Updated Florida Flood Insurance Information

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The real estate industry is celebrating flood insurance changes.

Both buyers and sellers of Southwest Florida real estate are breathing a sigh of relief because of a plan to scale back a federal flood insurance law that critics say has caused premiums to soar for thousands of area homeowners. This is some welcome news for those of us involved in real estate in Southwest Florida especially for the Cape Coral area that has so much real estate surrounded by canals.

This will help us continue our real estate recovery that we are experiencing. As a realtor specializing in selling second homes to Canadians in Cape Coral and Fort Myers this concern over flood insurance premiums has been a recurring theme with many of my buyers.

Many real estate industry experts felt that if flood insurance rates were permitted to skyrocket those increases threatened to undermine the real estate recovery throughout Florida, by making insurance rates too high for many current homeowners and potential buyers in flood-prone areas, experts said.

On Tuesday, the U.S. House of Representatives passed a bill that will allow sellers to pass their subsidized, below-market insurance rates to new buyers. The bill also would lower the cap on how high flood premiums could rise every year.

The U.S. Senate must pass the measure, which would weaken the 2012 flood insurance reform act — a law aimed at weaning hundreds of thousands of homeowners off subsidized flood insurance rates. Florida has nearly 40 percent of the homes covered under the National Flood Insurance Program, which is nearly $24 billion in the red.

Owners of older homes throughout Southwest Florida were facing skyrocketing premiums with some flood policies increasing from 700-1000% percent.

The House’s action brings “much-needed certainty” to the Florida real estate market that has been missing since the Biggert-Waters Flood Insurance Reform Act took effect, as well as relief to impacted homeowners who faced financial ruin, said Sherri Meadows, president of the Florida Realtors trade association.

“While good-intentioned, the Biggert-Waters Act had the effect of stigmatizing properties that are in flood zones,” Meadows said. “Current property owners, as well as those looking to buy, didn’t know if a new flood map might be adopted next week or next year.”

The House bill would permanently repeal a provision that imposes sharp rate increases on people who buy homes in flood-prone areas. It also preserves below-market rates for people whose homes meet federal flood map standards.

People whose second homes are in a flood zone, and those whose properties have repeatedly flooded, would continue to see their premiums go up by 25 percent a year until reaching a level consistent with their real risk of flooding. Despite the change, the Federal Emergency Management Agency would retain the ability to increase premiums each year, but the increases wouldn’t be as steep as mandated under the 2012 law.

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