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Rangel Dockery and her husband bought a waterfront house in Florida four months ago, assuming their $2,000-a-year flood-insurance premium would remain about the same. After reading recently about a change in the federal flood program, they checked on next year’s rates and were stunned: Their bill will grow to $14,000 annually.

Now the elementary school teacher and her husband, Clint, an information technology specialist, are considering selling their two-bedroom St. Pete Beach home, probably at a loss, because she said they can’t afford the bill, and their mortgage requires flood coverage.

“It was very frustrating to finally have what we’ve worked hard for all of our life,” Rangel Dockery, 52, said. “I feel like the rules were changed in the middle of the game. And unfortunately, we can’t play by the new rules.”

Monthly premiums for more than 1 million homeowners are set to increase due to a rewrite by the U.S. Congress last year of the federal flood insurance program. As a result, home prices in flood zones around the country are declining as potential buyers balk at the premiums, said Moe Veissi, a Miami real estate agent who led the Chicago-based National Association of Realtors last year.

Federal flood insurance covers $1.3 trillion of property in all 50 states, with Florida, Texas, Louisiana, California and New Jersey making up two-thirds of all policies, according to Federal Emergency Management Agency, which runs the program.

Seeking Repeal

About 85 private insurance companies contract with FEMA to administer the flood program, including Northbrook, Illinois- based Allstate Corp. and Columbus, Ohio-based Nationwide Mutual Å˽ðÁ«´«Ã½Ó³»­ Co.

Consumer groups, governors and mortgage bankers are calling on Congress to reverse the law, which was designed to reduce the National Flood Å˽ðÁ«´«Ã½Ó³»­ Program’s growing debt. The measure, called the Biggert-Waters Flood Å˽ðÁ«´«Ã½Ó³»­ Reform Act of 2012, phases in rate increases for the 20 percent of policyholders who have been receiving federal subsidies on premiums.

Some of those subsidies began disappearing or shrinking on Oct. 1, 15 months after the law passed with bipartisan support.

States are searching for ways to reduce homeowners’ bills. In Florida, home to 37 percent of the nation’s 5.6 million flood policies, state lawmakers are trying to attract private companies to write flood policies and are considering starting a state-based flood insurance pool.

‘Appropriate’ Measure

Mississippi sued the federal government to stop the rate increases, saying the U.S. failed to study the economic impact. Louisiana is preparing to sue. Massachusetts Attorney General Martha Coakley proposed legislation this month to cap the amount of insurance lenders can require.

Bills pending in the U.S. House and Senate to delay rate increases have bipartisan support, mostly from lawmakers in coastal states.

Research groups that advocate market-based policies, such as Heritage Action for America and the R Street Institute, have urged members of Congress to leave the measure in place.

The law is an an “appropriate” way to restore financial viability to the program, and it makes sense to ask those with the greatest risk to pay more, said R.J. Lehmann, senior fellow for the Washington-based R Street Institute, in a statement. Lehmann helped write the law sponsored by Representatives Maxine Waters, a California Democrat, and Judy Biggert, an Illinois Republican, who lost the November election.

Reaping ‘Heartache’

Waters, who said she never expected the bill she sponsored to cause large rate increases, is now working to delay its implementation.

“When I agreed to coauthor this legislation, our goal was to create a bipartisan solution to repair our National Flood Å˽ðÁ«´«Ã½Ó³»­ Program,” Waters said in a Sept. 30 statement. “Neither Democrats nor Republicans envisioned it would reap the kind of harm and heartache that may result from this law going into effect.”

Louisiana property assessments on homes in flood zones have already dropped by as much as 30 percent because of the new flood rules, said Michael Hecht, president of Greater New Orleans, Inc., an economic development organization. Hecht’s group has been using such stories to warn lawmakers to change the law.

“Owners will lose everything, values of unsellable properties will plummet, bank mortgages will go into default, local tax bases will erode, and economies will be eviscerated,” according to material distributed by Greater New Orleans.

Rejecting Contracts

Homebuyers are walking away from contracts when they see the insurance costs, said Ross Miller, who owns a mortgage brokerage in Metairie. In parts of Plaquemines Parish, a coastal community on the Gulf of Mexico, neighborhoods will have insurance premiums of $10,000 to $25,000 a year, Miller said.

“What do they think people are going to do?” he said.

Rangel Dockery said she and her husband moved from a 2,200- square-foot home inland to a property half its size in June, drawn to the barrier island on Florida’s west coast.

Their son had moved out of the old house for college and they expect to retire in the next five to 10 years, she said.

“We absolutely love it, and it would be very difficult to have to sell,” she said. “It’s the lifestyle we were looking forward to.”

Rapid Increase

Dockery said they never would have bought the $400,000 home if they knew insurance rates would increase so rapidly. The property is assessed by Pinellas County, which includes St. Pete Beach, at about $521,600.

Some house hunters in the area have already begun blacklisting neighborhoods where rates are rising, said Wendy Lockhart, a St. Petersburg, Florida, real estate agent. Lockhart is struggling to sell her own home after quotes for the insurance premium went from about $1,000 to $8,105.

“We were getting five or six showings a week,” she said. “Then when all this started hitting the front pages about three weeks ago, we’ve had no showings.”

Realtors in the St. Petersburg area, which has more than 50,000 subsidized policies, have taken up a marketing pitch for homes that don’t lie in flood zones: “No flood insurance required!”

Karen Hoyt, a physical therapist who is preparing to move from Colorado to St. Pete Beach, said the insurance rates she’s seen have discouraged her from buying.

“We’re going to rent for a year and see what happens,” Hoyt said.

No Subsidy

Under the law, those who bought homes after July 2012 became ineligible for subsidies after Oct. 1.

The flood insurance program amassed more than $20 billion in debt after Hurricane Katrina slammed into New Orleans in 2005 and it borrowed more after superstorm Sandy hit the East Coast in 2012.

Under the law, owners of vacation homes began to lose federal subsidies in January, with annual rate increases of 25 percent until reaching full price. Beginning Oct. 1, subsidies for businesses and primary homes began being phased out. Those who buy homes in flood zones or sign up for new policies won’t be eligible for subsidies.

Subsidies have kept rates as low as 10 percent of the actual cost. FEMA is reassessing its risk calculations, drawing flood maps that will bring higher rates to some areas.

If the Florida legislature finds ways to give homeowners more options for flood insurance, that may pressure lawmakers in Washington to reduce rates, said Florida State Senator David Simmons, the Republican chairman of the Banking and Å˽ðÁ«´«Ã½Ó³»­ committee. Florida policyholders have paid $16 billion into the federal program over the last 35 years, while taking out about $4.5 billion in claims, he said.

“We’re the ones who are subsidizing the entire National Flood Å˽ðÁ«´«Ã½Ó³»­ Program,” Simmons said.

–Editors: Justin Blum, Dan Kraut

Topics Trends USA Florida Legislation Flood Louisiana Pricing Trends