KNOXVILLE, Tenn. (WATE) — The Federal Emergency Management Agency is currently considering changes to the way floor insurance is regulated.
That price could not only increase, but more people could be required to buy flood insurance because of these changes.
The average cost of flood insurance in 2018 was almost $700 a year through National Flood Insurance Program.
With the recent flooding in East Tennessee and South East Kentucky people in these areas could feel the impact in their wallet.
Areas like Middlesboro, Kentucky, were hit hard by recent flooding this past weekend, and days later, they’re still trying to clean up the mess.
Places like Buttery’s Floor Covering had flood insurance to cover some of their losses, but the price of flood insurance is just another big hit for small businesses.
“We need to order new carpets, we need to order new materials,” manager Sheila Lynch said after floodwaters filled their building last weekend.
“We still got a lot to do trying to run the store and do the cleaning.”
Lynch said they had about 17 inches of water in their building that caused a lot of damage.
They’re not waiting on insurance to help.
“We have to wait on a CPA to come in so we’re having to hold everything, store it, find places for it, until whoever that is comes, and don’t know how long that will be,” Lynch said.
Flood insurance is required if you live in a Special Flood Hazard Area like Middlesboro, and more properties could fall under that umbrella in the coming year.
“When you look at the properties FEMA has currently put as big flood risks, that is vastly underestimated,” said Nick VinZant, a senior research analyst and insurance expert. “We saw about a 281 percent increase in the number of properties that should have actually been considered at risk for flood then are currently at risk for floods.”
With FEMA currently considering these changes, newly added properties would be required to purchase flood insurance or increase their coverage limits.
Current flood premiums could rise dramatically because of the updated risk.
“The change that they are going to be making is, flood insurance used to be based on the amount of insurance you had on your home,” VinZant said. “It wasn’t factoring in how big your home was, it wasn’t factoring in exactly how much risk you really had.”
It’s a big change to flood insurance, but the increase in pricing is one Lynch said she sees every year.
“It’s increased tremendously from last year what we paid for it this year for it,” she said. “So it’s going to impact again because of this and it increases without us having any claims.”
Lynch said their customers have been very patient as their company has to wait for insurance to cover their losses.
She also said that though flood insurance is expensive, it’s worth it for her business.
VinZant said flood insurance is regulated where it can only increase 18% each year, but that increase can happen every year.
These changes by FEMA could go into effect as early as October.