For years, the federal government subsidized many flood insurance policies. But premiums haven’t covered payouts, and now, billions of dollars in debt, the National Flood Insurance Program is reducing its assistance. For Allen and thousands of Californians living near the ocean, rivers and creeks, this means their flood insurance costs are on the rise.
Statewide, more than 48,000 home and business owners received subsidies in 2012 for their flood insurance through the federal program. Those policies could rise up to 18 percent each year for homeowners; second homes and businesses will see mandatory increases of 25 percent every year until they drop out of the subsidy program and get a rate based on the actual risk of flooding.
More than half of policyholders in communities including the city of Monterey, San Rafael and Long Beach who had subsidized flood insurance will face higher premiums in coming years. In Capitola, 71 percent of those with flood insurance face higher rates.
Those hikes are “a big concern,” said Allen, noting that the cost of flood insurance affects property values. His family has owned the Venetian for decades and can absorb the increase, but for future buyers, or sellers, the expense may price them out of the market.
“Not the best news just coming out of a multi-year real estate recession,” said Allen.
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