- Associated Press - Monday, March 24, 2014

LINCOLN, Neb. (AP) - Steve Skoda was surprised when he opened his yearly flood insurance bill and discovered his Lincoln vacation home’s premium had jumped by more than 20 percent.

The 57-year-old has owned the home near the Deadman’s Run creek for nearly 25 years without seeing a price spike. But like thousands of Nebraska residents, Skoda will end up paying more because of legislation designed to ease pressure on the federal government’s National Flood Insurance Program.

“We can handle it, for the most part, but it’s never fun to have higher bills than you anticipate,” Skoda said.

But his price hikes may not be over. Subsidized premiums throughout the country are on the rise, and an Associated Press analysis shows nearly 5,800 policyholders in Nebraska will be affected.

President Barack Obama signed a law Friday putting the brakes on a 2012 overhaul that was supposed to end costly government subsidies for flood insurance. While the law offers instant relief for homeowners hit by premiums that soared by thousands of dollars overnight, the reprieve is temporary for many.

Many policyholders getting subsidized rates will still face premium increases as high as 18 percent each year until the government collects what it needs to pay out claims. Owners of businesses and second homes face increases of 25 percent annually until they switch to a policy rated on the actual flooding risk at their property.

Skoda said his latest annual bill rose from roughly $550 to $680, followed by a note that he’d have to pay more because it wasn’t a primary residence. Skoda splits his time between Lincoln, where he spent most of his life, and Texas, where he now works.

Under the revised law, an owner of a second home getting a subsidy who pays $680 per year can expect a premium leap to over $2,000 within five years - and more thereafter - until an elevation survey can determine a rate based on the true risk of flooding.

Down the street, Robert Atkinson said rates were also expected to increase on the home he shares with his 82-year-old mother, Grace Walker. Atkinson, 57, said he wasn’t sure how much the rate would increase, but he doesn’t view the trickling creek near his backyard as a serious threat.

“I’ve lived in Lincoln all my life and I’ve never seen it flood,” Atkinson said. “It’s like, ‘Come on.’ If it gets that high, the whole city had better head for higher ground.”

The government has subsidized insurance for buildings in flood zones since 1968, but costs have soared in the wake of recent massive floods and the program has proven unsustainable. It was $24 billion in debt by the time Congress intervened.

Nebraska had 12,439 flood insurance policies in force as of Dec. 31, representing $2.1 billion in coverage and $10.4 million in premiums paid by insured property owners. Lincoln leads the state with 1,041 property owners who will face insurance rate hikes, followed by Omaha with 403. Fremont, Sarpy County and Valley rounded out the top five.

Dropping insurance is seldom an option, because banks require mortgage holders to have coverage. The change has aggravated many homeowners who want to sell their homes, refinance mortgages or reinstate coverage after it lapsed.

“I think there’s a lot of frustration,” said Ben Higgins, a senior engineer for Lincoln’s public works department. “The average person isn’t going to know this is coming. Some people are shell-shocked.”

Higgins noted that Lincoln residents receive a 20 percent break on their rates because the city has taken extra steps beyond the minimum federal requirements to manage its flood plain.

He pointed to a $74 million development project along Antelope Creek in the heart of the city, which effectively shrank the flood plain. As a result, more than 1,000 homeowners and businesses won’t be required to carry flood insurance.

Copyright © 2016 The Washington Times, LLC.

blog comments powered by Disqus

 

Click to Read More

Click to Hide