Additional reporting by Suhail Bhat and Rachel Holliday Smith
Premiums will be going up for most of the 53,000 New York City property owners covered by the federal flood insurance system, government stats reviewed by THE CITY show.
The National Flood Insurance Program rates that took effect Oct. 1 for new policyholders — and will hit in April for existing ones — have homeowners like Brooklyn’s Carly Baker-Rice facing new stress, on top of the toll of recent storms.
Baker-Rice and her husband bought their house in Red Hook last June in a move from Fort Greene, even though they predicted they’d eventually be “up to their knees in sewage” due to flooding in their new place, she said.
Just over a year into homeownership, that happened sooner than she thought. In August, Tropical Storm Henri flooded their basement and on Sept. 1, the deadly remnants of Hurricane Ida sent water splashing in through the front door.
Baker-Rice is still dealing with the damage and waiting for her insurance claims to go through — and she hasn’t been able to obtain a quote from her broker yet about how a new federal flood insurance policy might make her premium go up.
“It makes my heart race, and I’m already somewhat crippled by the amount of stress that I’ve been under for the last month,” said Baker-Rice, 38, who works as a corporate training consultant. “It’s incredibly frightening to not know what it’s going to go up by, knowing what some of the existing rates out there are.”
Focus on Fairness
In Red Hook, one of the city neighborhoods slammed by Superstorm Sandy nine years ago this month, just over half of National Flood Insurance Program policyholders will see increases in their monthly premiums when they renew starting next spring. Meanwhile the rest will see drops, based on a new calculation of what it actually will cost them to rebuild.
The Federal Emergency Management Agency revamp, known as Risk Rating 2.0, is the first such reassessment in nearly 50 years for the National Flood Insurance Program, the largest provider of flood insurance in the country.
According to FEMA, the new risk ratings are fairer. For the first time, owners of homes of greater value will be paying more for their premiums than owners of less expensive homes.
FEMA’s new formula also considers risk factors, including ground and building elevation, distance from water and the chances of damage from coastal erosion, river overflows, heavy rainfall and storm surge.
Prices will go up for at least 62% of flood insurance policies in New York City. More than 53,000 properties, including 19,440 single-family homes, are insured by FEMA’s program in the five boroughs, an analysis by THE CITY found. Nationally, more homeowners will be taking bigger hits: FEMA estimates 75% will see increases, which could be as much as 18% per year.
In the city’s 10 poorest ZIP codes, 38% of premiums will increase and 62% will decrease. The figures are roughly the same for the city’s 10 wealthiest ZIP codes.
Due for an increase: about 75% of covered properties in Queens, 65% in Brooklyn, 59% in Staten Island, 46% in The Bronx and 43% in Manhattan.
For 27,200 properties, the rise will be modest, not more than $120 a year. But about 10% or 5,400 properties, will see their yearly costs leap by more than $120.
Already, the average yearly cost of flood insurance in New York City is $1,152, ranging from $1,074 in Brooklyn to $1,742 in The Bronx. That’s significantly higher than the national average of about $700 annually.
Increased costs are the price of progress, FEMA Administrator Deanne Criswell told Congress at a hearing last week.
“The risk of where people build is reflected in their insurance premiums in a way it hasn’t been before,” said Criswell, who previously headed the city’s Office of Emergency Management. “It’s the first time this program has taken equity into account to make sure people are paying for the risks they have.”
But locally, the coming changes in insurance premiums are sparking concern. Homeowners have yet to see their actual changes in rates, which remain mostly unknown.
“It’s something of a black box,” said Beth Malone, resiliency and insurance program manager at Neighborhood Housing Services Brooklyn, which works with homeowners. “The cost of insurance is going to have them underwater financially well before they’re underwater physically.”
Pleading for Price Breaks
Sens. Chuck Schumer and Kirsten Gillibrand and seven of their colleagues wrote to FEMA last month asking the agency to delay the rollout of the new risk rating.
They expressed concern at projections that nearly 20% of policyholders nationwide would drop out of the insurance program over the next decade due to premiums they could no longer afford.
Jainey Bavishi, director of the Mayor’s Office of Resiliency, has similar worries.
“A quarter of families in New York City are already struggling to pay their current insurance program. This is just going to increase the financial burden,” she said. “Families have to decide between paying flood insurance premiums or putting food on the table.”
Not every homeowner at risk participates in the National Flood Insurance Program. Only those who live in FEMA’s defined flood hazard zone and have a government-backed mortgage, or have received federal flood repair aid previously, must participate.
