NEWBURY — Updated federal regulations are expected to cause a notable spike in insurance rates for residences adjacent to coastal or tidal areas.
The adjusted rules are part of an initiative by the Federal Insurance and Mitigation Administration, part of the Federal Emergency Management Agency, to phase out federally subsidized flood insurance. Some new rates might take effect Oct. 1.
Several classes of residential owners will be targeted with higher rates this fall, officials say. Newbury, which has substantial amounts of residential properties on both the coastline and along coastal rivers, will be especially affected. Among those likely to see higher rates are owners of second homes and owners of properties that have experienced severe or repeated flooding.
The increases will vary. One family that paid a couple hundred dollars a month for insurance premiums is facing an annual rate of $5,000 to $6,000 under new guidelines, according to town officials. That’s an increase of over 100 percent.
Some owners on Plum Island will see higher rates, as will householders in areas near the Parker and Merrimack rivers, and in tidal and basin areas.
“Homeowners have to educate themselves,” said Doug Packer, conservation agent in Newbury. “Every case is different, and those who own residences should talk with their insurance agent and with their bank, if they have a mortgage.
“A big part of this is that the federal government wants to stop subsidizing.”
Big storms, like Superstorm Sandy last year, have cost the federal insurance program enormous amounts of money. In New Jersey alone, Superstorm Sandy resulted in $3.5 billion in claims to the Federal Insurance and Mitigation Administration.
A key element of the rates changes are guidelines created by the Biggert-Waters Flood Insurance Program of 2012.
Regulations will require the National Flood Insurance Program to raise rates “to reflect true flood risk, make the program more financially stable and change how Flood Insurance Rate Map (FIRM) updates impact policyholders.”