TRAVERSE CITY — Nyla Caverly loves the creek that runs by her Sixth Street home in Traverse City, but she’s thinking about selling, thanks to a $1,000 jump in her flood insurance premium.
Caverly purchased her home 20 years ago. In 2012 her mortgage company notified her she needed to carry flood insurance equal to 85 percent of the home’s replacement cost. The bill came to a little over $2,000 annually. Her 2014 policy jumped to more than $3,000.
”It’s ridiculous,” Caverly said. “This house has been here on Kids Creek over 100 years. I can’t see it washing away. But we have to play their little games, and there’s not much we can do about it, I guess.”
The National Flood Insurance Program, which subsidizes the premium cost for homes built before 1975, is $24 billion in debt. Congress passed a law in 2012 that required about 1.1 million policyholders to start paying rates based on the true risk of flooding at their properties. Congress recently scaled back the law to ease fears of sky-high premiums by capping annual premium increases for subsidized policies.
But annual premiums still will increase by as much as 18 percent year-after-year until the government collects what it needs to pay out claims.
Owners of businesses and second homes face mandatory increases of 25 percent a year.
About 225 properties are affected in Grand Traverse, Antrim, Benzie, Kalkaska, and Leelanau counties, and about 94 of those local policy holders receive subsidies.
The caps in the new law could offer Caverly some insurance relief, but she’s been told it could take up to a year to receive any reimbursement.
”I was born and raised in the country, and the creek was like having a little bit of country right in town,” Caverly said. “It’s a shame we have to pay so much to enjoy it. We are seriously thinking of putting our house up for sale.”