Sweeping Flood Insurance Changes
It seems these days I’m writing an email every few days on the “upcoming flood changes”. I can understand why the public, and many insurance professionals, are having an issue keeping up- because it’s changing almost weekly! What we can expect…
Congress will be implementing the Homeowner Flood Insurance Affordability Act of 2015 (HFIAA) on April 1, 2015. The law is intended to allow for flood insurance rate increases (some large) and simultaneously offer relief to policyholders that had significant premium spikes in 2013.
Increased Deductible Option
A $10,000 deductible will be available. It will apply to both building & contents coverage and give up to a 40% discount from the base premium. Some mortgage companies may not accept a deductible so high.
Premium Increases
HFIAA will limit increases, for individual premiums, to 18% for buildings that have not been substantially damaged.
Federal Reserve Fund Fee
A 15% fee,as a percentage of premium, will be added on all new/renewal policies that are not a Preferred Risk Policy (PRP). Essentially, a premium increase of 15% being disguised as a “Fee”.
HFIAA Surcharge
A $25 surcharge for primary residences and a $250 fee for all other flood policies will be added.
Substantially damaged
Buildings that have been substantially damaged will see a 25% increase in premium until full risk rates are realized.
Nutshell
In a “Nutshell” there are major increases in flood insurance premiums expected on April 1st. 2015. The combination of premium increases (18%), Fund Fees (disguised as fees of 15%) and HFIAA surcharges will undoubtedly continue to confuse consumers and insurance brokers.
One saving grace is the option of a $10,000 deductible-if your mortgage company will allow.
Regards,
David W. Clausen
Coastal Insurance Solutions
Chief Executive Officer
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Learn about the National Flood Insurance Policy Changes made April, 2016
