SalemNews.com, Salem, MA

Local News

March 25, 2014

Flood insurance rate hikes still loom

The small, central Pennsylvania river town of Jersey Shore doesn’t have beach homes or boardwalks, but it shares more than a name with the famous stretch of New Jersey coastline 250 miles to the east.

Both are among the thousands of places around the U.S. where people could face trouble in the years ahead because of the rising cost of government-mandated flood insurance.

Earlier this month, Congress sought to ease their fears of sky-high premiums by rolling back a 2012 reform ending the government’s costly practice of offering subsidized insurance for older homes and businesses in flood zones. The president signed the bill last week.

But while the law was widely hailed as a victory for people who had seen their bills triple, quadruple or even increase 15-fold overnight, pocketbook pain for many has merely been delayed.

As many as 1.1 million policyholders with subsidized government insurance will still be hit with steady rate increases. While no one is sure yet how high rates will go, there is cause for worry in cities and towns that rely on affordable policies to keep businesses afloat and prop up the local housing market.

On Cape Ann, Manchester resident Al Cohen and his wife were searching for a waterfront home when they came across a dream house with spectacular views of the ocean.

Before they could make an offer on the property, they learned the bank would require federal flood insurance for the 2,000-square-foot, two-story Victorian.

Premiums would cost more than $8,000 a year — on top of monthly mortgage payments and real estate taxes. That’s because a large chunk of the property was located in a newly reconfigured, high-hazard flood zone.

“It was definitely a deal killer,” said Cohen, a 52-year-old advertising consultant who recently moved to the North Shore from Pennsylvania. “We’re looking at places a little further inland.”

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