NFIP adding flood insult to injury

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If you live in Island Park or Oceanside, if you were expecting lower flood insurance premiums, be prepared for a surprise. The National Flood Insurance Program (NFIP), is in the process of implementing congressionally mandated reforms that slow some insurance rate increases and offer relief to some policyholders who experienced steep flood insurance premium increases in 2013 and early 2014. Flood insurance rates and other charges were revised for new or existing policies beginning on April 1, 2015, that may mean higher premiums for many.

The new law caps increases at 18 percent compounded annually for a primary residence, and 25 percent for a secondary home or a primary one that has suffered a repetitive loss, and institutes new surcharges of $25 per primary home and $250 for secondary and multifamily homes.

About one million out of the five million flood insurance policy holders will be affected. The additional monies will be used to bolster the $24 billion dollar debt NFIP now faces after hurricanes Katrina and Sandy.

The changes result from the implementation of the Homeowner Flood Insurance Affordability Act (HFIAA) passed by Congress in 2014 and the continued implementation of its predecessor reform law, Biggert-Waters 2012 legislation. Under HFIAA, congress rolled back price hikes called for under Biggert-Waters after many complaints.

There is a new deductible available, $10,000 for residential properties. If that option is selected and the policyholder wants to buy contents and building, then the same amount must apply to both building and contents coverage, $10,000 building coverage deductible then $10,000 contents deductible. There are also new deductibles for Preferred Risk and Mortgage Portfolio programs. You need to check with your insurance company.

To be a “primary residence” the insured or their spouse must live in the property for more than 50 percent of the 365 days following the policy effective date. The insurance agent must now validate primary residence eligibility before applying the $25 surcharge by submitting one of these: a driver’s license, an automobile registration, proof of insurance for a vehicle, voter’s registration, documents showing where their children attend school, or a Homestead Tax Credit Form for Primary Residence. Or if none of those documents are available then the agent must submit a signed and dated statement.

FEMA published a fact sheet on the changes available at http://1.usa.gov/1AYFv5Q.