Paul Dreher Director of Personal Insurance View Bio

Flood Insurance

flood insuranceOn April 3, 2014, FEMA announced the Homeowner Flood Insurance Affordability Act 2014 law was signed by President Obama. While FEMA does not include actual implementation dates of the Affordable Act’s primary changes, the bulletin does provide a detailed report of all the moving parts currently being analyzed and prioritized as a result of the enactment of this new legislation.

We have summarized FEMA’s announcement to help you understand what you need to know:

    • In order to enable new purchasers of properties to retain Pre-FIRM rates while FEMA is developing it’s guidelines, a new purchaser will be allowed to assume the prior owner’s flood insurance policy and retain the same rates until guidance is finalized
    • Refunds:

-Refunds apply to: policyholders in high-risk areas who were required to pay their full-risk rate after purchasing a new flood insurance policy on or after July 6th, 2012

-Refunds may apply to: policyholders who renewed their policy after the Homeowners Flood Insurance Affordability Ace was enacted on March 21st, 2014 and whose premium increased more than 18 percent

 

  • Premium Rates for Subsidized policies: the new law requires gradual rate increases to properties now receiving artificially low (or subsidized) rates instead of immediate increases to full-risk rates required in certain cases under BW-12
  • New Surcharge: a new surcharge will be added to all policies to offset the subsidized policies and achieve the financial stability goals of BW12. A policy for a primary residence will include a $25 surcharge. All other policies will include a $250 surcharge. The fee will be included on all policies, including full-risk rated policies until all Pre-FIRM subsidies are eliminated

 

To read the FEMA Bulletin, click here.
To review the new FEMA law in it’s entirety, click here.

FEMA releases guidelines on HFIAA Refunds
The Homeowners Flood Insurance Affordability Act of 2014 was signed in law by the President in March of 2014 and introduced changes to the NFIP that would address some of the unintended consequences resulting from the Biggert Waters Reform Act of 2012.

While we are still awaiting guidelines on implementation of the new changes, FEMA has released details on the refunds associated with Section 3 and Section 5 of the HFIAA.

  • Section 3 requires FEMA to restore Pre-FIRM subsidized rates and issue refunds on all eligible policies
  • Section 5 states that FEMA is prohibited from increasing rates more than 18% per year for any individual policyholder

Please review the attached for details on the anticipated flood insurance premium refunds and who gets them and who does not.
FEMA HFIAA Refund Fact Sheet

Lawley Insurance is working closely with FEMA and all of our 30 plus carriers to keep you abreast of any developments and how they may impact your Flood insurance policy. Feel free to contact Amanda Martin at 914.345.7037 or amartin@lawleyinsurance.com with any questions or concerns on how this change could affect you.

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