Federal Flood Program Changes

By Joan LaFemina

What do I need to know about the Federal Flood Program changes effective April 1, 2016?

There have been a few media releases regarding the federally mandated changes to the Federal Flood Program and it can be confusing. Knowledge is power and can bring peace. Flood policies renewing on or after April 1, 2016 are subject to new rates and some policyholders have received notice of premium increases and Reserve Fund Assessment changes. The reason for some increases and assessment changes is due to the Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurability Act of 2014.

The intention of both bills was to make FEMA sounder for the future by charging premiums more appropriate to the level of risk for flood policies. The 2014 legislation slows some flood insurance rate increases and offers relief to some policyholders who experienced steep flood insurance premium increases following the 2012 legislation.

What changes were implemented?

1. If your property was receiving a subsidized (artificially low) rate for flood insurance there will now be gradual increases. The average 2016 premium increase (including fees, surcharges and assessments) for residential properties will be 9% while the average increase for commercial properties will be 25%.

2. A limit on increases. The average annual premium increases for average rate classes are limited to 15%. Individual premium increases are limited to 18%.

3. Newly mapped Special Flood Hazard Areas may mean you are now required to carry flood insurance for the first time. Often, you can purchase a Preferred Risk Policy, a cost-saving option for property owners who were newly mapped.

4. The elimination of a subsidized rate when there is a coverage lapse. Certain policies receiving pre-Flood Insurance Map-subsidized rates will lose that subsidy if there is a coverage lapse.

What does all of this mean? Call Hometown to review your existing flood policy or obtain a quote for a new policy. Our team is there to help you navigate any questions you may have regarding your coverage. Call us today for peace of mind!