USA - NJ flood insurance is so expensive, thousands drop it — What next?
Flood insurance costs are skyrocketing. NJ Congressman working on a fix. He says the entire flood insurance program could collapse. His bill would also close insurance company loophole
With flood insurance rates shooting higher in New Jersey, a Garden State congressman is working on a plan to reform the National Flood Insurance program.
According to U.S. Rep Frank Pallone, D-N.J. 6th District, at least 12,000 New Jersey residents have already dropped their flood insurance because it’s so expensive “and we estimate that the risk rating system over the next few years could double the premium every year, result in an extra thousand dollars annually.”
He said that will result in even more people choosing to not get flood insurance which will expose them to financial ruin if there’s another major storm Like Sandy.
It needs to be affordable
He stressed in order for the National Flood Insurance program to be effective it needs to be affordable and that’s not the case right now.
“The latest FEMA data says that for New Jersey's 72,000 policyholders, they’re going to see an average premium nearly double,” he said.
Pallone explained the legislation he’s working on would cap premium increases at 9% a year, and it would require more information about the risk rating system.
Pallone Will Introduce Legislation to Reform Flood Insurance Program, Calls for Risk Rating 2.0 Transparency
He said the Flood Insurance Program is in serious trouble and “part of the problem is if a lot of people drop out and they are already are (dropping out) then the whole program could collapse because it’s a pooling of resources so the more people drop out, the higher the premium is going to be.”
He noted another part of his legislation is focused on closing insurance company loopholes that are used to prevent legitimate insurance claims from being paid.
“After Superstorm Sandy and Hurricane Ida devastated New Jersey communities, insurance companies have outright refused to make good on their promises to policyholders and used the fine print to deny families who lost everything,” Pallone said. “We need to correct that and prevent it from happening moving forward.”