WASHINGTON (AP) — Homeowners living in flood-prone areas are getting relief from big spikes in insurance costs under legislation President Barack Obama signed into law Friday.
Lawmakers from both parties supported the measure in response to angry homeowners who faced sharp premium hikes after an overhaul of the government's flood insurance program two years ago.
Democratic Sen. Robert Menendez of New Jersey said he was hearing from constituents still reeling from Superstorm Sandy, "many who came to me in tears, expressing horror stories of skyrocketing flood insurance premiums that threatened to force them from their homes."
The 2012 rewrite was aimed at weaning those in flood-prone areas off of subsidized rates and required extensive updating of the flood maps used to set premiums. But its implementation left homeowners along the Atlantic and Gulf coasts and in flood plains facing often unaffordable rate increases.
The new law caps flood insurance premium increases and allows below-market insurance rates to be passed on to people buying homes in flood zones with taxpayer-subsidized policies.
Critics say taxpayers will end up footing the bill when the next disaster strikes instead of homeowners who choose to live in areas susceptible to flooding.
The legislation offers its greatest relief to owners of properties that were originally built to code but subsequently were found to be at greater flood risk. Such "grandfathered" homeowners currently benefit from below-market rates that are subsidized by other policyholders, and the new legislation preserves that status and caps premium increases at 18 percent a year. The 2012 overhaul required premiums to increase to actuarially sound rates over five years and required extensive remapping.