Florida Keys News - Key West Citizen
Monday, October 21, 2013
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Insurance turns home into nightmare

Steven and Debra Edmondson had visited the Florida Keys for decades before buying what they thought was there dream home in Big Pine Key.

The Virginians purchased the simple one-story working class home in November for $182,000. The couple continued to live in their first home outside of Richmond, Va. and planned to use the Big Pine Key home for family vacations and eventually retirement, Steven Edmondson said.

However, their dream home has turned into a nightmare, as they have become the latest homeowner to see their flood insurance rates skyrocket because of changes to the National Flood Insurance Program.

Last year, the Edmondsons' annual premium for flood insurance was $1,989. This year, the premium soared to $49,252, which is one-fourth the cost of the home, according to their renewal notice.

Steven Edmondson is trying to remain optimistic as he faces the challenge of resolving this issue. He can't afford such a large increase, and he knows that no one will purchase the home with such an expensive insurance rate, he said.

"Who is going to buy my home with this rate," he asked?

Edmondson is trying to secure a personal loan to cover the cost of his home, which would allow him to forego his flood policy and run the risk of being uninsured. Banks and lending institutions require flood and windstorm insurance for mortgages.

"I don't want to (be uninsured), but I have to," Edmondson said. "There is a lot of hoping going on right now."

Steven Edmondson, a mechanic who restores old cars, never considered buying a stilted home because his wife is wheelchair-bound.

Edmondson does not have a lot of confidence in federal elected officials to resolve the issue, as they are the ones who implemented the drastic rates increases, he said. There are bills in Congress to delay implementation of the rate increases until economic studies and other research can be completed to determine the effects of the increases. The federal legislation required the studies but they were never implemented.

The Edmondsons were never told by their real estate agents that such significant rate increases "were coming down the pipe," Steven Edmondson said.

"It's sickening," he said. "They (legislators) pass this stuff, and then they never do the studies. Can you believe it?"

Congressman Joe Garcia, D-South Florida, understands the skepticism on the part of Edmondson and others, but he is still continuing to push legislation that would postpone implementation of rate hikes at least another year, while a study to determine the impacts and necessity of the increases can be completed, he said.

Garcia, who was not in Congress when the legislation that established the new rates was passed, also plans to introduce a bill next month delaying rate hikes for at least five years and setting up a program that would allow homeowners to raise their homes or do other mitigation work. The costs of the mitigation would taken off their annual insurance premiums, Garcia said.

"This (the rate hikes) are making homes worthless," said Garcia, referring to the fact that people can't sell their homes with such hefty rate increases attached to them.

The Edmondsons are not the only second homeowners to see an significant increase. Nathan Seals has been hit with significant insurance rate increase to his Stock Island mobile home. Last year, he was charged $393 to his $27,500 valued mobile home on Maloney Avenue. This year, he received an estimate for $3,217.

Rate increases for second homeowners started in January. Starting this fall, subsidies will be phased out for businesses, properties of one to four residences that have experienced severe repetitive loss; and properties that have incurred flood-related damages where claims payments exceeded the fair market value of the property.

The drastic rate increases have local real estate and insurance agents and title workers scrambling. The Key West Association of Realtors will hold a forum and panel discussion on the flood insurance issue at 1:30 p.m. Tuesday at the Harvey Government Center in Key West. The forum will also be televised on the county's television channel 76 on Comcast.

The flood insurance rates is one of the biggest issues facing the Florida Keys right now, said Michael Larson, president of the Key West Association of Realtors. The increase will a have "ripple effect," on the local economy -- affecting homeowners first, then real estate agents and property attorneys and lastly the property values of all Keys homeowners, Larson said.

"It will affect everyone single person in the Keys," Larson said.

The forum's panel will includes Key West and Monroe County commissioners, local real estate agents, a representative from U.S. Rep Joe Garcia's office and a member of the local insurance watchdog group FIRM (Fair Insurance in Monroe).

Association and FIRM plan to regroup after the meeting and develop an action plan, which includes lobbying federal legislators to stop or halt the increase, Larson said. They will also need to lobby the Federal Emergency Management Agency (FEMA), which oversees the National Flood Insurance Program, to implement a grant program that would allow residents to raise their homes out of the flood plain, Larson said.

"This would significantly lower FEMA's risk," Larson said.

tohara@keysnews.com

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