Flood Insurance Rates Increasing Now  Will Impact Property Values

Flood insurance premiums are increasing

The Federal Emergency Management Agency (FEMA) is notifying affected property owners that their flood insurance rates will increase starting January 2017 pursuant to the Homeowner Flood Affordability Insurance Act of 2014 . National Flood Insurance Program (NFIP) policyholders that have been enjoying artificially low or subsidized rates will start to see gradual rate increases in their flood insurance premiums starting right now.

Coincidentally, the new flood insurance rate increases come now after 6 years of drought may have lulled Californians into believing flooding won’t happen to them. Recently the State has been drenched in a series of storms that have caused flooding in California neighborhoods, and homeowners in wildfire-damaged areas remain fearful of mudslides and landslides. The combination of drought and sudden rainfall often cause flash floods and other devastation necessitating an insurance claim.

When insurance is required

Federally regulated or insured lenders require properties in high-risk flood areas with mortgages to have flood insurance. According to FEMA, there is at least a 1 in 4 chance of flooding during a 30-year mortgage in high risk areas. Flood insurance is typically not required in moderate to low-risk areas, but anyone can be financially affected by floods. Ultimately, a lender can still require flood insurance, even if a property is not in a high-risk flood area. By determining the level of risks, a buyer can shop smart in choosing a home and for proper insurance protection. Knowing the property is outside the flood zones provides buyers peace of mind and might expedite the escrow process.

Understand the flood risks before purchasing

Flood insurance can be very expensive and it is critical that buyers understand their flood risks before purchasing property. Homebuyers that receive a Property I.D. Natural Hazard Disclosure (NHD) Report are informed in advance if a property is located in zones that require flood insurance coverage. Property I.D. employs a full time certified Floodplain Manager and its Legal Department is available to discuss issues related to flood and other hazards in the Property I.D. Report. To order a Property I.D. Natural Hazard Report, call 1800-626-0106.





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