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Gulf Coast Residents Brace For Insurance Hikes
PASCAGOULA, Miss. (WPMI) As the rain moves in this weekend, ironically, flood insurance rates are going up. A new federal law is in effect that will require Americans to dig a little deeper in their pockets.
The impact is going to be huge and here's an example. If you're a homeowner that already owned property in a flood zone before this act was signed into law last July, you could see your rates increase 25 percent per year for several years.
And for new property owners in flood zones, premiums could increase nearly tenfold.
Folks living in Pascagoula know flooding all too well after what they experienced during Hurricane Katrina.
"Well, this house got four feet of water and at that time she didn't have flood insurance. We had to pay for everything," said Brenda Lambert, whose mother's home flooded during Katrina.
She's bracing for hikes, much like she braced for floodwaters in 2005.
"It's around $300 for a year but it's supposed to triple, double. In fact we're probably going to sell the house because we can't afford to keep doing this," said Lambert.
The looming flood rate hikes were passed in 2012 to keep the National Flood Insurance Program afloat. Basically what it does is remove federal subsidies from properties in flood zones.
"Whether they know that or not, they've been subsidized. Now the government is saying, we're going to start charging you a surcharge a 25 percent per year until we get your rate up to where it ought to be," said Insurance Agent and President of Millsaps and Associates, Frank Millsaps.
He said people who have experienced repetitive losses in the past, people who own a business and folks who own a second or vacation home are prone to the highest hikes.
"The public demanded that if you're going to have repetitive loses over and over then you should pay more money. For many years we've kicked the can down the road and now with Sandy and Katrina and all these other events, it's a program that is all money going out and we need to fill it back up," said Millsaps.