{"id":5018,"date":"2014-02-20T13:15:52","date_gmt":"2014-02-20T17:15:52","guid":{"rendered":"https:\/\/louisvillehomesblog.com\/?p=5018"},"modified":"2023-08-22T19:56:49","modified_gmt":"2023-08-22T19:56:49","slug":"want-know-biggest-danger-louisville-real-estate","status":"publish","type":"post","link":"https:\/\/trepryor.com\/blog\/want-know-biggest-danger-louisville-real-estate\/","title":{"rendered":"Want to know the biggest danger in Louisville real estate?"},"content":{"rendered":"\n

Some might consider this article\u2019s title pure hyperbole. Let me be clear: It\u2019s not.\u00a0In July of 2012, the Flood Insurance Reform Act <\/em>was passed. Some of its pieces weren\u2019t \u201cplugged in\u201d until recently, but because of this piece of legislation, buying a certain home now can be like playing Russian roulette<\/a>. Let’s learn about Louisville flood insurance.<\/p>\n\n\n\n

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Just because your Louisville home is near water doesn\u2019t mean it\u2019s in a floodplain. But it could\u2026 and that could cost you thousands of additional dollars with the recent legislation regarding flood insurance.<\/figcaption><\/figure>\n\n\n\n

Here\u2019s the inside scoop\u2026<\/p>\n\n\n\n\n\n\n\n

National Flood Insurance Program cut all flood insurance premiums<\/h3>\n\n\n\n

Prior to this 2012 piece of legislation becoming law, the federal government subsidized a large portion of a homeowner\u2019s mandatory flood insurance costs. We may question why they would, given their propensity to take<\/em> money rather than give<\/em> money, but since 1968 we\u2019ve enjoyed the National Flood Insurance Program (NFIP)<\/a> and all of its benefits.<\/p>\n\n\n\n

What this meant was that buyers who bought homes where the improvement<\/strong> (basically the house) was even partially located in the floodplain, were required to purchase flood insurance.<\/p>\n\n\n\n

With NFIP in place, the premiums for their flood insurance were roughly half what they should have been, thanks to the government\u2019s participation.<\/p>\n\n\n\n

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The average annual subsidized premium was $1,121 in 2010, discounted from the $2,500 to $2,800 that FEMA said would be required to cover the full risk of loss.<\/p>\n<\/blockquote>\n\n\n\n

Like most government programs, NFIP is wildly inefficient and has an outstanding debt of more than $24 billion as of July 31, 2013,<\/a> according to the U.S. Government Accountability Office.<\/p>\n\n\n\n

Yes, that\u2019s 10<\/em>\u00a0zeroes.\u00a0As we all know, the government spends money on water. *ahem*<\/p>\n\n\n\n

Flood Insurance Reform Act of 2012 removed the subsidies<\/h3>\n\n\n\n

The government has realized the tide is rising (please forgive me), and they want to keep their heads above water (last one, I promise), thus we arrive at the aforementioned Flood Insurance Reform Act of 2012.<\/p>\n\n\n\n

Now that the law has kicked in, so have the horror stories.<\/p>\n\n\n\n

Rates are truly based on the risk of future flooding so even though the average increase in flood insurance rates is double, there are cases where it could be much higher.<\/p>\n\n\n\n

During a recent continuing education class our instructor, real estate attorney Harry Borders of Borders & Borders, cited an example where the new flood insurance premium was 15 times the previous rate<\/strong>.<\/p>\n\n\n\n

Which makes that property instantly less valuable and next to impossible to sell.<\/p>\n\n\n\n

Another example:<\/p>\n\n\n\n

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Owners of older oceanfront vacation homes in places like Cape Cod report getting socked with enormous premiums. Dawn Karol, who bought a cottage in Yarmouth, Mass., in November 2012 for $450,000, was sent an initial premium notice of $65,000. [link]<\/p>\n<\/blockquote>\n\n\n\n

If you are trying to sell a Louisville home located within the floodplain, your property may now be unsellable<\/em> due to an extreme flood insurance premium.<\/em><\/p>\n\n\n\n

According to Becky Hedgspeth with Epic Insurance Solutions<\/a> (formerly Hayes, Utley & Hedgspeth Insurance), the flood policy premiums vary drastically and there are limits of $250,000 for home\/dwelling and $100,000 for contents.<\/p>\n\n\n\n

Hedgspeth provided a few real-world examples:<\/p>\n\n\n\n