The impact of Harvey on you going forward:
Bottom Line: If you have flood insurance, you know that what was once one of the most affordable insurance policies, no longer is in most of South Florida. Unlike other insurance markets, flood insurance is solely controlled by the federal government and all rates, flood zones and policies are a dictate from the National Flood Insurance Program. The flood insurance program typically ran deficits but they were manageable - until Super Storm Sandy in the fall of 2012.
Despite the top wind speed often being the most sensational and closely watched aspect of hurricanes, it's storm surge and rainfall that have typically caused the most damage and loss of life. Andrew would be an exception with hurricanes like Katrina, Sandy and now Harvey being more of the rule. Despite Harvey impacting a long way from south Florida we're doubtless going to have an ongoing impact from the storm on our insurance costs, just as was and has been the case in the wake of Sandy - which still hasn't been fully accounted for in our insurance costs.
In the wake of Sandy flood insurance policies in flood zones started to spiral out-of-control as the feds tried to make up for the $20 billion+ deficit they had in the flood insurance program after accounting for Sandy. After two years of doubling or even tripling of rates, a law was passed that capped the size of increases to 25% per year (as some people we're literally being assessed out of their homes due to flood insurance increases). That law did allow for special assessments and we have those in SFL.
The special assessments are $25 per year for homes in a flood zone & $250 per year for non-primary properties in a flood zone. What's more is that the federal flood zone map, which hadn't changed since 1989 Palm Beach County, just updated adding tens of thousands of homes in South Florida into the mix. While Miami-Dade's flood zone maps were updated in 2009 and Broward in 2014, PBC's new changes resulted in more than 50,000 properties having been added to the federal flood zone map. This mandates flood insurance if you have a mortgage and will cause significant price increases for those policies. I've used my own flood insurance costs as an example of what has happened as flood insurance as spiraled higher for many south Floridians in recent years. Despite no claim history on my home...
- Flood insurance in 2012: $1468
- Flood insurance in 2016: $4138
- My rate for 2017: $5079
So while Harvey carries out it's damage far away from us, the impact will continue to be felt by all who have flood insurance for years to come.