FEMA offers insurance rate cuts under remapping

Property owners across the country fearing they may be forced to buy expensive flood insurance under a push to draw up new floodplain maps will catch a break by being offered the coverage at sharply lower rates for two years, a key lawmaker said.

Sen. Dick Durbin of Illinois said the Federal Emergency Management Agency's decision to offer the cheaper rates on properties affected by changes to flood hazard maps dramatically softens the financial blow for southwestern Illinois and other affected regions – at least for now.

FEMA has agreed to offer up to two years' eligibility for the National Flood Insurance Program's Preferred Risk Policy – the program's lowest-cost option – to small businesses and homeowners on any land the new maps show are in newly designated special flood hazard areas. The new rates are available after the redrawn maps take effect, in many cases this fall or early next year.

The savings could be big: An affected homeowner's yearly premium under the preferred risk program might be $300 – four to five times less than what it might cost otherwise, Les Sterman, an administrator of a flood-protection district involving three St. Louis-area Illinois counties, said Thursday.

The lower premiums "are quite reasonable, and everyone in the area should buy insurance at those rates. It's considerable relief to a point, obviously," Sterman said, cautioning that bigger companies still would have to shop for the coverage on the open market – a price tag he estimates in his region alone to be $30 million a year.

Durbin, in a statement Wednesday, cast FEMA's decision as "only a temporary solution" ensuring that residents "will at least be financially protected at an affordable price in the event of a flood."

Messages left Thursday with FEMA were not immediately returned.

FEMA's power to require the insurance comes from the 42-year-old National Flood Insurance Program that Congress enacted chiefly out of the public's inability to get privately backed insurance for flood losses.

Source: Copyright © 2010 The Associated Press, Jim Suhr, Associated Press writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.