The Cost of Flood Insurance is on the Rise in Texas

Amid worsening climate-fueled floods, the Federal Emergency Management Agency (FEMA) is overhauling its insurance rules to better reflect the real risks facing homeowners. An overhaul makes sense - and is long overdue - given climate-shifted weather patterns. Lawmakers call the new scheme an “actuarial death spiral” that won't fix long-standing inequities in the National Flood Insurance Program (NFIP). [According to Reuters.com]

The updated system, applied to new policies from this month, is intended to weigh flood-related factors well beyond a home’s elevation – currently the key metric for determining risk. The new system also applies to policies that renew on or after April 1, 2022. The new system factors in the type and frequency of floods, a property's proximity to water and the cost of any rebuild.

FEMA estimates two in three existing policy holders will see an average premium increase of up to $10 a month and about a quarter will see immediate decreases. Premium changes would continue until the new "risk rate" is fully realized.FEMA estimates that about 50% of policies will hit that mark after five years and about 90% will reach it at 10 years.

U.S. residents in high-risk areas with federally-backed mortgages are required to carry flood insurance. The NFIP covers about 5 million policy holders, collectively totaling about $1.3 trillion in coverage. The new system is a step forward – though it fails to force people living outside designated flood threat zones, but who could still be at heightened risk, to buy insurance, said Nalan Senol Cabi, an expert in the field.

Adding more people outside of official flood zones could theoretically help shore up the NFIP's finances with homeowners who pay into the system but who might not face claims or payouts in the immediate future. FEMA anticipates that the new rules will spur more property owners to buy policies since they'll have a better understanding of their individual risk.

FEMA is making the changes as officials struggle to keep pace with rising costs associated with extreme weather events. In the first nine months of the year, there were 18 U.S. “weather and climate disaster events”, said the National Oceanic and Atmospheric Administration. Each one was associated with losses exceeding $1 billion, according to NOAA.

'DEATH SPIRAL'

Lawmakers representing coastal regions say the new system will create unintended and costly consequences. U.S. Sen. Bill Cassidy of Louisiana said a resident of flood-prone Lake Charles, with a home outside the official flood zone, could see their annual insurance premium jump from about $570 now to $5,200 under the new plan over the coming 10 to 15 years.

The senator said people who can’t afford insurance and who otherwise aren't required to carry it would simply drop coverage, further up-ending a system already in the red. Federal assistance can be available for damage not covered by insurance - but people in high-risk zones who are uninsured and receive assistance after a flood might be required to buy insurance to receive aid in the future, according to FEMA.

“FEMA is not being upfront about these costs in the (long run), and that is what’s going to set up our actuarial death spiral,” Cassidy told reporters last month. In the last 50 years, FEMA has collected about $60 billion in NFIP premiums and paid out $96 billion in costs. [Sourced from Reuters.com]

If you are questioning if you should get flood insurance or not, it is important to note that people are four times more likely to be affected by flood waters than they are to have their house catch on fire. So if you are debating to or not to spend $500 or so dollars on flood insurance, I personally think the answer is yes!

If you are looking for an insurance expert to help you write all your insurance policies, I recommend reaching out to Alice Green at Goosehead, here locally in Texas. She is my go to, and holds 95% of my policies including, dwelling insurance for my rentals, life insurance for my husband and I, car insurance for myself, my family, and my extended family, and good ol' fashioned home owners insurance on my primary residence. 

Alice Green, Goosehead Insurance

832.423.0202  |  MOBILE

281.602.3950  |  DIRECT

www.goosehead.com | [email protected]head.com

download_our_local_maps We are so happy you found our little corner of the interwebs. We look forward to y'all reaching out to us. We love to answer questions and welcome them. Recently we created some local maps, and you can download those by clicking the image/link above. Below, you will find an index of some very helpful information to assist you in learning more about the Houston suburbs. If you are relocating to our neck of the woods, we hope you reach out to us, because we would love to help you by being your local realtor and friend. Hugs, Jo. Thoughtfully written for you by Jordan and the Jo & Co. Team.   here for you at jo and co

We are Waiting for You

If you are looking to relocate to the Houston Area, we would love to meet you, and hear your story. Below you will find all of my contact information, as well as some homes for sale in the area. We truly look forward to hearing from you! P.S. Don't forget to check out our YouTube Channel!

If you are overwhelmed..

Now if you are feeling overwhelmed on where you should plant your roots, I would love to talk to you. You can schedule a call with me by click this link: http://byjoandco.com/call or just send us an email: [email protected]. There are some amazing communities all over the Houston suburbs. In this post, https://search.byjoandco.com/blog/best-neighborhoods-in-houston/, I deep dive into all the different suburbs/neighborhoods that you might want to consider, and why. There are many resources here, so please reach out if you are curious what to look at next! Thank you for trusting us.

Links to check out..

➟ Our YouTube Channel :: http://byjoandco.com/youtube
➟ How do property taxes work in Texas? :: http://byjoandco.com/propertytaxesintexas
➟ Things to do in The Woodlands :: http://byjoandco.com/inthewoodlands
➟ Safest Neighborhoods in Houston :: http://byjoandco.com/safesthouston
➟ Best Neighborhoods in Houston :: http://byjoandco.com/bestneighborhoods
➟ Houston Texas Where to Live :: http://byjoandco.com/houstontexaswheretolive
➟ First Time Texas Home Buyer :: http://byjoandco.com/firsttimetexasbuyer

What next?!

• Download our Moving to Texas ebook! http://byjoandco.com/movingtotexasebook.
• Download our Where to Live in Houston Texas ebook! http://byjoandco.com/wheretoliveebook.
• Schedule a phone call or appointment with us! http://byjoandco.com/appointment.
• Email us! [email protected].
• Looking for a buyer’s agent? Fill out our buyer questionnaire! http://byjoandco.com/q.
• Ready to find your dream home? Search, http://search.byjoandco.com.
• Subscribe to our YouTube Channel: http://byjoandco.com/youtube.find your piece of texas

At Jo & Co. we know that most people struggle with the home buying or selling experience. We are a brokerage, real people, that do more for you, by being with you every step of the way, so that you plant your roots in the right soil. One way that we go above and beyond is with the content we share on YouTube. Click the photo below to explore our channel.

Post a Comment