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    Personal Insurance Blog

    National Flood Insurance Program (NFIP) Reauthorized through November 13, 2018

    Posted by Antonia Clifford

    Wed, Aug 01, 2018 @ 02:45 PM

    Senate has approved an extension of the National Flood Insurance Program, ensuring it will be operational through November 20, 2018.  All the Program rules and regulations will remain in force and unchanged, and all transactions will continue to be processed.

     

    Flood 080118

    If the Senate had not acted, the NFIP would have expired on July 31st.  The final vote was 86-12 in favor of keeping it authorized an additional four months.  

    To discuss your Flood Policy in particular or the Program in general, call the Gordon Atlantic Insurance professionals toll free at 1-800-649-3252.  Prefer to type versus talk?  Use the form to the left of this blog.

     

    Tags: nfip, national flood program, flood insurance, Flood

    2018 Government Shutdown and NFIP (Flood insurance)

    Posted by Stephanie O'Neill

    Mon, Jan 22, 2018 @ 02:57 PM

    Homeowners that are required to have a flood policy with the National Flood Insurance Program (NFIP) may be affected by the current government shutdown that began on January 20, 2018 depending on when your policy - or a pending closing - is effective.

    If your flood policy renewed prior to the expiration of the program (December 23rd) and you have paid your renewal, then your policy remains in force. Those who did not pay their renewal premium before or within the 30-day grace period may run the risk of not having coverage, loss of grandfathering and other penalties.

    If you are purchasing a new house or property within a flood zone, you'll need a flood policy.

    flood_pic.jpg

     If you have a sale pending, the application and payment must have been received and dated before the flood program expired (January 20) for the policy to be issued. This is also the case for closing dates after January 20th.

    However, if you have a pending closing and have not submitted the application and payment, your closing will probably be delayed until the government re-authorizes the National Flood Insurance Program, or unless you choose a private flood insurance carrier such as offered at Gordon Atlantic Insurance.  See our article on private flood insurance options here.

    How will claims be handled? Policies that are in force before midnight of the last effective day of authorization will remain in force until their expiration date and claims under those policies will be processed and paid as usual. Claims for covered losses occurring during a lapse, on existing policies and on policies in force after the last effective day of authorization, are to be processed and paid as usual.

    FEMA will notify NFIP stakeholders when the program has been reauthorized.  Naturally if we can help with NFIP placement or with a private policy, just contact us.

    Contact Us

    Tags: nfip, national flood program, flood insurance, Flood

    Fallout of Private Flood Insurance Market and Effect on NFIP Policyholders

    Posted by Geoffrey Gordon

    Thu, Aug 11, 2016 @ 01:58 PM

    IMG_0595.jpgA private flood insurance market is beginning to emerge for homes and businesses in existing flood zones. The effect of this development on the NFIP's monopoly on flood coverage here in the United States will be significant.  If you are able to transition from NFIP to one of our private flood markets, read on!

    A private market will provide innovation and cost savings for many consumers in flood prone areas.  Ultimately this will lower costs for many property owners.   But for others, watch out.

    Rates used today by the National Flood Insurance Program (NFIP) have little relationship to actual risk.  This is a program designed by Congress, so political factors influence many characteristics.  For example, consider two houses side by side, same age, same size and value, same exposure to a flood.  But one is a ‘primary’ home where the family lives full time, the other ‘secondary’, a vacation home.  The primary home pays less because a secondary homeowner presumably can afford higher prices.   Affordability is not a risk factor with catastrophe insurance.  Thus some properties are subsidized, while others are priced to subsidize other properties.  Until now, the NFIP has had a monopoly on pricing: take it or leave it.  Private insurance challenges all that.

    The private flood insurance market will be most competitive where they can underprice insurance for properties subsidizing others, that is, overpriced relative to actual risk.  They’ll do this by applying true  risk based rates, rather than those devised by the NFIP or Congress using factors such as homeownership as rating mechanisms.

    The effect on the NFIP program is already evident.  Losing policyholders who subsidize other policyholders is chipping away at the foundation of National Flood subsidized rates.  NFIP likes its comfortable monopoly, and is not eager to give it up.  If properties priced to subsidize others leave the program, prices will have to increase, perhaps substantially.

    NFIP isn’t making transitions easy for its customers.  We recently had a homeowner customer change from NFIP to a private program, saving about 50% or $2,000 in their case.   We sent the customer’s signed request to cancel the NFIP policy prior to the renewal date.  Unfortunately the bank (mortgagee) paid the NFIP premium from the escrow account.   NFIP would NOT cancel the policy, since they do not yet officially recognize the private market  (this may change with another act of Congress, but don’t hold your breath).   Thus, once the policy is paid, the premium won’t be returned, even with a signed request to cancel.   An appeals process is available, but again, don’t hold your breath. Careful coordination with your bank (to prevent payment) is important.   The bank must also recognize the private flood insurance.

