The legislation proposed by Florida Sen. Jeff Brandes, R-St. Petersburg, is designed to give homeowners more coverage options in the state’s emerging private flood insurance market, such as lowering premiums by excluding coverage of a detached garage or covering only the value of a home’s mortgage rather than its full replacement cost.
At the same time, the bill ensures that private polices explicitly state that coverage meets or exceeds the National Flood Insurance Program’s requirements, crucial to lenders that historically have accepted government-backed policies.
It also aims to establish a long-term database of property elevations in flood prone areas by requiring surveyors to submit a copy of a home’s elevation certificate to the county property appraiser when it is reviewed for a new flood insurance policy.
State Rep. Larry Ahern, R-Seminole, is expected to file companion legislation in the Florida House.
“This bill just offers a lot more flexibility, so you can bring down the cost and have affordable flood insurance coverage. It’s not affordable long-term for many Floridians,” Brandes said.
With the Federal Emergency Management Agency’s flood program facing insolvency after recent disasters such as hurricanes Katrina and Sandy, Congress has moved to increase rates across the nation, especially on older properties that have enjoyed lower rates set before contemporary flood mapping technology and building codes were in place.
The immediate sting of those rate hikes was lessened for owners of primary residences by last year’s Homeowner Flood Insurance Affordability Act, which capped individual increases at 18 percent per year, but those rates will become unaffordable for many property owners over time.
While panic in the Tampa Bay area real estate market about rates immediately skyrocketing has subsided, the prospect of climbing premiums still is causing a chill for older, mid-priced homes in coastal areas, says Pinellas County real estate agent Cliff Roe.
For example, paying $1,500 to $2,000 a year for flood coverage in addition to a homeowner’s policy can prove unaffordable for a buyer of a home in the $150,000 range, and those flood insurance costs likely will continue to climb.
Many of the state’s political leaders believe a robust private market alternative is the only long-term solution to rising rates, but Florida faces hurdles to making that option viable.
For one thing, not all lenders that offer mortgages backed by government-sponsored Fannie Mae and Freddie Mac are willing to accept a private flood policy, even if it provides coverage comparable to a federal policy.
Pushing lenders to accept private coverage is a priority for U.S. Congressman David Jolly, R-Indian Shores, who is backing a plan by fellow Florida Republican Dennis Ross on the matter.
Jolly also has filed a bill that would slow federal flood insurance rate increases for commercial properties and vacation homes that are owner-occupied, which were excluded from the protections offered by last year’s Homeowner Flood Insurance Affordability Act.
“On Capitol Hill, it is challenging environment. You have many members who are not from a coastal state and they really don’t have reason to appreciate the significance of what the increased flood insurance premiums have done to homeowners,” Jolly said.
Another challenge for insurers thinking about offering flood coverage is that FEMA essentially has been the only agency collecting flood risk data over the past four decades, information which is fundamental for setting appropriate rates.
Finding a way for FEMA to release that data while ensuring sensitive homeowner information isn’t compromised will be a next step in the process, Jolly says.
In Florida, the Brandes bill also lays out in broad terms the need for coastal cities to take a closer look at their building rules to make existing structures safer from storm surge and to ensure future development isn’t deemed high-risk by FEMA down the road.
“What we’re asking is for each individual community to really contemplate the peril of flood and to think through how to best plan to utilize their land in the future, understanding that flood insurance is probably not going to get cheaper than it is today,” said Brandes, noting that the bill contains no legal mandate for any specific development principles to be adopted.
©2015 the Tampa Tribune (Tampa, Fla.). Distributed by Tribune Content Agency, LLC.
