How to avoid falling victim to flood insurance surcharge

how to avoid flood insurance

Getty Images/iStockphoto

High Water Sign in Flooded Neighborhood

High Water Sign in Flooded Neighborhood less

For the thousands of Floridians with flood insurance, I have some bad news. Your premium is about to go up. How much it will go up will depend on whether or not you’re insuring your primary residence. And making sure you have that right will make a big difference in what you pay.

Starting April 1, the National Flood Insurance Program. a part of the Federal Emergency Management Agency, added a surcharge of $25 to the cost of flood insurance for primary residences. On flood insured properties that aren’t, such as a vacation home or an investment property, the charge is $250.

Ed Nass said he and several of his neighbors recently received letters from FEMA asking them to prove their Cape Coral homes were their primary residences. Nass said they scrambled to quickly respond, but in his case it was no use. Within two days of getting the letter from FEMA he received a statement from his mortgage company showing the $250 surcharge had been paid.

“I called my insurance agent and he said, ‘Let me check.’ But I’m not holding out hope I’ll get it back,” Nass said.

When you get your renewal notice for your flood insurance, check that the correct surcharge amount has been applied. If you’re not sure, contact your agent.

If you were charged the nonprimary residence rate, you can get a refund, said Scott Ehrenfeld, an insurance agent with the Culbertson Agency in Fort Myers and Naples.

“It’s an easy fix,” Ehrenfeld said. Your agent can upload proof of a homestead exemption on the Lee County Property Appraiser site and use that to show FEMA it’s a primary residence. They will refund the $250, but homeowners like Nass will still have to pay $25.

Ehrenfeld said FEMA was a little late getting the notices out to homeowners and the surcharge might be applied before people can respond. Or you may have

missed the letter asking for the information. But a letter should arrive from FEMA about 90 days before your renewal date asking you to provide proof the home is a primary residence. There are several things you can send in, such as a copy of your homestead exemption, your voter’s registration card or a signed sworn statement.

For most homeowners, premiums on flood insurance for a primary residence are going up $30 to $40 plus the $25 surcharge.

“The people it’s going to affect the most are snowbirds and people with rental properties,” he said. Rates for those homeowners will go up $300 or more.

FEMA press secretary Susan Hendrick said, “Changes in flood insurance rates are part of congressional legislation to reform the flood insurance program to ensure it is sustainable over the long term, while remaining sensitive to the needs of the policyholders.”

In 2012 Congress had passed a flood insurance law significantly raising rates and making flood insurance unaffordable for some homeowners. The Homeowner Flood Insurance Affordability Act of 2014 went into effect this month, repealing and modifying provisions in the earlier law. It limits individual premium increases to 18 percent and implements the surcharge, among other changes.

Because some people who own rental property or second homes paid cash and may not have a mortgage, getting a flood policy is voluntary. And the increase in rates may be the tipping point.

But Ehrenfeld cautions against opting out of the flood insurance program or letting the insurance lapse, especially for people who have homes in Cape Coral or near McGregor Boulevard in Fort Myers. A 7- or 8-foot surge will put many of these homes under water, he said.

“I guess it’s a cost-benefit situation,” Ehrenfeld said. “If the flood insurance was $3,000 a year you might not want to get it. But if it’s $400 a year, you would be silly not to.”

Contact: TellMel@news-press.com ; (239)344-4772; 2442 Martin Luther King Jr. Blvd. Fort Myers, FL 33901. facebook.com/TellMel and Twitter @tellmel .

Source: www.news-press.com

Category: Insurance

Similar articles: