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Federal Regulations Threaten Rates On Homeowners Insurance NJ Residents Need

By Mike Heuer


Buying homeowners insurance NJ residents need to protect their family homes could become too high for some with new federal regulations requiring more to buy flood insurance and some to raise their homes higher.
Hurricane Sandy in late 2012 ravaged much of the Atlantic coast along the Garden State, leaving thousand of homes damaged or destroyed. While most had homeowners insurance NJ property and casualty insurers honored, the federal government since has developed new flood insurance regulations that could decimate homeowners to a much greater degree than Sandy ever could.
The Federal Emergency Management Agency recently issued new flood insurance regulations that make residents of communities like Toms River, N.J., liable for up to $20,000 worth of flood insurance coverage, which many simply cannot afford. The new regulations give homeowners along the Atlantic coast until mid 2015 to either elevate their homes on pilings or pay exorbitant rates for flood insurance, which is provided by the National Flood Insurance Program since most property and casualty insurers won’t offer the coverage in flood-prone areas of the Garden State.
About 365,000 homes in New Jersey were damaged or destroyed by Hurricane Sandy, which ravaged coastal communities and dumped a great deal of rainfall causing localized flooding further inland. But to get flood insurance protection, those homes that have been repaired or rebuilt as well as those that escaped the deadly and highly destructive storm could face an obstacle they simply cannot overcome, this time created by the federal government.
Flood insurance rates for homes could spike to as high as $20,000 for homes that do not comply with new federal regulations created by officials with the Federal Emergency Management Agency. To get flood coverage with homeowners insurance NJ residents will need, they will need to speak with insurance agents to find out what they can do to keep their rates as low as possible. Since the federal government is forcing them to buy flood insurance, the marketplace will be less likely to offer affordable rates as the competition will be relatively low. More than 1 million homes could be impacted by the higher rates, particularly when a federal subsidy for flood insurance protection runs out by 2015.

Homeowners relying on the National Flood Insurance Program for their flood protection will find the heavily indebted program is not a bargain. Already some $24 billion in debt, federal officials have been expanding flood plain maps to force more homeowners to buy insurance from the National Flood Insurance Program to help mitigate the impact of the debt by spreading the risk among homes that otherwise would not need flood insurance.
That means the program essentially is a tax on homes and their owners in order to bail out a program that has been heavily indebted since 2004, when four consecutive hurricanes slammed into Florida in the span of one month followed the next year by Hurricane Katrina and later Hurricane Rita inflicting massive damage along the Gulf Coast. To make matters even worst, the federal flood insurance program has lapsed many times in recent years due to short-term federal funding. And that trend might continue if the heavy debt can’t be lowered significantly in the next few years.