Flood Insurance Rate Changes for 2017 (in Layman’s Terms)
The National Flood Insurance Program has released rate changes for new & renewal policies beginning April 1st, 2017. We’ve put together some bullet points that will help you easily decipher the expected premium changes and what this means for your flood policy. If you are purchasing a home, and have (or will have) a flood insurance policy, here’s what you can expect.
Flood Premium Increases Overview
Flood insurance rates will increase from an average of approximately $830 per policy to $880 per policy in 2017. This represents an average increase of 6.2% for the entire program.
The largest increases of 25% will apply to homeowners that are located in flood zone AE, are Pre-Firm (homes built before 1975) and meet the following criteria:
- Non-Primary Residences (Secondary Homes & Rental Properties)
- Substantially Damaged Properties- 50% or more of value claimed in a prior loss
- Severe Repetitive Loss Properties (SRL)- 4 or more minor flood claims (over $5,000) at one location in 10 years or 2 major flood claims (exceeding value of property) for lifetime.
- Business properties
If your home was built before 1975, has not been substantially improved and fits into one of the four categories above, you can expect rate increases of 25% per year until full rates are reached.
Pre-FIRM (Built before 1975) Primary Residence Flood Zone AE Increases
Generally speaking, If your home was built prior to 1975 and does NOT meet the above 4 criteria, and you’re located in flood zone AE, your premium increases will be limited to 18% but must increase by at least 5% annually.
Flood Zone X
If your property is located in Flood Zone X & you have a Preferred Risk Policy (PRP), like the majority of Long Island New York homeowners that own a house NOT located on the water, you can expect premiums to remain unchanged in 2017.
- Standard-Rated Policies- Premiums will increase 2%, with a total increase of 1%
- Preferred Risk Policies (PRP’s)- Premiums will remain unchanged
The majority of New York homeowners will experience a premium jump, on average, of approximately 6%, unless your home has been substantially damaged or has experienced multiple losses.
This guide gives a general overview and does not include probation surcharges, FPF, and Congressionally-mandated HFIAA surcharges that are not considered premium and, therefore, are not subject to the premium cap limitations. In some cases, homeowners may experience premium rate increases in excess of the cap limitations of 18%.
Do you own a home that doesn’t fit any criteria listed in this article? Have a flood insurance question? Give us a call (631-782-3175) to speak with one of our New York State licensed flood insurance specialists or fill out our Flood Insurance Form to get competitive rates today.
On April 1st, 2015, the Homeowner Flood Insurance Affordability Act (HFIAA) made the first round of changes and only 1 year after that, more changes were to follow. The changes took place on April 1st 2016 and they’ll undoubtedly affect anyone who purchased a Flood insurance policy.
National Flood Insurance Program
Based on information from the National Flood Insurance Program ( NFIP), all policies are subject to an increase of nine percent. When it comes to individual premiums though, the increases will vary based on different variables, such as property type, year built and flood zone.
The highest policy increase (of twenty five percent) affects non-residential business properties. While not that steep, the policy increases for residential properties is also going to hover somewhere around nine percent. Below we’ve come up with a list of the main flood zones in Nassau and Suffolk counties on Long Island, NY and the specific increase envisioned for each of them. Residential properties built after 1974 are generally considered Post-FIRM.
- Preferred Risk Policies: Five percent decrease.
- Standard rated policies: Three percent increase.
- X-zone (outside of the SFHA). Three percent increase.
- AE Zone Post and Pre-FIRM non primary residences: Twenty Four percent increase.
- AE Zone Post-FIRM primary residences: Nine percent increase.
- Pre FIRM primary residences: Five percent increase.
- Post FIRM Primary Residences: Ten percent increase.
- Pre-FIRM Primary Residences: Five percent increase.
One thing to bear in mind is that these increases don’t take into consideration the HFIAA, the FPF and the probation surcharge.
Federal Policy Fee Increases
The FPF also increases for every property type. For instance, the fee for PRPs is going to increase from twenty two to twenty five dollars, while the fee for a standard rated policy increases from forty five dollars to fifty dollars.
Below we have the revised condo FPF (per policy):
- One unit: $50 (a five dollars increase).
- Two to Four units: $150 (a fifteen dollars increase).
- Five to Ten units: $400 (a forty dollars increase).
- Eleventh to Twenty units: $800 (an eighty dollars increase).
- More than twenty one units: $2000 (a two hundred dollars increase).
The Elimination of Subsidy for Specific Pre-FIRM Policies
If a pre-FIRM policy lapses due to non payment and also uses subsidized rates, then the buyer won’t be able to have it reinstated with pre-FIRM rates if the payment is received past ninety days.
Implementation of Clear Communication
FEMA wants to implement some changes that make it easier for people to understand the risk of flood damage and the way flood insurance premiums don’t or do indeed relate with such risks. From now on, NFIP insurers need to report current FIRM and flood zone information, including the Base Flood Elevation, for each and every new business policy after April 1st 2016, including renewals effective after or on October 1st 2016.