The analysis found the costs of insuring those same areas in 30 years could be double or more in many places, including South Florida.īecause of new federal caps, massive rate hikes will not all come in one year, but industry analysts say homeowners may face years of consecutive increases to bring the cost in line with projected risk – not unlike what has happened with windstorm rates. And that trend only continues as seas rise. The First Street analysis shows that to get out of the red, the NFIP will have to charge a lot more. But flood insurance has always been far cheaper – at a national average of around $800. The $1,960 average premium is the second-highest in the nation. That’s a problem worsened by the climate change-driven sea level rise that makes coastal spots riskier every year.įloridians are used to sticker shock over home insurance, with much of it coming because of the high cost of windstorm hurricane insurance, a category of coverage largely abandoned by large insurers years ago. This research backs up what experts have been saying for decades: The NFIP undercharges for flood insurance, which makes it cheaper and easier for people to live in dangerous places. About one in four of those properties are in Florida. Nationally, First Street found about 4.2 million properties facing major flood risk, and those properties would need to pay about four and a half times more than the NFIP charges to cover that risk. The First Street analysis is among the first to estimate how much higher premiums could rise, although FEMA – which will set rates for the national flood program – stresses it is “premature” to compare the study to its yet-to-be-released new rate formula. In lucky others, like South Miami, the research actually showed a 16% decrease, indicating that residents are perhaps overpaying for their risk. It would take nearly a tenfold leap from the average price to bring it in line with risks – which adds up to a $20,000 annual premium. In some cities, like Miami Beach, the calculations show flood risks are currently wildly underpriced. The “proper” price, the nonprofit found, is around $1,500. Potentially, a lot higher in some places.įor example, the average premium in the city of Miami is $1,069 a year, by First Street’s calculations. Experts expect it will lead to higher rates for homeowners in flood-prone places like Florida. The second prediction comes because the National Flood Insurance Program is rolling out a new way of pricing flood insurance later this year.
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