Legislation easing the premium costs on government-sponsored flood insurance has passed the U.S. House of Representatives, repealing a 2012 law that kicked up rates when a coastal property is sold to a new owner.
The measure would cap premium increases at 18 percent per policy, or 15 percent of the average cost of a premium in a specific flood zone. The law also aims to correct a 2012 mandate that the Federal Emergency Management Agency reset premiums at actuarially sound rates, a move that proponents of the change said hiked up increases to a rate middle-class homeowners couldn’t afford.
Fear of such hikes hurt real estate markets in flood-prone areas, Representative Bill Pascrell of New Jersey said during the debate, because sellers couldn’t find buyers willing to fork out the cost of higher premiums. One such homeowner, according to Bloomberg News, walked away from his $150,000 home after receiving notification from FEMA that her flood-insurance premium would jump from $1,000 to $14,000.
“This legislation ends dramatic increases caused by events such as property sales” and reinforces “rates for those who played by the rules and built their properties according to code,” California Representative Maxine Waters, who crafted the bill along with Virginia’s Eric Cantor, said in a floor speech on the legislation. [Bloomberg News] — Julie Strickland