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Federal reforms pushing flood insurance rates ever higher

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When it comes to flood insurance in Vermont, it’s federal reforms that worry Susan Donegan.

The commissioner of the Department of Financial Regulation gives an example: She heard from a Washington County resident a few days ago who faced an $8,000 premium for a year of flood insurance in a high-risk zone. The bill was sticker shock for a property owner who hadn’t resided in a risky zone before the latest flood map for Washington County was adopted in March.

But it’s not just the new designation that drove up the price — and that may drive down the home’s property value. It’s the fact that the bill reflects the property’s actual risk.

Residential flood insurance, for the most part only available from the federal government, is undergoing major changes in 2013 with the rollout of the Biggert-Watters Flood Insurance Reform Act of 2012. The congressional changes were inspired long before Tropical Storm Irene, as was the Federal Emergency Management Agency’s initiative to update the country’s flood insurance rate maps.

“You can debate global warming,” Donegan said, “but you can’t deny that we’re having more severe and more frequent severe storms.” Known as BW-12, the Biggert-Watters Act was crafted to address that reality and shore up federal flood insurance in its wake.

Donegan doesn’t argue the intention, but she’s concerned about what its drastic changes will mean for Vermont property owners.

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