Flood insurance

[Scott Harper]

I am not happy with Fema. I have owned a house in Daytona for ten years. The house is two miles from any water. Last year Fema decided to redraw flood maps and now include my house in the flood area. I believe this was just to get more money into the insurance fund. I had an elevation survey done and i was one inch short of having it removed from the mapping area. Now here is where i get angry. When i got a quote fo flood insurance the cost was 400.00 a year. However, because it is a rental the government then adds on an extra 300.00 premium. So last year it was 700.00. Now this year it has gone to 800.00. This is why i dont understand the logic. If the house floods, why does it matter if it is owner occupied or not? The cost to the structure will be the same. This has reduced my cash flow significantly. Does anybody have thoughts on this?

[Kevin Romines]

The basics to it is that the federal government which is the actual insurer of flood insurance. Yes can get it through many standard carriers, but its always administered and funded by the US government. Congress decided the program was not financially sustainable with the current subsidized rates, so they made changes. They made a distinction between primary / secondary / non-primary or rental property. They decided that the secondary and non-primary properties will no longer receive the subsidy and so therefore rates will increase by 25% per year until they reach full premium rates.

This is what you have started to experience. The only thing you can do is review the dwelling and contents coverage on the policy, also review the deductible that you have chosen and possibly make some changes to those areas to help reduce your premium. I would be careful about reducing coverage to much as this could put you in a position to not have enough money to rebuild.

Other than that, it is a cost of doing business and should be factored in to your rental rates where and if you can?