New Law May Increase Your Flood Insurance Rates

I ran across this article about the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) in

In a newsletter posted on Tuesday (July 30), the Federal Emergency Management Agency (FEMA) announced the following schedule for increases in National Flood Insurance Program (NFIP) premiums.

The increases are a result of 2012 legislation aimed at putting the program on a more solid fiscal foundation and building a catastrophic reserve fund to provide for claims in years with unusually costly flood disasters. The NFIP has been operating with a debt of about $17 to $20 billion beginning with the massive storms of 2004 and 2005. Since then, and because of the borrowing done in those years, which is still being paid back, the program is forced to borrow to pay out flood claims for catastrophic events, including Sandy.

From FEMA’s website:

Key provisions of the legislation will require the NFIP to raise rates to reflect true flood risk, make the program more financially stable, and change how Flood Insurance Rate Map (FIRM) updates impact policyholders. The changes will mean premium rate increases for some—but not all—policyholders over time. Homeowners and business owners are encouraged to learn their flood risk and talk to their insurance agent to determine if their policy will be affected by BW-12.

Not everyone is affected:

Owners of primary residences in SFHAs (Special Flood Hazard Areas) will keep the subsidized rates until the home is sold; the policy is allowed to lapse; a new policy is purchased; or a string of severe losses is experienced.

Post-FIRM rates for all zone classes will be unaffected by Section 100205 of the Biggert-Waters Act.

What to do? Call your insurance agent to determine your flood risk and your changes under the law.  Also, check out