La. residents could get pounded by new flood insurance rates
Thousands of Louisiana residents are about to experience sticker shock when it comes to paying for flood insurance.
Federal subsidies are now being slashed from the state's flood insurance program, thanks to Congressional passage of the Biggert-‐Waters Flood Insurance Reform Act of 2012. Nearly half a million homeowners in this state were covered by the program.
"Some of our policyholders will experience $20 thousand-a-year insurance cost, which is what the actual cost is," said Kevin Davis with the Governor's Office of Homeland Security.
Those who live outside flood protection systems and whose homes are below base flood elevation will feel the biggest impact. Rates for second homes are already going up. Owners of business properties and the thousands of homeowners who experience repetitive losses are starting to get slammed.
"There are about 25,000 homes in Louisiana that are in that repetitive loss risk area," said Davis.
New flood insurance rates for businesses are already stalling sales. Tommy McMahon with Eustis Insurance said in one case, "A new owner was looking at, worst case scenario, a $23 thousand increase in flood insurance." McMahon said the previous owner was left holding the bag on a stalled warehouse sale in Elmwood.
Under the Biggert Watters Act, all the increases won't go into effect at one time, but many homeowners may have to pay as much as 25 percent more each year, for several years.
People inside new flood protection systems in Orleans, Jefferson, and St Bernard Parishes may see rates stay flat. But until new base flood maps come out, nothing's certain.
McMahon said, "Some people may do fine, but some may get popped."
Outside flood protection systems, in places such as St. Tammany, St. John and Plaquemines, residents could see flood insurance costs rise tenfold.
"If you build back now, and you build at the old elevation, you're taking a chance with the new elevations coming in," said Plaquemines Parish President Billy Nungesser, "And it's unfortunate because with the new levee coming on the east bank and hopefully and eventually getting that in the federal system, we'll see that area come back one day."
Perry Duskin isn't waiting. He's rebuilding a home in the Ninth Ward, and said, "Living in this part of the country we're prone for hurricanes, and it's something we have to live with."
But he and thousands like him now brace for flood insurance rate hikes as federal subsidies are phased out.
The federal subsidies for flood insurance had accounted for between 40 and 70 percent of flood insurance costs for most homeowners.
In the past, the National Flood Insurance Program has been threatened with cancellation from time to time. Now, after the financial restructuring done by the Biggert-Waters Act, it's expected to remain in place for four more years.
The new flood maps are just about ready. FEMA has put out a schedule of flood map open houses.
Here's the schedule: