In 2012 Congress passed the Biggert-Waters Act, creating sharp rate increases for properties in the National Flood Insurance Program (NFIP). Those increases went into effect in the fall of 2013, and crisis ensued for many homeowners. Congress acted by passing the Homeowner Flood Insurance Affordability Act, which addressed many of the problems.
The sharp increases from Biggert-Waters were postponed, and a glide path was proposed instead of the immediate increases. On Friday, April 1, 2016 the glide path went into effect.
Here is what a property owner should know:
- The type of property matters: Residential vs. Commercial, Pre-FIRM (Flood Insurance Rate Map), Severe Repetitive Loss, non-primary residential, etc. It is important for a property owner to understand that the property’s characteristics will dictate the maximum annual increase in premiums. A typical Pre-FIRM, primary residence will see a maximum annual increase of 18%, but on average will see a 9% increase.
- High likelihood rates will continue to increase: Pinellas County, FL has the most NFIP policies of any county in the country, and Pasco and Hillsborough are close behind. This is based on several factors that will continue to drive risk and increased rates for years to come. Those risk factors are weather, building codes at the time of construction of Pre-FIRM homes, and proximity to bodies of water.
- How do I know exactly what I will be paying?: It is important to involve an insurance professional during this conversation. The many facets of flood insurance, or any other form of property insurance, make it a complex question to answer. An insurance professional can navigate the ins and outs, and properly advise you on how best to limit your cost. Keep in mind, you won’t see an immediate increase in costs until your next renewal period, you purchase a new property requiring flood insurance, or you have to re-initiate your flood insurance policy due to a lapse in coverage.