62° Good Evening
62° Good Evening
ClassifiedsReal Estate

House OKs bill to roll back spikes in flood insurance premiums

Floodwaters swamp houses and businesses along Fire Island

Floodwaters swamp houses and businesses along Fire Island Avenue in Babylon Village due to superstorm Sandy on Oct. 30, 2012. Credit: Jessica Rotkiewicz

The U.S. House of Representatives Tuesday approved its version of a bill to roll back sharp increases in flood insurance premiums for homeowners on Long Island and in other flood-prone regions.

The measure, which passed 306 to 91, echoes legislation approved by the Senate in January. Both bills aim to unravel once-popular reforms to save the government-run flood insurance program from insolvency by bringing premiums in line with the risk of flooding.

Yet, those reforms hit a backlash after the Oct. 29, 2012, superstorm Sandy, prompting an about-face by lawmakers. Rep. Tim Bishop (D-Southampton) said the latest bill is a reasonable way to address the flood insurance program's $24 billion debt without hurting storm victims.

"While we have the long- term goal of making the program fiscally sustainable, we have to get there without placing undue hardship on homeowners," Bishop said.

The measure, which now goes back to the Senate, could boost home values for up to 25,000 Long Islanders who have subsidized flood policies.

The bill would reinstate the long-running practice of allowing property owners to pass those subsidies along to buyers when houses are sold. Without that grandfathering system, which the reforms ended, houses in flood zones have become harder to sell, as prospective buyers are told their premiums could skyrocket.

"It has devastated values," said Frank Dellaccio, a member of the Long Island Real Estate Board.

Insurance companies typically don't provide flood coverage, saying its too risky. So the government offers it. But roughly 20 percent of the 5.5 million policies nationwide are subsidized, which has left the program mired in debt.

To save it from ruin, lawmakers passed the Biggert-Waters Flood Insurance Reform Act in 2012. It called for phasing out those subsidies and gradually raising premiums until they matched risk.

The recent Senate bill would keep subsidies in place for another four years. The House bill would end the plan to phase out subsidies altogether. To pay for them, the measure calls for charging policyholders $25 a year to insure their primary homes. The charge on businesses and second homes would be $250.

Richard Guardino, executive dean of the Wilbur F. Breslin Center for Real Estate Studies at Hofstra University, said the legislation will benefit Long Island. "People are just recovering from Sandy," he said. "And to be hit with huge increases is inflicting pain on top of pain."

Latest Long Island News