Flood of misery follows insurance premium hikes

BY DAVID SINGLETON
Times Shamrock Writer

For most of the 41 years he has lived beside Martins Creek in Susquehanna County, Robert Wagner worried little about flooding and less about flood insurance.

He even had a certificate verifying the modest home he and his wife built on Bailey Road in Lathrop Twp. stood outside the flood zone.
Then came June 2006 and day after day of relentless rain. Martins Creek surged out of its banks, and the Wagners ended up with 18 inches of water in their basement.

“We got hammered then, but so did everybody else,” Mr. Wagner said.
Two years ago, his mortgage company told him he had to have flood insurance. The 76-year-old retiree grumbled but paid the $1,137 premium. When the latest bill for the federal government-subsidized insurance arrived in November, he thought it had to be a mistake. It wasn’t.
His premium had almost tripled to $3,379.

“This is way, way, way beyond ridiculous,” Mr. Wagner said last week as he sat in his dining room, the receipt for the insurance payment on the table in front of him. “It’s just about to the point now where I want to put the keys in the front door and tell them, ‘Take it. It’s yours.'”

Mr. Wagner and his wife, Celia, are among more than 2,000 policyholders across Northeast Pennsylvania with subsidized coverage through the National Flood Insurance Program who face skyrocketing premiums amid a government push to increase rates to reflect the actual cost of insuring their properties.

For many, unaffordable premiums threaten to do something floodwaters perhaps never could: permanently force them out of their homes.

“It’s a situation, and I don’t know where it’s going to go, to be honest with you,” said Wyoming County emergency management coordinator Eugene Dziak, whose office has fielded numerous calls from confused and angry policyholders.

“People who paid $300 for flood insurance for God knows how many years are now looking at insurance rates of $1,800 or $2,000 year. When you look at a senior citizen on a fixed income or a young couple trying to make ends meet and you’re smacked with more than a 50 percent increase, it’s tough.”

Earlier this month, Congress rolled back a 2012 overhaul of the flood insurance program that caused some premiums to double, triple or more overnight. However, the relief may only be temporary as more than 1.1 million policyholders nationwide will still see annual increases – some up to 18 percent, others up to 25 percent – as the program tries to erase $24 billion in red ink.

In Lackawanna County, at least 699 residential and business properties – 61 percent of those with the subsidized insurance – have seen or will see their premiums increase.

More than a quarter of them are in Dickson City, where most are homeowners living just west of the Lackawanna River in the Boulevard Avenue area. Although it is wedged between two locations with far more extensive flood histories – Olyphant to the north and Scranton’s Plot Section to the south – the neighborhood hasn’t experienced serious river flooding since the 1950s.

When Paul Cioffari built his home on Bowman Street in Dickson City in 1978, his property was considered outside the flood zone. However, by the time he refinanced his mortgage in the late 1990s, the flood maps had changed, and his home was back in.

His annual flood insurance premium had been holding fairly steady until this year, when it jumped 22 percent – from $596 to $729. The premium for his childhood home on Boulevard Avenue, which Mr. Cioffari rents to his daughter, increased by the same percentage.

Mr. Cioffari, 64, said the premium in each instance is tied to the amount of his mortgage – not the value of the property.

When he inquired at his bank about possibly refinancing again to take advantage of lower interest rates, he was advised not to as it would trigger a recalculation of his flood premium based on the full value of the home. Instead of paying hundreds of dollars a year, he would pay thousands.
Mr. Cioffari, who thinks the government is trying to get people to buy more insurance than they need, said he’d rather than his take chances on the river.

“It annoys me. I don’t mind spending money if I have to, but I don’t like spending money on something that doesn’t appear to be worth anything,” he said.

Russell and Bernadette Rozelle, who live a couple of blocks away on Poplar Street, were required to buy flood insurance when they took on a mortgage about 15 years ago to pay for a new roof, siding and other renovations.

The Rozelles said the insurance was affordable in the beginning – less than $500 a year. But then the premiums started increasing, usually by double-digit percentages. When the couple got their most recent bill in February, the annual premium had jumped more than $400 to almost $1,900.
Mrs. Rozelle, 55, who grew up in the home, said it “almost seems illegal.”
“It is just sad because when a house goes up for sale in the neighborhood, nobody wants to buy it because the flood insurance tacks another $200 (a month) onto the mortgage,” she said. “It’s depreciating everything in the neighborhood.”

