NEW ORLEANS — If you live in south Louisiana, you need flood insurance.
Heavy rain events and hurricanes in recent years pushed high water into thousands of homes and businesses in the New Orleans and Bayou regions of the state causing billions of dollars in damages. Now, the price of flood insurance at the only place you can buy it, may soon be too expensive for many property owners.
“They’re going to be faced with rates that are six, eight times higher than they had previously been,” said Jefferson Parish realtor John Sibley from The Sibley Group at Keller Williams.
FEMA has introduced a new risk rating system for its National Flood Insurance Program. It prices each home individually rather than by flood zone. The system considers things such as how close the property is to water, the height of the land underneath the home, square footage and how often the street has flooded.
“Everybody is being impacted and the majority of people are being impacted negatively,” Sibley said. “Now, even within that same zone, that was a lower risk zone previously, now you may have one house that is one price and another house that’s twice that price within a few doors down.”
According to an analysis the Times Picayune, New Orleans Advocate, the so-called risk rating 2.0, is expected to produce phased-in increases of more than 12 percent for about half of Louisiana policyholders.
Louisiana U.S. Senators Bill Cassidy and John Kennedy are pushing FEMA and the White House to cancel, and press pause on 2.0.
“Knowing that the system had not been fully thought through, that rates were going to skyrocket for the overwhelming majority of policy owners in Louisiana and the rest of the country,” Cassidy said.
“FEMA is implementing Risk Rating 2.0, a plan that’s going to make flood insurance virtually unaffordable for the people of America and for the people of Louisiana,” Kennedy said.
The new program went into effect last fall for new policies. The rate increases will start April 1, for people renewing their flood protection.
Policy renewals are capped at an 18 percent increase per year, until the properties reach the new FEMA rate.
“It’s definitely going to be something if we don’t address it,” Sibley said. “I feel like it’s going to create a crisis for many homeowners.”
Some Louisiana policyholders found to have been paying too much for flood insurance could see their rates go down. Sibley says if you’re selling your home keep your flood insurance in place. It’s will benefit you and it can be assumed by the buyer.
That would give the purchaser the benefit of the 18 percent per year increases rather than paying the new rate all at once.
If you’re buying, it’s best to check with your insurance company to find out how much you’ll be paying for flood in the long run.