Flood Insurance Reform may Significantly Increase Premiums for Some Property Owners

Some of these changes have already been put in place, and others will be implemented in the coming months. Key provisions of the legislation will require the NFIP 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.  The changes will mean premium rate changes for some – but not all – policyholders over time.

The new law encourages Program financial stability by eliminating some artificially low rates and discounts. Most flood insurance rates will now move to reflect full risk, and flood insurance rates will rise on some policies. Buying a property, allowing a policy to lapse, or purchasing a new policy can trigger rate changes.

Not everyone will be affected immediately by the new law – only 20 percent of NFIP policies receive subsidies.

• Owners of subsidized policies on non-primary/secondary residences in a Special Flood Hazard Area will see 25% increases annually until rates reflect true risk – began January 1, 2013.
• Owners of subsidized policies on property that has experienced severe or repeated flooding will see 25% rate increases annually until rates reflect true risk – beginning October 1, 2013.
• Owners of subsidized policies on business/non-residential properties in a Special Flood Hazard Area will see 25% rate increases annually until rates reflect true flood risk – beginning October 1, 2013

Primary residences in Special Flood Hazard Areas will be able to keep their subsidized rates unless or until:

• the property is sold;
• the policy lapses;
• you suffer severe, repeated, flood losses, or;
• a new policy is purchased.

Learn more about flood reform via the FEMA website, Floodsmart.gov, and the special section of the FEMA website regarding the Flood Reform.

Source:  FEMA