There are property owners breathing a huge sigh of relief over the passage of the flood insurance relief bill that repeals many portions of the Biggert-Waters Flood Insurance Reform Act of 2012 – mainly premium rate increases. The bill’s title says it all, The Homeowner Flood Insurance Affordability Act, leaving some measures of the original flood insurance reform legislation intact and many owners of commercial property and investor-owned property out of the loop. Jeff Harrington, staff writer for a Florida newspaper, summarizes five areas that remain unchanged in the relief bill, including two applicable to commercial and investment property owners. Is it fair or foul?
Commercial properties still get hit
With the Biggert-Waters debate focused on homeowners, small businesses slammed by higher flood insurance rates have felt ignored. Unlike homeowners, owners of older, flood-prone commercial properties that have benefited from subsidized rates will not get a reprieve. In Pinellas County, some 1,400 business properties could be affected.
Sharp increases have forced commercial property owners to re-evaluate their business models, said Robin Sollie, president of the Tampa Bay Beaches Chamber of Commerce. Some are seeking new rate maps or mitigating against flood damage, which costs money.
No reprieve for investors
Just like commercial properties, investor-owned buildings are also left virtually untouched by the flood insurance “fix.”
That means investors still face sharp rate hikes if their policy lapses, they have recurring flood problems or they try to sell their property. Any buyer of an older, investor-owned home in a flood zone could face paying full-risk flood rates immediately, a potential deal-breaker. The issue is particularly acute in Florida, a prime market for both investors and vacation homes. In Pinellas County alone, there are more than 5,200 second homes that could face a rate shock.
Some contend relief legislation stalls any momentum to restore National Flood Insurance Program (NFIP) solvency and to fix inherent flaws that penalize low-risk property owners by charging full actuarial premiums while continuing to subsidize the premiums of those truly high-risk.
If you own, manage or represent commercial or investor-owned property, be diligent about flood risk:
- Stay informed of flood insurance rate map changes in your area.
- Contact your legislative representatives and tell them unequal treatment of property owners is unacceptable.
- Conduct a flood risk evaluation, a proactive strategy to mitigate flood risk, protect the real estate investment and verify whether the structure is built to minimize the risk of flooding.
For more information, including a complimentary flood risk evaluation performed by an expert team of flood risk professionals, submit this form.