Muriel Simpkins, 74, sees the same thing happening in her neighborhood in Scranton’s Weston Field area.

“Houses have been for sale here where people just took them off the market after two years because of the flood insurance. It’s like another mortgage payment, and nobody is going to pay that,” she said. “People can’t sell houses. You can’t even give them away.”

A few of her neighbors just packed up and walked away – “Slam, bam, boom, and they’re gone,” she said.

Mrs. Simpkins and her husband, Donald, are paying $946 this year for flood insurance on their home in the 600 block of Court Street, up from $876 last year. Their premium peaked at more than $1,500 a few years ago, but they managed to get some relief by switching insurers and adjusting their coverage “to the least amount to make the bank happy,” she said.

“You know what’s sad? The only money we can take away to set aside for this or that is our grocery money,” Mrs. Simpkins said. “We work all our lives and this is what it comes to – our grocery money.”

Mrs. Simpkins and other Scranton homeowners living in areas protected by the Lackawanna River flood control project – the Weston Field, Plot and lower Green Ridge sections – expected their flood insurance premiums to drop once the levees were finished.

While the Federal Emergency Management Agency did issue a new flood-zone classification for the levee-protected neighborhoods, they are still considered at high risk for flooding. That means homeowners with mortgages from federally regulated or insured lenders must have insurance.

With no mortgage, Anthony Andruskevich, 86, had the option of dropping flood insurance on his home in the 900 block of Albright Avenue but kept it anyway – for good reason. His house flooded in 1985 and again in 1996.

Mr. Andruskevich, whose only income is his Social Security, finally decided to drop coverage on his home’s contents a couple of years ago when his premium jumped to $800. He still maintains coverage on the house itself at about half the cost.

He said he feels for mortgage-holders for whom the insurance is mandatory, especially if the rates continue to rise.

“They are really in a pickle,” he said. “The little guy is caught in the middle.”

Not everyone feeling the pinch of increasing premiums lives close by a river or stream.

Dalton resident Mari Hendershot’s Weatherby Street house is more than 500 feet up a large hill from Ackerly Creek, which flows through the center of the borough.

In 2006, two years after she and her husband Seth bought the home, the mortgage was sold to a new lender, and the company told them they were required to have flood insurance based on updated FEMA maps. The Hendershots were certain there had been a mistake until FEMA officials identified the culprit: two small drainage culverts on the road farther up the hill from their house.

“They explained the whole thing, and it was going to be maybe $500, so we were like, ‘I guess we better pay it,'” Mrs. Hendershot, 42, said.

It turned out the FEMA reclassification put their home into a flood zone equivalent to that of people living a few feet away from the Susquehanna River, she said.

Their annual premium has risen sharply since, and the Hendershots are now paying more than $2,300 a year.

“Our first home was actually along a creek in Sullivan County, where we had to have flood insurance, and we flooded,” Mr. Hendershot said. “So we said never again. We were going to live on a hill in a town where we would never flood, and that is why we bought this house. The whole thing is just so ridiculous.”

The prospect of an even higher rates has them worried, not just about their ability to sell the property at some undetermined future point but more immediately about whether they can afford to continue living there.

“We can’t pay any more,” Mrs. Hendershot said. “We will have to tell them there will be a choice – leave it where it is and accept that or we just won’t pay. They can impose all they want, but they will just end up foreclosing. We are at the point where if it’s 25 percent more, we can’t do it.”

Mr. Wagner wonders what will happen next, both to him and his wife and to their home in Lathrop Twp.

The couple, who are both cancer survivors, had a little “mad money” set aside in the hope of doing some traveling, but the last premium payment put a dent in that, he said. At 71, Mrs. Wagner still works as kitchen manager cook at the American Legion at Elk Lake just to keep some cash coming in.
“Needless to say, our nest egg is dwindling fast,” he said.

Mr. Wagner doubts they could sell their home, especially with the flood insurance situation as it stands now.

While FEMA is studying flood insurance affordability and looking for ways to provide targeted assistance to policyholders unable to afford higher premiums, Mr. Wagner said neither his mortgage company nor his insurance company has offered any reassurances.

“You hear noises about some things,” he said, “but what I say is, ‘Show me.'”