Flood Insurance Changes – From FEMA


FLOOD INSURANCE CHANGES (from FEMA)

Home Sale

  • Pre-FIRM (Flood Insurance Rate Map) buildings were built prior to the community joining the National Flood Insurance Program.  They were not rated using elevation and the basic premium was lower than what should be charged.  When the home was sold, the lower grandfathered rate was transferable to new owners.
  • Now, when the home is sold, full-risk rates apply, not the pre-FIRM subsidized rates.

Policy Renewal for a Subsidized Primary Home

  • In the past you would renew the policy at the same subsidized rate.  Rates were subject to actuarial adjustment.
  • Now, you retain the subsidized rate as long as the home is a primary residence and continuous coverage is maintained.  The rates are subject to routine actuarial adjustment plus increase for the Reserve Fund.  As of October 2013, full-risk rates will apply if the property is sold or the policy lapses.

Policy Renewal for a Subsidized Secondary Home

  • In the past, you would renew flood insurance at the subsidized rate.  Rates were subject to routine actuarial adjustment.
  • Now, the previous premium did not reflect the home’s full flood risk.  The premium will increase 25%/year until it reaches the full-risk rate.  Rates are subject to routine actuarial adjustment plus an increase for Reserve Fund.

Receiving Map Updates

  • In the past, new maps could identify that flood risk has changed.  Obtaining flood insurance prior to change allowed a policy to be grandfathered in at a lower rate when new maps are adopted.
  • Now, new maps could identify that flood risk has changed.  As maps change, discounts, including grandfathering will be phased out.  New rates will be phased in at 20%/year for 5 years.  Implementation will start in 2014

For more information, visit our website.

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