Homeowners in New York and New Jersey are still struggling to repair homes and businesses damaged by Hurricane Sandy. However, aside from clearing all the debris, there is something else to consider when rebuilding; the impact of the storm on coastal living and flood insurance. It has led many to question the wisdom of building on fragile, storm-vulnerable areas, and raised the question of just how much owners want to pay for that ocean breeze.
It isn’t simply a matter of rebuilding. As a result of exorbitant claims in high risk flood areas, the aftermath of Hurricane Sandy could send the already high cost of coastal living through the roof. Newly mapped flood hazard zones will expand, accounting for Hurricane Sandy’s vast reach. And according to the New York Times, homeowners in storm-damaged coast areas could face premium increases as much as 25 percent under new legislation to reform flood insurance. Finally, expensive requirements for homes being rebuilt in flood zones could make rebuilding costs extremely costly for many coastal owners.
In the published Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), the report concluded it was very likely the frequency of heavy precipitation events will increase over many regions as the climate continues to warm over the next century. Government groups are calling for flood insurance reforms that takes into affects areas now at risk because of climate changes such as rising sea levels.
It is an unintended consequence of government subsidization of flood insurance risk that has encouraged many to build along coasts highly vulnerable to extreme weather. It is a balancing act between not wanted to push out lower-income residents who, with heightened premiums might not be able to afford living on the coast, to having an insurance solutions that reflect the high risk of living along the shore.
Should the federal government continue to subsidize flood risks? Should highly vulnerable, flood-prone areas be rebuilt? Or should there be stricter laws about building in high flood risk areas? What about the home and business owners who currently live there? It’s a difficult topic with no clear answer- we’d love to hear from you.
Homes and buildings in high-risk flood areas with mortgages from federally regulated or insured lenders are required to have flood insurance. These areas have a 1% or greater chance of flooding in any given year, which is equivalent to a 26% chance of flooding during a 30-year mortgage. Contact a Sinclair representative to see if your home is in a high-risk flood area. (877-602-2305).