Bosque Farms frustrated by flood insurance hikes

News,Business,Flood Insurance,Insurance Industry

ALBUQUERQUE, N.M. (AP) — In the small village of Bosque Farms that borders the nearly dry Rio Grande south of Albuquerque, home and business owners have shelled out more than $600,000 a year recently for federally subsidized flood insurance to cover claims that have totaled only $2,192 during the decades-old life of the program.

And the rates just keep going up, making it difficult for some residents to pay the premiums — or sell their homes.

"It's tough on qualifying," said real estate agent Harriet Taylor. "In fact, there's some loans that won't even consider a home if it's in a flood zone."

This year, 275 homeowners in the village of 3,900 people are set to see rate hikes of up to 18 percent a year as the federal government seeks to put the troubled National Flood Insurance Program back on sound financial footing.

Policyholders on more than 20 other properties face premium increases of 25 percent per year until they switch to a rate based on the true risk of flooding. The changes came under a newly passed national law that aims to cover a $24 billion deficit created by the long-running discounts and a series of catastrophic storms.

President Barack Obama signed the law Friday putting the brakes on a 2012 overhaul that was supposed to end costly government subsidies for flood insurance. But while the law offers instant relief for homeowners hit by premiums that soared by thousands of dollars overnight, for many the reprieve is temporary.

The hikes are infuriating to residents in this drought-stricken state, who are already paying what they consider to be unreasonable amounts even though they can't remember the last time the area had any substantial flooding.

"The likelihood of flooding in our community is quite low," said Mayor Bob Knowlton, whose flood insurance premium went up 13 percent last year, to $1,700.

"I believe we are basically subsidizing all of the FEMA payouts back East. Also, my flood insurance premium is about four times higher than my regular homeowners insurance for the same amount of coverage. Something is really wrong with this system."

Across New Mexico, more than 4,000 subsidized flood insurance policies will see rate increases.

In the Middle Rio Grande Valley, Taylor says, the impact is huge, and growing.

"FEMA keeps coming in and making more and more of our county in the flood zone," she said.

"Now almost all of Valencia County is in the flood plain. Everybody has to pay flood insurance. You have seniors on limited income, and in addition to struggling anyway, now they have to pay flood insurance," Taylor said. "... So it makes it hard. I understand they need funding for other areas, but they are doing this to people who haven't had any problems."

Still, Taylor understands that doesn't mean a major flood won't hit the area someday.

"They call it the 100-year flood. They say we are due," Taylor said. "It just depends on how the rains come, because we have been in such a drought.".

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