Flood insurance hikes make some property buyers think twice
Steeply rising flood insurance rates are making some developers think twice about buying old properties on the water.
The Kennebec Journal reported at least two real estate deals in Gardiner came to “a screeching halt” this year after flood insurance rates were revealed to be much higher than anticipated.
Brunswick-based developer Dustin Slocum said he halted his purchase of a downtown building after learning he would have to pay $18,000 a year more for flood insurance because of a federal law passed in 2012 that is increasing rates for the federal flood insurance program.
“That quote literally made everything come to a screeching halt,” he told the KJ.
While changes to the law in March stopped most of the larger rate hikes, the Federal Emergency Management Agency is expected to steadily hike subsidized rates for older buildings in floodplains until they represent their actual flood risk. The annual increase will range between 5% to 18% a year for most old buildings with subsidized flood insurance.
Sue Baker, the state coordinator for the federal flood insurance program, told the newspaper that she doesn’t know how high the rate increases will be every year for property owners. She recommended that they should try to mitigate risk by flood-proofing their buildings.
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