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RI Flood InsuranceRI Flood Insurance

In April 2015, Congress began implementing the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA), which repeals some provisions of the Biggert-Waters Flood Insurance Reform Act of 2012, modifies others, and makes additional changes to the National Flood Insurance Program (NFIP).

The new law limits the rate of increase for individual premiums to 18%, while increases for average rate classes are capped at 15%. However, non-primary homes, such as secondary or vacation homes or rental properties, are subject to a 25% annual premium increase. In addition to premium increase, HFIAA requires a $25 surcharge on all policies for primary residences, and a $250 surcharge on all other policies, including non-primary residences.

FEMA defines a non-primary residence as a building that will not be lived in by an insured or an insured’s spouse for more than 50% of the 365 days following the policy effective date.

To determine the correct HFIAA surcharge, insurers must now validate primary residence eligibility. Flood insurance providers sent a letter and Verification of Primary Residence Status form to current policyholders to verify their primary residence.

To make sure you only receive the $25 HFIAA surcharge, policyholders must submit one of the following with the form:

  • Drivers license
  • Automobile registration
  • Proof of insurance for a vehicle
  • Voter registration
  • Documents showing where children attend school
  • Homestead Tax Credit form for primary residence

Because this premium surcharge is mandated by law, if documentation is not provided your renewal premium will automatically reflect the $250 HFIAA surcharge. We strongly encourage you to review your renewal policy to confirm that it is being rated as your primary residence.

If your policy is coming up for renewal and you have not received a letter and form, please contact your OceanPoint agent. If you have any questions, contact our RI Flood Insurance team.

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RI Flood Insurance Rate ChangesIn 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 about RI Flood Insurance rate changes or for a free complimentary policy review contact OceanPoint Insurance today!

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