Oct 21, 2013

By Steve Jones, The Sun News (Myrtle Beach, S.C.)
McClatchy-Tribune Information Services

May 24--MYRTLE BEACH -- Congress has decided it wants the federal flood insurance program to pay for itself, and it has set in motion a multi-year process to make it happen.

Eventually, homeowners will lose the federal subsidies they now might have for their flood insurance and all will be paying actuarial rates in which the cost is determined by the risk.

The first to see the change were owners of secondary residences, whose rates began on Jan. 1 an annual 25 percent increase until they reach the actuarial, or full-risk rate, said Maria Lamm, state coordinator of the S.C. Flood Mitigation Program.

On Oct. 1, premiums for businesses and for residences that have seen severe repetitive losses will begin to phase upward, and property where there is a lapse in coverage, a change in owners or a new or renewed policy will begin to pay the full-loss rate.

Then, sometime late next year, those whose premiums have been subsidized will begin paying phased-in increases until their payments equal the full-loss rate.

Some already pay actuarial rates and won't see any premium increase as a result of the program. Others could see substantial increases.

It's complicated, Lamm said.

"There's a lot of layers to it," said Laura Crowther, CEO of the Coastal Carolinas Association of Realtors, who saw a presentation on the changes when she was in Washington, D.C., last week.

She doesn't think the program will overly-stress a lot of homeowners, but she worries that higher rates could affect sales of second homes, in particular.

"It will cause people to pay a whole lot more attention (to flood insurance costs) on the front end," Crowther said.

The amount of the increase will depend on when property was purchased, and Lamm advised those who bought flood insurance before Horry County adopted its first flood rate map on Feb. 16, 1984, to contact their insurance agents to see how they will be affected.

Current rates depend on the location of the property and the height a residence is in relation to the base flood elevation. The program allows homeowners to take out policies that will cover up to a $250,000 loss on the structure and $100,000 loss on the contents.

Lamm explained the federal program classifies flood-prone property as either Zone V, which is for high hazard, beachfront residences, or Zone A, which is for residences behind those in Zone V as well as riverfront structures.

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Lamm said she can't give the exact full-loss premium for every residence, but she had examples provided her by the Federal Emergency Management Agency, which administers the flood insurance program.

Beachfront residence owners pay, at full-loss rates, $3,500 a year if the structure is two feet above the base flood elevation, $7,000 a year if it is at the BFE and $17,500 a year if it is four feet below the BFE. Zone A residences at full-loss rates will have flood insurance premiums of $427 a year if they are three feet above BFE, $1,410 if at BFE and $9,500 if four feet below BFE.

Lamm said that flood insurance rates can also be affected by updates of flood rate maps. The map for Horry County is currently be redrawn, but that isn't automatically bad news.

"Base flood elevations don't always go up (with map updates)," she said. "Sometimes they go down. Sometimes they stay the same."

Contact STEVE JONES at 444-1765.


(c)2013 The Sun News (Myrtle Beach, S.C.)

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