Millions of Americans face higher flood insurance premiums

Millions of Americans face higher flood insurance premiums

Millions of Americans face higher premium for flood insurance protection after a new law that came into effect this month. The new law allows the insurers to increase the premium by up to 18 percent. As many American families are still struggling to recover from Sandy, they are now starting at higher premium costs for flood insurance.

The insurance premium is usually high for families living in areas with high risk of flooding. For the second time in two years, Congress has made changes to the legislation, allowing the insurance providers to increase the premiums. The Congress says that the changes are necessary to save National Flood Insurance Program. The changes made to the legislation in 2012 increased premiums for some homeowners by nearly 25 percent.

The National Flood Insurance Program has been paying more than the premiums it receives from insured homeowners. More than $260 billion in flood-related damages have been recorded between 1980 and 2013, according to Federal Emergency Management Agency (FEMA) spokesman Rafael Lemaitre.

All flood insurance customers will be charged $25 additional surcharge on their annual premium. Homeowners with a ‘secondary home’ such as vacation property will be paying $250 surcharge. The Congress also aims to limit the annual premium at less than $2,500 for an insurance cover of $250,000.

Federal Emergency Management Agency (FEMA) will conduct a detailed study flood insurance affordability. The agency has been asked to submit a report within 18 months. FEMA will also be submitting its report regarding compensating policyholders who can’t afford to pay higher premium, within 36 months.

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