Monday, January 26, 2015

New Flood Insurance Changes, April 2015

The National Flood Insurance Program is in the process of implementing reforms from the 2014 Homeowner Flood Insurance Affordability Act (HFIAA). The HFIAA was designed to create less drastic rate increases than the 2012 Biggert-Water Flood Insurance Reform Act. Here is a summary of the April 1, 2015 changes:

(1) Annual rates for new and renewal policies will increase an average of 9.9 percent per year, excluding new surcharges. Certain subsidized and non-primary residence policies will have larger increases (up to 25% or more).

(2) A Reserve Fund Assessment of 10% - 15% will apply to all policies.

(3) The Federal Policy Fee will increase from $22 to $45 for policies for special flood hazard area (SFHA) properties - properties located in high risk flood zones.

(4) A new surcharge, the HFIAA Surcharge, will begin. Since HFIAA effectively slowed the immediate transition to full-risk rates for subsidized policies, the compromise was the HFIAA surcharge, which will be collected on all policies until all subsidies are eliminated. The surcharge is a flat fee based on occupancy, not zone. Primary, single-family and individual condo unit residences will be assessed $25 per year. Non-primary residential homes, multi-family residential buildings and non-residential properties will all pay $250 per year.

(5) PRP Extension Policies (those newly mapped from a low-risk zone to a high-risk zone) will be eligible for PRP (Preferred Risk Policy) rates for one year after the new map becomes effective.

(6) Minimum deductibles will increase to $1,250 or more for some properties, while a new, higher maximum deductible of $10,000 will also be available.

More specific information regarding the changes can be found here: 
http://nfipiservice.com/Stakeholder/FEMA4/w-14053_Full.pdf. 

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