Flood Insurance Premiums Vary for New Jersey Residents

If flooding were a real concern for Taylor Rambo, he says he wouldn’t have built a bar in his basement.

Yet he pays about $2,700 each year for flood insurance that he is required to have as part of his mortgage, and the amount is likely to rise quickly as the federal government raises premiums paid by home and business owners through the subsidized National Flood Insurance Program.

“It worries me a lot because it makes my escrow go up and I can’t afford it,” said Rambo, who said he hasn’t had any water in his basement in the 17 years he’s owned his house in Burlington City, a blue-collar town between Philadelphia and Trenton and about 45 miles from the New Jersey shore, where flooding has become a high-profile and expensive problem.

More than 1,000 property owners in Burlington City, which is situated along the Delaware River, paid $1.5 million in premiums subsidized by the program last year. In the 40 years the community has been part of the program, residents have received payouts of only about $500,000.

That’s a sharp contrast with several towns on the shore – including Toms River, Union Beach and Sea Bright – where the historic payouts have been 50 times the premiums collected there each year.

The program pays out far more than it brings in, in effect having taxpayers subsidize development in flood-prone areas. That led to a 2012 overhaul, but the outcry from policyholders who saw rates skyrocket led to Congress passing a bill to stop many of the changes.

President Barack Obama signed that measure into law Friday, but it measure merely delays the premium increases that will hit as many as 1.1 million policyholders across the country, including nearly 89,000 home and business owners across New Jersey, according to an analysis by The Associated Press.

The legislation caps rate increases, but flood-zone homeowners like Rambo could still see their premiums go up 18 percent each year until the program is collecting enough revenue to cover a $24 billion shortfall.

Owners of the state’s more than 17,000 vacation homes and non-primary residences, along with nearly 5,000 business owners, will be hit with annual mandatory increases of 25 percent until they switch to a risk-based rate.

Rambo points out how high above street-level the windows are on his three-story nearly century-old home, how a nearby reservoir is several feet lower than his home, the efficient storm drains and the pitch of the sidewalks on Federal Street. The home is in the New London neighborhood, which was first settled in 1696.

“It amazes me how someone down in Alabama draws a line and says you’re in a flood zone,” he said.

The flood maps that decide who is required to have the insurance are based on expected future floods, not past ones. And Rambo’s neighborhood in a town that served as capital of the West Jersey colony for part of the 18th century is in one where officials say there is a 1 percent chance each year of a major flood.

Down the street from Rambo, Bob Kennedy is also concerned about the flood insurance program, not only because of the price but because of what you get from it if there is a flood.

One friend in town who did have flooding – after 2011’s Tropical Storm Irene – has not been able to get money for repairs, he said.

Meanwhile, Kennedy, who has a wallpaper-hanging company, is paying about $2,000 a year for insurance he doesn’t think he needs.

“There are people at the shore with $2 million houses that don’t pay $2,000 a month,” he said.