Impact of flood insurance hikes on Utah unclear
The cost of national flood insurance is set to jump for hundreds of policyholders throughout Utah, but it's unclear how much the spikes will affect whole neighborhoods or communities.
Dozens of residents in pockets of Salt Lake County and the city of Cottonwood Heights are among those losing government subsidies that have kept rates down for federal flood insurance.
While price increases will likely be steep in individual cases, local officials and real-estate groups say the change does not seem poised to cause broader community problems as it could elsewhere.
There are about 740 policies in the state set to lose subsidies, but Brent Beardall, an engineering manager with Salt Lake County, said it's hard to say how those increases will play out.
For individual policyholders, "rates can be quite different, in terms of thousands of dollars different," Beardall said.
Across the country, more than a million policyholders are expected to see increases in the coming years despite a federal law President Barack Obama signed Friday that scaled back price hikes for some homeowners who saw their premiums jump by thousands overnight. The federal government is trying to close the National Flood Insurance Program's $24 billion shortfall, caused by long-running subsidies and a series of catastrophic storms, including Hurricane Katrina and Superstorm Sandy.
Under the new law, homeowners face annual premium increases as high as 18 percent, compounding year after year, until the government is collecting what it needs to pay out claims. Businesses and people owning second homes with subsidized policies now will see increases of 25 percent each year until they hit a rate that reflects the true risk of flooding.
The federally subsidized policies in Utah are sprinkled throughout towns and communities in the state.
One cluster is in the city of Cottonwood Heights: 124 of 161 policyholders were receiving discounted coverage that is set to spike. That's an increase for 77 percent of policies, but City Manager John Park said he hasn't heard any complaints or concerns about it from residents.
In Salt Lake County's unincorporated areas, 128 policies out of 429 are set to jump.
Dave Anderton, a spokesman for the Salt Lake Board of Realtors, said any rate hikes affecting homeowners in the county do not appear to have put a dent in home sales.
Locally, "the market right now is pretty strong," he said. "I haven't heard Realtors talking about this issue."
Across the country, about 40,000 home sales were stalled or canceled from October 2013 through January because of confusion or jumps in flood insurance, according to the National Association of Realtors.