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Flood Insurance Changes

It is a true fact that flood insurance is about to change the way we live, because it will affect many household and commercial pockets. Flood insurance of course is not covered under your homeowners policy. The National Flood Insurance Program was established in 1968 to provide affordable flood insurance to those living in high risk flooding areas. The reason it was created was to protect mortgages backed by the Federal Government, the banks are in my opinion the ones policing the program if the client lives in a flood zone, because they alert the buyer of the need to insure, otherwise they may not get to the closing table.  So the government creates this program, and the flooding occurs over the years, which means a ton of money was spent and borrowed from the program. Keep in mind flooding is the most expensive natural disaster, therefore very few insurance companies want to offer flood insurance. Knowing the state of our country’s finances and the state of the flood program, which has gotten pummeled with losses, the government has now decided to raise flood rates up to 25% every year until you hit the premium level for your updated flood zone.  Fact check here, in 2011 the subsidized rates were 40 to 45 percent of premiums

We have seen an increase of new flood insurance policies in our Knoxville, TN office. Last month we wrote 10.  Buying now is a good time, because you still have a few more weeks before the up to 25% increase which starts Oct. 1. We will update other changes to the flood insurance program as the weeks move on.

As you may expect, Coastal properties are about to get more expensive, below is a warning from Dept of Insurance in Mississippi talking about coastal properties. I think this was a smart comment from the state of MS, because this issue has not been highly publicized probably because there are few people who understand the state of flood insurance in our country.

For more info about flood insurance  or if you are an insurance agent who doesn’t want to deal with flood insurance contact me at

Photo: Erik Daniel Drost

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