Homeowners should be aware of policy changes

Published 7:00 am Saturday, July 4, 2015

The National Flood Insurance Program is seeking to implement Congressionally mandated reforms required by the Homeowner Flood Insurance Affordability Act of 2014 to repeal and modify the Biggert-Waters Flood Insurance Reform Act of 2012.
According to www.fema.gov, the Biggert-Waters Flood Insurance Reform Act of 2012 was a “law passed by Congress that extends the National Flood Insurance Program for five years, while requiring significant program reform.”
The website states that, the National Flood Insurance Program is “aimed at reducing the impact of flooding on private and public structures by providing affordable insurance for property owners and by encouraging communities to adopt and enforce floodplain management regulations.”
On April 1 of this year program changes were made, which includes an annual surcharge on all new and renewed policies, an additional deductible option, an increase in the Federal Policy Fee and rate increases for most policies.
According to a FEMA fact sheet, the annual rate changes to be implemented include limiting increases for individual premiums to 18 percent of the premium, limiting increases for average rate classes to 15 percent and mandatory increases for certain subsidized policyholders under Biggert-Waters and HFIAA.
Another change will be an increase to the Reserve Fund assessments required by Biggert-Waters, the fact sheet states. The 2015 fee, which is a percentage of a premium, for a preferred risk policy is ten percent. For newly mapped properties and all other policies the fee will be 15 percent.
According to FEMA’s fact sheet, the annual surcharges required by HFIAA will be implemented. The annual surcharge for a primary residence is $25. For a non-primary residential dwelling, multifamily residential and non-residential, the annual surcharge is $250. Policy holders should watch for a letter in the mail to confirm whether their home is a primary residence or not.
Guidance on substantially damaged and substantially improved structures and additional rating guidance on buildings constructed before their communities’ first Flood Insurance Rate Maps also became effective, the fact sheet states.
A new procedure was implemented for properties newly mapped into the Special Flood Hazard Area and existing Preferred Risk Policy Eligibility Extension, which is a cost-saving flood insurance coverage option, the fact sheet states.
Lastly, the fact sheet states there will be a “reformulation of expense loading on premiums and reduction of the expense load on the highest-risk policies as an interim step while investigating expenses on policies as required by Biggert-Waters.”
More changes will also be implemented in November of this year.
According to a summary from www2.floodresource.com, upcoming changes include identification of business occupancy, new questions and fields, published rate tables for certain submit-for-rate structures and changes to endorsement and cancellation refund rules.
For more information visit www.NFIPiservice.com.

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