As a national policy to deal with catastrophic relief payments to property owners in flood zones, Federal Flood Insurance Premium hikes took effect recently. The Flood Premium increases were in effect even before the latest round of hurricane and other weather-related damage. The increases and the national policy creeping behind them, were reported here in the categories of Flood Insurance and Hurricanes, among other categories. Representative articles on these trends emerging over the past year include "Sandy Makes Landfall on Tax Bases Three Months Later," posted here on January 30, 2013; and "Bad Faith Votes Against Flood Insurance for Sandy Claims," posted here on January 16, 2013 with links to other articles posted here and on Insurance Claims and Bad Faith Law Blog.
Now the Federal Flood Insurance Premium hikes are reportedly a major brake on sales of homes in flood zones. See, e.g., Drew Harwell, "Flood-Insurance Hikes Ravage Tampa Bay Neighborhood Home Sales" (Tampa Bay Times Online, posted Sunday, December 29, 2013).
This is another weather-related catastrophe, there is no doubt. It may be inflicted on a smaller number of people, there is no doubt about that either, but there is no doubt that for the people affected, the effects will be catastrophic. It will be interesting to see what effect if any Federal laws have on sales of commercial property located in flood zones. Federal Flood Insurance is certainly available at a cost to commercial property owners. See Download FEMA.NFIP.Summary of Commercial Flood Coverage.F778. However, the costs do not fall alike on owners of residential property and commercial property.
In general terms, owners of commercial property can treat increases in any insurance premiums as a cost of doing business which they can and do pass on to their customers.
However, there is more than that. Federal laws affect the security of sales of commercial property located in flood zones because Federal laws including the Stafford Act (see the articles previously published here) provide for Federal taxpayer subsidies of government or nonprofit property damaged by weather including floods. See the articles previously published here, again in several categories including Flood Insurance. If you need to sell your warehouse, you need not fret about road repair for example after a hurricane. You can depend on your bailout so long as you are the owner of that commercial property.
On the other hand, you may not be able either to afford your insurance rates or sell your residential property if you are the owner of residential property serviced by that same road.
Public policy by insurance premium. And by bailout. Catastrophic.
© 2014 by Dennis J. Wall. All rights reserved. No claim to original U.S. Government works.
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