Major flood insurance cost increases coming April 1

Hundreds of Yavapai County residents will see their flood insurance costs increase April 1 because of new surcharges.

The surcharge will be $250 annually for all structures except primary residences, which will have only $25 surcharges. The surcharges continue until all flood insurance subsidies are phased out.

FEMA started phasing out flood insurance subsidies in 2013 for homes that were built in high-risk areas before governments adopted floodplain maps. Rates are increasing by 15 to 25 percent annually. Yavapai County first created floodplain maps in the mid-1980s.

A $200,000 home with $80,000 worth of contents might have a $390 premium, so the $250 surcharge will raise the owner's costs substantially, national flood insurance expert Bruce Bender of Scottsdale said. He's concerned people will drop their insurance coverage.

Already, surprisingly few people who live in floodplains even have flood insurance. Only 719 of the 7,543 homes in floodplains across unincorporated Yavapai County are insured for flooding, Yavapai County Flood Control District Director Dan Cherry said.

"There's a lot of homes out there subject to high risk," he said.

Statistics show that one out of every four floods occur in low-risk floodplain zones, Bender said.

The only help for most people without insurance who lose homes is a federal loan, and only if the flooding was declared a federal disaster, Bender said.

Low-income people might qualify for a grant but it's usually only $3,000 to $4,000 and the maximum is $31,000, Bender said. Some victims of larger disasters have received more help, such as the Hurricane Sandy victims.

Yavapai residents get a better deal on premiums than most. This county is among a select few local governments that does such a good job on floodplain management that its residents gets 20-percent discounts on flood insurance premiums, Bender said.

And starting on April 1, property owners can get premiums with $10,000 deductibles that will reduce premium costs by 40 percent, a FEMA news release said.

Cherry obviously would like to convince more people to get flood insurance, and he said he's talking with other county departments about ways to do it. New, more accurate floodplain mapping in Yavapai County is resulting in an overall fewer number of homes in floodplains, Cherry said.

That's good news because homes in floodplains with federally backed loans must carry flood insurance.

Because of the high risk, insurance companies don't want to offer insurance on these homes so the federal government has been the only provider since 1968.

Federal officials didn't anticipate catastrophic hurricanes such as Katrina and Sandy when it started offering flood insurance and subsidies, Bender said.

So at this point to cover the subsidies, the U.S. Treasury has loaned the FEMA flood insurance program $23 billion, Bender said.

Legislation in 2012 and 2014 aimed to drop the subsidies and bring in more money for a reserve fund to cover flood disaster claims in the future. The new surcharges will help build up the reserve.

When the government heard an outcry over the rapid end of subsidies from the 2012 law, Congress approved another law in 2014 to phase out the subsidies.

But since the Statutory Pay-As-You-Go Act of 2010 requires most new spending to be offset by spending cuts or added revenue, Congress had to add the flood insurance premium surcharges to offset the subsidies it was temporarily reinstating, Bender explained.

The Yavapai County Flood Control District is hosting two meetings at the end of the month, to help educate people about the April 1 changes to the national flood insurance program and to talk about its ongoing work to update floodplain maps across the county.

Since the meetings will discuss broad issues, they especially are geared toward business owners, insurance and lending professionals, and real estate brokers and agents.

They take place from 10 to 11:30 a.m. on Monday, March 30 at the Clark Memorial Clubhouse in Clarkdale and Tuesday, March 31, at the Flood Control District offices at 1120 Commerce Drive in Prescott.

To ensure adequate seating, the county is asking people to RSVP to Christina.sandoval@yavapai.us. People also can email questions to her.

National flood insurance expert Bruce Bender will speak at the meeting alongside county flood control officials.

Follow Joanna Dodder on Twitter @joannadodder

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