Flood insurance rates, fees increase Wednesday

Wednesday will bring new costs to many local homeowners already burdened by high flood-insurance premiums, Realtors say.

Premium hikes ranging from 15 to 18 percent for primary homeowners and 25 percent for other properties are part of a congressional act that takes effect Wednesday.

In addition to higher insurance rates, homeowners must pay a new surcharge -- $25 for primary homes and $250 for non-primary and multi-family homes. They also have to pay a 10 to 15 percent increase in their contribution to the Federal Emergency Management Agency's reserve fund.

The hikes will take effect whenever homeowners renew their policies, according to Lisa Jones, a local certified floodplain manager.

The increases are required through the Biggert-Waters Flood Insurance Reform Act of 2012, which Congress passed to buoy FEMA's National Flood Insurance Program after several catastrophes left it $24 billion in debt.

The premium increases have held steady for non-primary homeowners.

FEMA has been phasing out subsidized policies since 2013, with annual premium increases of 25 percent until they reflect the properties' full risk of flooding.

Businesses will see premiums increase 25 percent next year.

Primary homeowners, however, will now see their premiums increase based on the age of their home, elevation and other factors, Jones said.

KILLING THE DEAL?

With rates continuing to rise in coming years, some local Realtors say they expect to see more residents lose money on older homes, if they're able to sell at all.

Greg Bennett of Exit Beaufort said one of his sellers recently took a significant hit on a 1970s home. While the home was only worth about $165,000, the homeowner will be paying at least $1,300 a year on flood insurance because the property can't be elevated, Bennett said.

Neighboring, newer homes have annual costs of about $300 per year, he said.

"You're going to have a lot of prospective buyers afraid to buy those homes" in flood-prone areas, Bennett said. "In many cases, the high insurance premium for flooding will kill the deal.

"(Insurance) could effectively make those homes unsellable at some point."

Andy Klepchick, broker-in-charge of Lighthouse Realty on Hilton Head Island, said he's seen a few potential buyers walk away from homes when they learned how much they would be paying for flood insurance.

"I just don't see that changing," he said. "It is what it is."

WHAT YOU CAN DO

Unincorporated Beaufort County has about 22,000 buildings in high-risk flood areas, along with another 15,000 on Hilton Head Island and 73 residential properties in the town of Bluffton, according to county and town officials.

Figures were not available Tuesday from the city of Beaufort.

There are 54,380 residential flood policies in Beaufort County, according to Karen Jones of the S.C. Department of Natural Resources, but she could not say Tuesday how many are subsidized.

Beaufort County had the second-highest proportion of such policies in the state in 2013, second only to Charleston County. Beaufort County had the second-highest proportion of such policies in the state in 2013, second only to Charleston County.

Jones, who owns Carolina Flood Solutions -- a firm she started to help people lower their flood-insurance payments -- urges residents in high-risk areas to obtain an elevation certificate, which determines a home's proper insurance rate.

Without a certificate, FEMA will not know when to stop raising premiums, Jones said.

Residents, too, can use that information to guide decisions on investments.

For example, it may cost $3,000 to structurally change a home and decrease the risk of flooding, but the resident may end up paying more than that in premiums in just a few years without the improvements, Jones said.

While the rate increases are already hurting sales of older homes, Bennett said it's too soon to tell how the market for second homes will fare.

Since receiving the latest bill, Bennett himself is considering selling his 10-year-old investment property in Beaufort's Battery Point neighborhood. The home is in a high-risk flood zone.

His annual bill increased from about $350 to nearly $700, making it more costly than the insurance he pays on his larger, more valuable primary residence.

The coming months will show whether the surcharge and premium hike deters others from making similar investments, he said.

"We're just now feeling it."

Follow reporter Rebecca Lurye on Twitter at twitter.com/IPBG_Rebecca.

Related content:

• Lowcountry legislators, Realtors hope for delay of flood-insurance rate hikes, November 2, 2013
• Lowcountry residents seek relief from wind, flood insurance hikes, November 13, 2013
• Federal, state laws could slow whirlwind of hurricane-insurance rate hikes in Beaufort County, May 29, 2014

This story was originally published March 31, 2015 at 12:09 PM with the headline "Flood insurance rates, fees increase Wednesday."