    The main lesson is in the payment details: If you switch to a private carrier and the flood insurance is part of the bank’s escrow for taxes and insurance, notify the bank in writing NOT to pay the NFIP bill.  If they pay it, you probably won’t get your money back from NFIP.

    In addition, if you leave the National Flood insurance program and decide private flood isn’t for you, expect to need an elevation certificate and possibly higher prices when you do return.

    The long-term economic issue is this: as private insurance offers lower prices to overcharged properties, subsidized insurance in high risk, loss prone areas must rise.  We have long predicted that the economics of the National Flood Program were precarious, and believe that the private markets' disruption of the existing program will hasten the national program’s decline.

    The current program is today about $24 billion in debt to the U.S.  Treasury and Congress has been struggling with making the program revenue neutral for years.  With subsidized policies under threat from private insurance markets, this job just became harder.

    Look to Gordon Insurance for guidance on this ever changing and fluid insurance program.

    Geoff.jpg

    Tags: flood insurance, private flood insurance, new england, home, insurance

    Grandfathering Your Flood Insurance Rates

    Posted by Maggie Thompson

    Thu, Jun 02, 2016 @ 10:32 AM

     

    The Federal Emergency Management Agency (FEMA) currently has an effort to remap flood hazards across the nation.  The effort is commonly known as Risk MAP, or risk Mapping, Assessment, and Planning.  Risk MAP poses some possible changes for property owners, as it is creating a new Flood Insurance Rate Map (FIRM).  A high-risk property on a previous FIRM may be considered of even higher risk on the new map, possibly elevating the flood insurance rates. In addition, a property that did not even appear as high-risk on the old map may be considered high risk by the new standards, which would also raise the cost of coverage on the property.

    Luckily, there are some ways to combat this increase if the structure was built after the first flood map was released.  The first way is to simply purchase a flood insurance policy before the new maps are implemented.  If this is not possible, using the Grandfather Rule is a great option.

    The Grandfather Rule is applicable if there is proof that a home was built in compliance with the flood map that was effective at the time of construction.  Contact us and we can provide you with this documentation! 

    If the structure was not built after the first flood map was released (pre-FIRM), there must be a policy in place before the new map becomes current in order to qualify for the Grandfather Rule. 

    Either one of these options will lock in the property in its current flood zone or Base Flood Elevation, keeping its insurance rating the same.

    However, in some cases the new FIRM will consider a structure a lower-risk structure than the previous map.  Make sure to check whether or not your rates would go up or down before using the Grandfather Rule!


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    Tags: Flood insurance on the South Shore, flood insurance, flood insurance MA, Flood Insurance Changes, risk map, firm

    Flood Maps Delayed One Year

    Posted by Kasey McCarthy

    Wed, Mar 05, 2014 @ 09:00 AM

    Proposed FEMA flood map changes for Plymouth County were recently delayed for a year so FEMA may review the methodology of the flood mapping. The proposed FEMA maps were rolled out in 2013 and were expected to be adopted by communities in 2014. The new maps were intended to model coastal flooding more accurately. Without a doubt, the new maps made quite a splash in Marshfield, Duxbury, and Scituate. In these towns, nearly two thousand homes that were not located in a special flood hazard zone A or V would be remapped into special hazard zones if the new maps were adopted. The new maps were proposed to be adopted by June, 2014.Learn about MA flood maps with andrew g gordon inc insurance

    Many properties currently in a special flood hazard zone would face significant changes in their base flood elevations under the new maps. In some instances, the base flood was raising from 9  to 17 feet elevation. This is the elevation that the property elevation is measured and rated relative to the FEMA base flood elevation.

    The primary reasons for postponing the map adoption were the many questions surrounding the science used for the flood mapping. In a nutshell, many believe the FEMA map study was flawed. The towns of Marshfield and Scituate submitted appeals questioning how the maps were created. These towns also engaged consulting engineering firms to review the methodology. Further supporting their arguments was an analysis by the University of Massachusetts that indicates FEMA used wave models used for the Pacific rather than Atlantic Ocean.

    Local town officials in Scituate, Marshfield and Duxbury are optimistic that the towns have proven the new flood map deficiencies that must be addressed by FEMA. As a result, the homeowners newly zoned into a special hazard flood zone will not be required to secure flood insurance  in 2014.

    The town of Hingham in Plymouth county approved new flood maps in 2012, so they are facing a different scenario. Since then, town-hired engineers found numerous problems with the new maps, including incorrect wind speed data and topographical information. Therefore, Hingham officials are filing an appeal against the new Federal Emergency Management Agency flood maps that added hundreds of homeowners into the flood zone in 2012. Although FEMA delayed map implementation in Plymouth county, there is uncertainty if the delay can be applied to Hingham after the maps have already been approved by the town.  Hingham plans to file this appeal by March 1 and hopes to have this decision before Oct 1. Stay tuned for further developments. 

    Learn more about flood insurance here.

