Real estate agents: FEMA’s new flood insurance pricing looks promising


Ms. Hayden has become a strong advocate for fair and affordable insurance – to help people avoid financial ruin in the event of a disaster – and is now the new vice president of insurance for the National Association of REALTORS.

Cyndee Hayden lost everything in a house fire in Philadelphia almost 30 years ago.

His saving grace: his assurance.

Today, she lives on a Florida peninsula and is not naive to think that a storm could take her life again.

Ms. Hayden has become a strong advocate for fair and affordable insurance – to help people avoid financial ruin in the event of a disaster – and is now the new vice president of insurance for the National Association of REALTORS.

She said Risk Rating 2.0, the new pricing methodology for the National Flood Insurance Program, managed by the Federal Emergency Management Agency, will finally cap the price of flood insurance for NFIP customers. In addition, it will only increase by 18% per year until this cap is reached.

“The old system had no mechanism to shut down. It was always increasing, no matter what, for everyone, ”she said. “The proportion of home value and insurance is now equal in the new system,… but in this process, we need to let people know that there is a calm way to make these decisions about whether to they can handle the incremental increases if their insurance increases.

Overall, Ms Hayden has not seen a crash in local markets since the start of Phase 1 of the 2.0 Risk Rating in early October.

“We don’t hear complaints from real estate agents about exploding deals,” she said. “I actually think we are seeing an increase in the number of homes that need flood insurance in these special flood risks which are cheaper because they have a discount.”

A 2011 study from the University of Delaware reported that more than 331 square miles – or 17% of Delaware’s landmass – lies in a 100-year-old mapped floodplain. The distribution of floodplains in the three Delaware counties is similar: 16% in New Castle and Kent County and 18% in Sussex County. But homes in these floodplains usually need to be raised above the base flood elevation.

The Environmental Protection Agency says changing sea levels are contributing to coastal flooding and making coastal infrastructure more vulnerable to damage from storms. But Ms Hayden said the stronger a home, the lower the cost of insurance will be. More people may even begin to engage in mitigation and resilience home improvements based on the feedback.

Michael Dominguez, real estate agent at Jack Lingo in Delaware, said the state’s coastal real estate market has actually skyrocketed since the start of the pandemic as many people can now work from home. Delaware’s central location between many east coast states makes it a popular place to settle, he said, and interest rates and crime are low here. In addition, it is one of the five states in the country with no sales tax.

“People who want beachfront property know the risk they are taking, and they are willing to pay the risk,” Dominguez said. “Let’s face it, if you can afford a (multi-million) dollar beachfront home, you can afford the coverage.”

He said there are always risks to living by the water’s edge, and he tries to address those issues before clients even start looking for properties – educating them about the fees that come with the risk. He also added that since federal insurance only covers claims up to $ 250,000, many beach home buyers will purchase additional private insurance.

“Delaware is fundamentally a peninsula,” Dominguez said. “A lot of people think, ‘The further away I am from the beach, the less chance there is of flooding,’ which is not the case. A lot of these small towns, especially around bridges and canals, are flooded, and when you have a hurricane or hurricane, you need to worry about flood insurance.

Builders take these concerns to heart.

“We make sure that our foundations and the floors of our crawl spaces are above the flood level of eight or nine, while the water table is zero,” said Brian Lessard, CEO of Lessard Builders Inc., who built custom homes in Lewes and Rehoboth. “Builders today focus a lot more on the flood elevations when we’re along the coast, and on that basis we design a home’s utilities, such as ovens and air conditioners, to make sure that it is up to a higher altitude. “

Mr. Lessard said newer homes are not the most at risk in coastal communities, since they are built to withstand extreme weather conditions. Houses built without raised foundations, non-absorbent siding and other weather-resistant materials and designs present the real challenge. In addition, houses that have been built further inland in areas increasingly exposed to extreme weather conditions may need to be rebuilt or renovated.

“Whether you believe in climate change or not, the goal today is to make homes more energy efficient and weather resistant,” said Mr. Lessard. “So we’re not really dealing with flooding issues, but with building houses that will withstand a much longer lifespan. “

Ms Hayden said the new program is an effort to prevent another situation from the Biggert-Waters Flood Insurance Reform Act of 2012. The move aimed to reform the country’s nearly bankrupt flood insurance program, ending federal subsidies for building insurance in coastal areas prone to flooding. Essentially, the financial risk of insuring flood-sensitive properties rested on the shoulders of the owners, not the taxpayers. Coincidentally, a few months later, the Superstorm Sandy hit.

“No one could have known that, and all of a sudden, people who bought flood insurance for $ 2,000, they were now saying, ‘It’s now $ 14,000, and you have to send a check, and we’re not kidnapping it, “” Hayden said. “And they were basically just left out.”

She added that FEMA’s biggest expenses are homes that get hit over and over again. Ultimately, homes that have recurring problems will either be mitigated or the risk will have to be self-funded.

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