FEMA’s zones also reflect high risks of coastal flooding, not the torrential rainwaters seen in Ida.
One important feature of the new program, according to FEMA, is that it encourages property owners to invest in flood protection measures because that will ultimately lower their premiums and risk.
Such upgrades could include elevating a home, raising boilers and other mechanical equipment, filling in a basement, or installing flood vents to relieve pressure on foundations.
But such measures cost money up front. And some lower-income property owners at high risk of flooding will likely find the expense too burdensome, said Joel Scata, an attorney with National Resources Defense Council.
“Lower priced homes could see an increase in their insurance costs if their risks of flooding are particularly high,” he said.
Many New York City buildings are also impossible to elevate and difficult to floodproof — such as the attached brick homes that are common in Brooklyn’s flood-prone Canarsie.
Without the update, all policyholders in the program would have seen premium hikes, a spokesperson for FEMA noted.
Uncovered and Exposed
Even at current rates, THE CITY has reported, most property owners within FEMA’s existing hazard zones do not carry flood insurance. Those zones date to 2007, years before Superstorm Sandy inundated many blocks not on that map.
The premium increases could deter others from carrying coverage — with potentially devastating consequences.
Richard David is a Democratic district leader in South Ozone Park, Queens, where about 95% of property owners are primed to see a decrease in flood insurance premiums under the new ratings. And he’s been helping residents in Hollis recover from Hurricane Ida, weeks after the deluge.
Hollis has regularly flooded from rainfall for decades, due to an overtaxed stormwater management system. Despite the damage the neighborhood repeatedly suffers, David said Hollis homeowners he talks to aren’t thinking about buying flood insurance.
“It’s still something out of your pocket that you never have to incur before,” he said. “Even if they had flood insurance, it wouldn’t have prevented the deaths.”
Any of David’s neighbors who receive federal assistance after a disaster like Ida are required to buy into the flood insurance program in order to qualify for future aid from FEMA. For them, foregoing flood insurance now could be catastrophic later.
While only property owners are required to purchase insurance, renters can be just as affected by flooding — facing property damage and even death, as 11 people did in basement apartments during Ida.
Insurance costs may ultimately get passed on to tenants, observed Aaron Sturm, a program manager for the nonprofit Center for NYC Neighborhoods. “It seems entirely possible that a building owner would want to offset the increased flood policy with higher rent,” he said.
Baker-Rice, who began renting out her home’s garden apartment when she moved in, said she doesn’t want to raise the rent in the long term.
“We were happy to put the unit back into housing stock at an affordable rate,” she said.
If her insurance premiums go up too much, she’d consider only renting out the unit on a short-term basis, or would think about taking advantage of her commercial zoning to rent the space to a business. Or, she said, she might just go without insurance.
City Hall is joining many environmental and housing advocates in calling on FEMA to provide vouchers to help people of modest means pay insurance premiums.
“If Congress truly cared about helping families afford flood insurance, they would provide FEMA the means to offer assistance to those families,” Scata said.
Sturm said he hopes to see funding to help people retrofit their homes “so that they suffer less damage in the future, so that the cost to recover is not so high.”
Meanwhile, the Mayor’s Office of Climate Resiliency is joining the Center for New York City Neighborhoods and the University of Pennsylvania’s Wharton Risk Center to test an “inclusive insurance” model to offer cheaper options for low- and moderate-income households in some flood-prone southern Brooklyn neighborhoods.
At the same time, new FEMA maps are in the works that could expand the flood hazard zones to include tens of thousands more properties.. New drafts are expected in late 2023, with final zones to become effective in 2025.
The process of planning — and paying — for future risks raises existential questions about where New Yorkers live and build.
“In the face of climate change, to achieve housing stability we also need to think about housing mobility — which is basically just saying that some people will likely have to move,” said Bavishi of the Office of Resiliency.
Such a reassessment would have to acknowledge and address the racist practices that led to many people living in vulnerable areas in the first place, she added.
Last week, the City Council passed a bill requiring the city to create a five-borough climate adaptation plan that could potentially include relocation for some homeowners.
In the here and now, Baker-Rice said she fears the insurance changes could jeopardize the community that attracted her to Red Hook in the first place.
She’s worried that her neighbors, some who have been there for decades, might not be able to afford their policies, leading to only wealthy people able to move in.
“Unless the city is actually going to give up this land to the sea, it’s going to have to put a plan in place that allows living and buying here to be feasible,” Baker-Rice said. “It doesn’t make sense for individuals to have to foot the bill when the government at all levels has put off taking action on climate change for so long.”