Flood Warning

Flood Warning

We recently received this snippet of the recent changes to the Biggert-Waters Flood Insurance legistation changes.  This information was supplied by the national Association of Professional Insurance Agents and gives a real high-level view of the changes.

Main Provisions of H.R. 3370 “Homeowner Flood Insurance Affordability Act”

Reinstates Grandfathering – Repeals Section in Biggert-Waters that would have terminated grandfathering. • Property sales trigger – Repeals the provision in Biggert-Waters that required homebuyers to pay the full-risk rate for pre-FIRM properties at the time of purchase

• Accounting for Flood Mitigation Activities in Estimates of Premium Rates – authorizes FEMA to consider and incorporate various flood mitigation activities when estimating and calculating risk premium rates.

• Flood Mitigation Methods for Buildings – Requires FEMA to issue guidelines for property owners that provide alternative methods of mitigation, other than building elevation, to reduce flood risk.

• Refunds Homeowners who Overpaid – Requires FEMA to refund policyholders for overpaid premiums.

• Annual premium surcharge – Imposes a $25 per policyholder per year ($250 per commercial policyholder) surcharge, which will be set aside in a NFIP reserve fund to pay future claims.

• High deductible plans – increases the maximum deductible for single family residences (and 2-4 family buildings) to $10,000.

• Monthly installment payments – Allows NFIP premium payments both monthly and annually.

Cap on Annual Rate Increases – Prevents FEMA from raising the average rates for a class of properties above 15% (18% for individual properties). Biggert-Waters set this rate at 20%.

• Flood Insurance Advocate – Establishes a Flood Insurance Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process and flood insurance rates.

• Affordability goal – puts in place a nonbinding goal for FEMA to minimize the number of policies with annual premiums that exceed one percent of the total coverage provided by the policy.

• Mapping accuracy – Requires FEMA to certify in writing to Congress that it has implemented a flood mapping approach that results in technically credible flood hazard data in all areas where flood maps are used.

• Notification of rate increases – Requires FEMA to make publicly available the rate tables and underwriting guidelines that provide the basis for the change.

• Reimbursement for successful appeals – Allows FEMA to utilize the National Flood Insurance Fund to reimburse policyholders and communities that successfully appeal a map determination.