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New U.S. House Bill Could Lower Flood Insurance Costs

The U.S. House has given its strong approval to legislation that could lower flood insurance rates for hundreds of Vermont homeowners.

The proposal also eliminates the need for some homeowners to have flood insurance.

After paying out billions of dollars in claims in the aftermath of Hurricanes Katrina and Sandy, the federal flood insurance program faced a $24 billion deficit in 2012. Congress that year passed legislation that dealt with this deficit in two ways.

First, it raised flood insurance premiums by substantial amounts. In some cases, this made the policies unaffordable to homeowners. The bill also expanded the definition of a flood plain so that more homes would be required to purchase insurance coverage.

Congressman Peter Welch says the new bill addresses these concerns. It contains provisions to re-evaluate the risk of flooding at a specific location. Welch thinks this change will result in significantly lower premiums for many homeowners.

Welch says the deficit at the federal flood insurance program is a real issue, but imposing higher premiums isn’t the way to deal with it.

“You’ve got to do it in a way that just doesn’t create such an undertow that folks like in Vermont whose homes have been for 100 years along a river suddenly find they can’t afford to be in the home,” said Welch. “So this is going to give some relief to Vermonters and others who have been just put in this vice.”

"I think it is going to provide some relief that is the difference for some people whether they can stay in their home." - Rep. Peter Welch on a new flood insurance bill

Welch says the new bill also rolls back the sections of the 2012 law that expanded the size of floodplain areas.

“The new mapping meant that a lot of homes that realistically were not in a flood plain suddenly had the burden of paying very expensive flood insurance and there was very little ability to appeal that,” said Welch. “This legislation is going to help our homeowners who shouldn’t be in a flood plain to begin with.”

When the 2012 law passed, some homeowners saw their premiums rise by more than 50 percent. Under the new law, the average annual increase for all flood risk categories will be roughly 5 percent and individual increases are capped at 15 percent.

Welch thinks the new proposal will make a big difference for many Vermont homeowners who need flood insurance.

“I think it’s going to provide some relief that is the difference for some people whether they can stay in their home or resell it as opposed to have to leave it or sell it at a very significant loss,” said Welch.

The new bill also refunds money to those homeowners who experienced sizeable premium increases over the past two years.

House leaders are hoping that the Senate will endorse the House approach in the next few weeks.

Bob Kinzel has been covering the Vermont Statehouse since 1981 — longer than any continuously serving member of the Legislature. With his wealth of institutional knowledge, he answers your questions on our series, "Ask Bob."
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