In Columbus, Ind., in June 2008, a flood destroyed the basement of Sunset Drive homeowner Wally Cantrell, but his flood insurance policy helped cover a good bit of the repairs.
Now, Cantrell wonders if he will soon face a related disaster due to soaring insurance premiums being established all around the nation by the Federal Emergency Management Agency as it tries to reduce a $24 billion deficit in the federally run flood insurance program.
In recent weeks, he has seen some neighbors in his small subdivision nestled near the Flatrock River get hit with flood insurance bills at renewal dates that are three or four times above their former rates.
Cantrell, who has lived in the 300 block of Sunset Drive for 14 years, said he might consider "going bare"—without insurance—rather than pay any premiums he considers exorbitant when his flood policy comes up for renewal in midsummer.
"I've paid off my mortgage, so I might take the risk," he told The Republic, theorizing that not paying insurance premiums over a number of years would create a substantial self-insurance fund to repair his home again, if necessary.
Because Cantrell has paid his home loan off, he cannot be forced by a lender to carry flood insurance to protect the investment. Other homeowners who are still paying on mortgages don't have that option. Banks can require that owners keep flood policies in place as long as they have a loan.
That means for hundreds of property owners in the Columbus area—and an estimated 4 million people nationally—the only reprieve from paying much higher flood insurance premiums would be if Congress acts to delay or soften impending rate hikes in the next few days.
One bill designed to do just that could be voted on in the U.S. House of Representatives next week, congressional leaders say.
Some property owners in Bartholomew County are worried that, without a congressional rescue effort, their flood insurance costs could rise from perhaps $1,600 per year to $7,000 or $8,000 per year.
The steep increases being felt from south Louisiana to New England to Columbus were required by the Biggert-Waters Reform Act of 2012. That legislation was approved by Congress and signed by President Barack Obama two years ago. It set into motion a process designed to start shaving down the flood insurance system's mounting deficit.
Flood insurance losses have skyrocketed recently due to major natural disasters such as Hurricane Katrina in August 2005 and Hurricane Sandy in October 2012.
The dilemma leaves homeowners such as Larry Duncan, who moved into a house next door to Cantrell's two years ago, facing potentially crippling costs and the prospect of lower resale values for homes when would-be buyers realize how expensive flood insurance has become.
"As the homeowner, you're going to have to reduce the sale price or else prospective buyers will walk away," said Duncan, a retiree who lives on a fixed income. His flood insurance policy is due to be renewed in April.
"It looks like my flood insurance could jump to $7,000 a year. I can't afford that," said Duncan, who has been paying $100 a month for coverage. "Seven thousand dollars doesn't fit into my budget. We're in a Catch-22."
Flood insurance premiums under the current system vary based on topographical factors, plus home values, elevation and other components.
Property owners seeking to buy or renew policies also have to pay for updated elevation surveys—done to exacting FEMA standards—in order to get coverage. That can add an extra $400 or more to the homeowner's overall costs.
Duncan said he will wait to commission a survey until he sees an updated estimate of his flood insurance bill for the next 12 months.
"No one really knows what's going to come out of this. It affects so many people right here in Columbus," Duncan said.
The proposed impacts are coming five years after June 2008 floodwaters surged into Bartholomew County, swamping neighborhoods and inundating businesses. Downtown Columbus was cut off from Interstate 65 and all major state roads by racing streams of water. Three people lost their lives in the flooding, and more than $500 million in damage was caused communitywide.
"We expected an increase in the cost of flood insurance" after the 2008 flood, Duncan said. "But nothing like this."
Jonathan Isaacs, who does flood elevation surveys in Jackson and Bartholomew counties and other locations, said many homeowners are in the dark about how flood insurance works and why rates are rising so sharply.
"Most people aren't very proactive," Isaacs said. "They don't think about it until they get a letter from their lender."
Count Tom Neeld, a young Cummins employee who moved into his home at 315 Sunset Drive in late 2012, as among those caught by surprise.
He got a written notice a few weeks before Christmas that his flood insurance coverage would soar from $2,300 per year in premiums, with a $2,000 deductible, to $6,654 per year, with a $5,000 deductible. That policy will remain in effect until Dec. 12 this year, he said.
Neeld said he felt he had no choice except to pay the price for coverage to protect his home. He also paid a land surveyor $400 to do an elevation survey as part of the renewal process.
Dave Dailey, a State Farm Insurance agent who works with homeowners to wade through the federal flood insurance rules, said the program can be tricky to master.
"I feel sorry for the folks hit with this," Dailey said of higher rates.
Additionally, FEMA also is in the final stages of updating flood maps in Bartholomew County and around the nation. That process is due to be completed later this year with the help of the Indiana Department of Natural Resources.
After maps are finalized, property owners will get another chance to appeal FEMA's data, but that can be a steep hill to climb, Dailey said.
"You have to prove that the agency's data overlooked key information about your property," Dailey said. "You can't just come in and say, 'But it's never flooded here.'"
Dailey said he understands why flood maps and insurance rates are being reworked.
"They are rewriting the policy, if you will, collecting the proper premiums for the risk," Dailey said, adding that he also sees the financial pain it brings on many property owners.
"If you were paying $800 a year and suddenly it goes to $7,800 per year, that's a shock to the system. And it could be detrimental to anyone who wants to sell that home," the insurance agent said.
Property owners and groups that question the accuracy of FEMA's revised flood maps—especially along the Gulf Coast and Eastern Seaboard—are keeping a close eye on how much possible rescue legislation in Congress helps and whether it passes.
Skeptics aren't sure the emerging House package will provide adequate breaks to middle-class property owners in flood-prone areas. Others argue that people who live in neighborhoods where floodwaters can rise should pay to cover that risk out of their own pockets.
Cantrell said homeowners on Sunset Drive took steps on their own to try to improve the neighborhood's situation after the 2008 flood.
The tiny neighborhood association—known as the Noblitt Falls Lagoon Association—paid to get permits and build an earthen berm to protect against future flooding from the lagoons that ring three-fourths of their cozy residential area.
The Sunset Drive area contains between 50 and 60 homes. Property owners paid a special assessment of $600 each over two years to cover the costs of building the berm, Cantrell said.
"In the 2008 flood, a few homes got floodwaters; some had damage to basements. And two or three homes were soaked through," Cantrell said. "It was chaos."
Still, federal policy on how to establish fair flood insurance rates hasn't stopped calls from fiscal conservatives to stem the tide of massive losses in the program.
"If you choose to build in those areas, and you want insurance, it probably should cost you," said Isaacs, the land surveyor. "But it's really tough for the average middle-class person to see their premiums go from $1,600 a year to something like $6,400 a year."