FEMA Flood Rate Increase/Secondary Home Surcharge

 

New flood insurance premiums to rise higher than expected

 When their policies renew on or after April 1, homeowners with federal flood insurance will begin paying new fees and rates that are higher than some coastal advocates expected.

Come April 1, the National Flood Insurance Program will implement reforms required by the Homeowners Flood Insurance Affordability Act, which Congress passed and President Barack Obama signed into law in March 2014.

The act repealed or modified some aspects of the Biggert-Waters Flood Insurance Reform Act of 2012, which eliminated flood insurance subsidies for homes built before flood maps, causing premiums to soar for many homeowners. While Biggert-Waters allowed rates to increase as much as 25 percent annually, the affordability act capped the increase to between 15 and 18 percent for most policies.

As part of that law, the Federal Emergency Management Agency will issue updated flood insurance rates and other charges for new and existing policies beginning April 1.

FEMA detailed the changes in a bulletin released last fall.

That cap includes the Reserve Fund Fee, which Biggert-Waters created as a way to cover premium shortfalls. Calculated as a percentage of the total premium cost, the Reserve Fund Fee assessment will increase 10 percent for most policies.

But when the Federal Policy Fee and the affordability act surcharge are factored in, policies could jump substantially more. Mandatory insurance premiums for properties in the high-risk AE zone, for example, could grow as much as 23 percent with the fees.

The surcharge for primary homes will be $25; for secondary and multifamily homes and businesses, the surcharge is $250..

The new law is a tradeoff, as it will help make the program financially sound while easing the impact on older homes that have suffered severe flood losses – known as pre-FIRM Severe Repetitive Loss properties.

Renewals will be subject to a 25 percent renewal cap as well as a higher affordability act surcharge of $250.  Premiums will surely increase for pre-FIRM SRL renewals, but they won’t lose grandfathering or subsidized rates.

 Lehn & Vogt Insurance  

2980 S McCall RD Suite E
Englewood, FL 34224
www.lehnandvogt.com