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A Life Raft for Flood-Wary Property Owners

Published: Apr 25, 2014

There’s no question that the Biggert-Waters Flood Insurance Reform Act of 2012 was necessary to help stabilize the sinking National Flood Insurance Program (NFIP), which is now $24 billion in debt following huge payouts from Hurricane Katrina and Super Storm Sandy. The problem with Bigger-Waters was that its sudden implementation was ill-conceived, forcing lawmakers to create a fix that would ease the financial strain on concerned homeowners while preserving the law’s long-term goal.

Among other provisions, Biggert-Waters required new flood zone mapping, adjusting floodinsurance premiums on certain properties to accurately reflect the property's current flood risk, gradually eliminating subsidized properties, and eradicating the grandfather clause that protects property owners from rate hikes due to flood zone remapping.

Projections of the unanticipated effects of immediate, full-risk rate increases and the revised flood maps included:

  • Skyrocketing flood insurance premiums − estimated to be higher than many homeowners’ mortgage payments – causing many to inevitably lose their homes
  • Reducing the number of qualified buyers in flood zone areas
  • Declining home values by as much as 40 percent

What’s more, eliminating the grandfather clause, yet to go into effect, would put an even larger population of property owners facing equal hardship.

Passed by the House and Senate, and signed into public law by President Obama on March 21, 2014, H.R. 3370 Homeowner Flood Insurance Affordability Act of 2014 is an overall economic win and huge relief to the real estate, mortgage, and home builder industries -- and most importantly, the many flood-prone and other property owners incorporated into newly drawn flood zones who were facing staggering flood insurance premiums despite no history of ever flooding.

Despite its passing, which mitigates some unpopular effects without risk to the positive provisions of Biggert-Waters, homeowners are encouraged to secure flood insurance protection now while mandated rate hikes receive only a temporary delay.

Among the many other related provisions and details to help the NFIP become financially sound, without jeopardizing current and future home ownership, the Homeowner Flood Insurance Affordability Act of 2014:

  • Delays excessive premium increases and lowers limits on annual rate increases
  • Requires the Federal Emergency Management Agency (FEMA) to provide a study of the affordability of policies, re-evaluate the accuracy of new flood maps, and reimburse expenses of homeowners who successfully appeal the new flood map, and/or who have already paid the new premium
  • Reinstates subsidies for uninsured properties as of July 6, 2012, and allows continuance of lapsed policies by homeowner choice
  • Requires FEMA to designate a Flood Insurance Advocate to promote fair treatment for policy holders

For more information on how H.R. 3370 Homeowner Flood Insurance Affordability Act of 2014 might affect the marketing and sale of your relocating employees’ properties, or current inventory, please contact NEI at 800.533.7353.

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