TALLAHASSEE, Fla. – The cost of flood insurance on second homes in Florida is about to get a lot more expensive. Rates are scheduled to rise at least 25 percent a year until the true cost of insurance is being charged.
Congress mandated the hike for second homes but not for primary homeowners. Letters are being sent to more than 270,000 owners of second homes in Florida that say their flood insurance will go up by 25 percent.
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Sam Rogers Jr. is the incoming president of the Florida Association of Insurance Agents.
"It is not well-known, it's not effective until Oct. 1, so it's just now starting to come out in notices related to insurance," Rogers said.
Flood insurance is required by lenders. Keith Phelps, a retired homeowner, ditched his policy once his mortgage was paid off.
"You don't need it if you do not have a loan," he said.
Policy holders who are late making a payment or who canceled their policy and then try and get it back are in for a surprise. They'll have to pay full price, and that is going to be more than the 25 percent increase going into effect now.
The hike was necessary to reach a deal in Washington. Without it, it's likely the program would have died in a political standoff.
"And it's a big-ticket item," Rogers said. "Flood insurance is a large part of anybody's who is on the river or the beaches insurance cost."
The hike also has developers and Realtors worried. Increasing the cost of flood insurance will make second homes that much more expensive.
Legislation has cleared the U.S. House to delay the October hikes. There is no word on when or if the Senate will take it up.