Flood premiums rising

Published 12:10 pm Saturday, September 28, 2013

FRANKLIN—Business owners or residents located near water, or even listed in a flood zone, will soon find their views to become spoiled.

Effective Tuesday, Oct. 1, flood insurance premiums nationwide are scheduled for a rate increase ranging from 10 percent to 20 percent, and some even as high as 25 percent. Todd Rose with Allstate in downtown Franklin said this began when Congress failed to fund the National Flood Insurance Program. This lack of money has prevented the Federal Emergency Management Agency from paying out claims.

To replenish the coffers, Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012.

“The long and short of it is that the public will see a 20 to 25 percent increase, with no cap in sight,” said Rose. “I don’t know what can be done.”

Further, he said, subsidies are going away for many property owners whose buildings were made before a Flood Insurance Rate Map was created in the mid-1970s.

To help determine what rate is to be charged, Rose highly recommended getting an elevation certificate. This can determine where your house is located and how far above a flood zone. A licensed surveyor is needed, and the cost can range from $400 to $700.

While getting one isn’t required by law, he said, you’ll have need to do it.

Speaking of need, new business or homeowners could be required by their mortgage companies to have flood insurance.

“The changes, theoretically, could price a business out of work or a homeowner out of a house,” Rose said. “It’s a reasonable assumption.

“I personally could see people walking away,” he continued. “I don’t know what’s going to happen.”

He repeatedly suggested that in order to reduce premiums, people contact their respective insurance agents on whether coverage or deductibles could be adjusted.

“Get with an agent to review your policy and really fine-tune it,” Rose added.

On learning about the flood insurance changes, Dr. Dylan Belt calculated that in the long run, his rates will climb significantly.

“I learned mine is 364 percent. That’s just based on the new rate versus last year,” the downtown optometrist. He quickly explained that’s a compound rate over the years to come.

“I figure as individuals we could cut coverage, which exposes us to more liability, but cuts premiums,” he added. “Maybe the city could do help.”

Belt has a concern that extends beyond his business.

“My big issue is what happens if anyone tries to sell in downtown or a flood zone?

Banks that require flood insurance might make the property more difficult to sell,” he said. “Luckily, our elevation is not like in Outer Banks. It’s not as bad of an issue as there. Still, it’s going to be a problem for us.”

Dan Howe of the Downtown Franklin Association shares Belt’s worries about the rate increases.

“It definitely could affect us in a negative way, obviously some more than others,” Howe said. “It’s a stepped increase, but in the long run they’re very high rates and very detrimental. They could be detrimental to marketability in downtown.”

Franklin City Manager Randy Martin said that along with Howe and Community Development Director Dan Howe, he’s still learning about the impending rate increases.

“The City’s going to take a hard look at what it can do under the Community Rating Service. Perhaps we can apply something that would improve rates,” said Martin. “We are concerned about it.”