Traverse City Record-Eagle


March 24, 2014

Mich. homeowners dread flood insurance rate hikes

DEARBORN HEIGHTS, Mich. (AP) — Katherine Calhoun gets nervous this time of year. She nods toward the rear of her home, where Ecorse Creek moseys through Dearborn Heights.

"We check the creek height whenever we're outside. We worry all the time, especially in the spring because of the rain and melting snow," she said.

Living so close to the creek in a flood plain has been costly — not the least because it's flooded twice and once caused $19,000 worth of damage they had to pay after their insurance claim was rejected. When the Calhouns bought the house 22 years ago, they paid $300 annually for flood insurance. That bill is now $800.

It will only get worse for the Calhouns and people around the nation when federal flood insurance premiums go up soon as decades-old subsides through the National Flood Insurance Program start to end. The program, which made low-priced insurance policies available for houses built before 1975 and near bodies of water, is $24 billion in debt.

In 2012, Congress passed a law requiring about 1.1 million policyholders to start paying rates based on the true risk of flooding at their properties. It scaled back that law recently, but annual premiums will still 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 until the owner drops out of the program and gets a new rate based on the actual risk of flooding.

In Michigan, there are about 11,500 federal policies for primary residences and 2,600 businesses and vacation homes.

Higher premiums for people living close to Ecorse Creek would be an extra burden on an area that has yet to recover from the national mortgage crisis and home foreclosures, Dearborn Heights Mayor Dan Paletko said.

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