President Barack Obama signed into law today legislation that limits insurance rate increases paid by property owners in flood-prone areas.
The new law caps premium increases under the National Flood Insurance Program to 18 percent per year for primary residences and 25 percent per year for second homes.
And in a coup for the real estate industry, the measure allows sellers of older homes built before original flood insurance risk maps were drafted to pass taxpayer-subsidized policies on to the people buying their homes instead of requiring purchasers to pay actuarially sound rates immediately, writes Nedra Pickler of the Associated Press.
“Those rates had been particularly high in older coastal communities in states like Florida, Massachusetts and New Jersey, and have put a damper on home sales as prospective buyers recoil at the higher, multifold premium increases,” she wrote.
Critics of the measure say taxpayers will end up footing the bill when the next disaster strikes instead of homeowners who choose to live in areas susceptible to flooding, she added.