigate the issue, the Homeowner Flood Insurance Affordability Act of 2014 was passed, effectively delaying the premium increases. The bill’s victory, however, is short-lived, with pending rate increases looming.
Citizens Property Insurance is similarly looking to increase its premiums by an average of 6.8%. The insurer has complained of a recent string of expensive water damage claims filed by contractors who have abused the “assignment of benefits” arrangement to gouge the prices of their services.
An opinion piece on the Bradenton Herald
pointed out that the NFIP and Citizens increases “could generate a seismic shift away from waterfront living for all but the rich.” With Hermine set to generate storm surges of up to 8 feet high, property owners in the state will be lucky if they can still afford their insurance afterwards—provided their homes survive the weather event first.
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