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Depending on the location of your home or business and depending on whether you pay a subsidized or grandfathered flood insurance rate, what you owe has either already gone up or will be going up soon.

Oh, and your rate could either go up a little or an exorbitant amount.

Confused?

You're not alone.

One thing that is clear is that many should be worried about the affordability of the rate increases, something that has both of Louisiana's senators concerned.

The rate increases, of which some began in January, are tied to the Biggert-Waters Flood Insurance Reform Act of 2012, which was passed into law in last July as part of the larger Transportation Bill. It's meant to make the National Flood Insurance Program (NFIP) sustainable in the face of increasingly expensive natural disasters.

The rates are slated to go up either 20 or 25 percent depending on whether the insurance is subsidized or grandfathered. According to an aide for Sen. Mary Landrieu D-La., a subsidized rate is one that covers a building built before the NFIP issued a flood rate map in the community where the property sits. A grandfathered rate, on the other hand, was granted to policies that were built to code based on a prior flood rate map after a new one was released.

Meanwhile, the Federal Emergency Management Agency is tasked with re-working flood maps, something that's currently happening in the greater New Orleans area.

In other words, a home could see the double effect of having its flood insurance raise because of the Biggert-Waters Act and the FEMA flood mapping update. The 20 or 25 percent increase will be based on what the new flood map says rather than the old rate. If the property is found to be farther beneath the flood level than before, the rate will go up more than if it's found to be above flood level.
Landrieu along with Sen. David Vitter R-La., are concerned the stabilization of the program could come out of the wallets of their constituents, some of whom can't afford it.

And Tuesday, Landrieu submitted reform legislation to delay premium increases while also repealing provisions meant to keep home owners from including the subsidized rates in a sale.

Landrieu already has sponsored an amendment, which Vitter co-sponsored, that would have delayed the rate increase until the Federal Emergency Management Program finished an affordability study and the results studied.

That bill, however, didn't make it after Sen. Pat Toomey R-Pa., objected to a vote on it.

As it stands the timeline remains.

  • Beginning this past January, second homes that were receiving subsidized insurance rates saw 25 percent increase from their base rate.
  • In October, businesses as well as those buildings deemed to be severe repetitive loss properties will see a 25 percent increase.
  • And beginning in October 2014, those properties whose rates are considered grandfathered will begin to rise 20 percent per year.

All of those rates will rise until they reach their full, true risk.

Additionally, prior rates won't be transferred upon sale or lapse of policy; the rates will immediately rise to the full-risk amount.

This could make selling a house more difficult, certainly a worry for homeowners, a Landrieu aide said.

At issue, at least in part, is the FEMA maps aren't taking into full account the local levees and protection systems because they're not federally certified, another Landrieu staffer said.

Landrieu already has announced in the Senate plans to file more amendments to help fix what she believes is a problem with the way the NFIP currently exists. Landrieu has not released full details of what her plan would entail to take pressure off policyholders while also keeping the NFIP properly funded, though part of it includes FEMA including non-federal levees and protection systems in their mapping.

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