Be Prepared for Flood Insurance Rate Changes

In 2012 congress passed the Biggert-Waters Flood Insurance Reform Act, which requires the phase out and removal of subsidized rates. This law extends the National Flood Insurance Program (NFIP) for five years and requires significant program reform. You should expect changes in your rates beginning October 1, 2013. Over the years, storms like Super Storm Sandy and Hurricane Katrina have caused flooding costs to continually increase. Many of the changes will be phased in over time and are designed to make the NFIP more financially stable, ensuring flood insurance rates more accurately reflect the real risk of flooding.

Some of the changes are as follows:

  • Premium increases
  • Exclusion of certain properties from receiving subsidized rates
  • No extension of subsidy for Pre-Flood Insurance Rate Map (FIRM) new business policies or Pre-FIRM lapsed policies in Special Flood Hazard Areas (SFHAs) or D zones
  • Policies issued under the Preferred Risk Policy Eligibility Extension will incur an average of a 20% premium increase annually, beginning with new business and renewals.
  • Introduction of Reserve Fund – The Biggert Waters Act of 2012 requires FEMA to build up a reserve fund to help meet the expected future obligations of the NFIP in higher than average loss years. Reserve Fund amounts will be part of the premium calculation for applicable policies and is about 5% of the total premium.
  • The Federal Policy Fee will increase to $44 for Non-Preferred Risk Policies and $22 for Preferred Risk Policies.
  • Elimination of no waiting period due to lender requirement
  • NFIP form changes

Many of these changes can be confusing, and it is important that you are fully aware of what to expect.  It is crucial you stay in contact with your agent while these modifications come into play to ensure you are properly protected at all times.

For more information or for a free complimentary policy review call OceanPoint Insurance today at 401-847-5200.