Chances are, if you're living anywhere near the coastline of Charleston, South Carolina, then you're paying for flood insurance due to the the fact that Charleston's elevation is just above sea level. If you're financing your home, then your lender would have required it at closing when you purchased. However, if you paid cash or if your house is in flood zone x, then it wouldn't be required. See more on Charleston flood zones.
But what is this about flood insurance rates going up, and will it affect me? Yes. The Biggert-Waters Flood Insurance Reform Act of 2012 was passed in June of 2012 which will increase flood insurance premiums over a 4 or 5-year period.
The National Flood Insurance Program states that premiums were off as much as 40% of what rates should have been. Here is the breakdown, and how it might affect you:
For owner-occupied and non-owner occupied Residences:
- For owner occupied properties, the rates will be phased in over a five-year period.
- For non-owner occupied properties, the rates will be phased in over a four year period.
- NEW policies will be written at the full actuarial rate. This means during the course of a real estate transaction if the policy is not assumable to the new owner, the full rate increase will take effect immediately.
A real-life example:
For example, your current policy premium is $1,000/year but the actuarial is $2,000. Unless the property has an assumable policy, when the policy lapses or the property is sold, you will begin paying 20% of the difference each year. So, if the difference is $1,000, your premium will increase $200 per year until you reach the $2,000 actuarial premium.
If you are purchasing a property- make sure your real estate agent knows that you want to see if you can assume the current owner's flood policy to avoid these flood insurance premium increases all at once, immediately.
For more information, visit the explanation of flood insurance premiums going up by the Charleston Trident Association of Realtors.
Mike Ciucci specializes in the Charleston SC real estate market. He has been a Charleston realtor for over 15 years, focusing on quality and attention to detail his clients have come to expect.