• Quick guide to flood insurance

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    Quick guide to flood insurance

    By Lynn Mason Small

    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.

    About Lynn Mason-Small

    Lynn is the Senior Vice President of Business Development at Rogers & Gray. She likes to write, is a social media junky, networks with the best of them and is crazy about her hubby, 2 boys and black lab, Jellybean.

    January 16, 2015