    INSURANCE QUESTION?

    Kasey McCarthy

    Tags: plymouth county, hazard zone, FEMA, flooding, Flood, maps, flood insurance

    Who Insures Flood Policies?

    Posted by Kasey McCarthy

    Thu, Oct 31, 2013 @ 09:00 AM

    You may have a flood insurance policy issued by a national insurance carrier such as Hartford, Mapfre, Nationwide or Travelers. The insurance company’s name, address and logo appear on the flood policy coverage page. However, the private insurer company is only issuing and servicing the standard flood policy on behalf of the federal government. In the coming years, we expect there will  be many discussions of privatization of flood insurance given the flood programs $18 billion deficit. At this time, all flood policies with up to $250,000 in building coverage are underwritten by the federal government. Amounts over $250,000 are considered excess flood policies and these policies are insured by private insurers instead of the federal government.

    Prepare for flood or storm with personal insurance from andrew g gordon inc

    Insurance companies began participating in the Write Your Own (WYO) Program in 1983 as a cooperative undertaking between the insurance industry and FEMA. The WYO Program allows participating property and casualty insurance companies to write and service the Standard Flood Insurance Policy in their own names. The companies receive an expense allowance for policies written and claims processed while the Federal Government retains responsibility for underwriting losses. The WYO Program operates as part of the NFIP, and is subject to its rules and regulations. There are currently 85 insurance companies participating in the write your own program.

    The primary goals of the WYO program are:

    • Increase the NFIP policy base and the geographic distribution of policies;
    • Improve service to NFIP policyholders through the infusion of insurance industry knowledge;
    • Provide the insurance industry with direct operating experience with flood insurance.

    Recently, Travelers Insurance announced that they are discontinuing their participation in the Write Your Own program. Travelers sold its flood policy renewal rights to American Bankers Insurance Company of Florida, part of Assurant Inc. Customers with Travelers Flood policies will be renewed with American Bankers Insurance Company of Florida (ABIC) for policies renewing October 15 and later. In some cases, agents will move these Travelers Flood policies to other Write Your Own carriers. Travelers stepped out of the flood program because it was a small, non-core part of their business. Exiting the program eliminated operational complexities associated with maintaining separate underwriting and claims processes required for participation. If you have a flood policy serviced by Travelers through our agency, you can expect to see a change in servicing carrier at your next renewal.

    If you have any questions about how these changes could affect you personally, give us a call at Gordon Insurance (781) 659-2262, and we would be happy to help you in any way we can! Learn more about flood insurance here.

    INSURANCE QUESTION?

    Kasey McCarthy

    Tags: Travelers Insurance, Travelers, Flood Policy, ABIC, WYO, Write Your Own, Flood, flood insurance, flood insurance MA

    Biggert-Waters and Flood Insurance Rate Changes in MA

    Posted by Geoffrey Gordon

    Fri, Sep 13, 2013 @ 05:42 PM

    The Biggert – Waters Flood Insurance Reform Act, inspired by ‘bigger waters’ along the coast (not really), arose out of a desire to make the National Flood Insurance Program (NFIP) economically sustainable, and less dependent upon taxpayer subsidies. The removal of subsidies for about 20% of coastal properties, those in Zone A and Zone V, will be a costly transition for some property owners, though there are important timetables that limit the transition to non-subsidized rates.

    The law passed and was signed by President Obama in 2012 without much fanfare, but now changes are looming (most scheduled for October 1, 2013). While political pressure is pushing to delay the changes, we believe property owners should prepare for these changes to take affect on schedule.  Many changes are beginning on October 1st, 2-13, some won't kick in until 2014.

    Two important facts may help to understand how we got here. First, mapping technology has come a long way in the past several years, and rating precision has followed. The NFIP is able to quantify the chance and severity of future losses, and thus rate more precisely. This technology also means as coastal development and environmental factors (including floods) affect landscapes, flood zone maps can change as often as each year as well.  Mapping improvements are affecting people independently of many of these Biggert Waters changes.

    The second fact is the NFIP is about $25,000,000,000 ($25 billion) in debt to the U.S. Treasury from past losses. The government wants their money back, and they don’t want to subsidize flood insurance rates any longer.  While the new rates aren’t calculated to recoup old losses, they do include the interest on that debt. Thus, subsidies are transitioning out of the flood insurance program, especially for homes built before the early flood maps in the 1970's.

    The result: Rates for about 20% of flood insurance buyers are going up, and more people are now learning they live in a ‘flood zone’ as maps are updated. Scituate and Marshfield MA flood maps affect their towns particularly hard.  The greatest impact will be to property owners who had subsidized flood insurance rates: homes built prior to Flood maps (most South Shore towns, this means early 1970s)

    Non-subsidized (risk based) rates won't happen right away. In and effort to transition to actuarially based rates, increases on existing flood policies will be limited to 25% per year until rates become non-subsidized. Flood policies with substantial increases coming (but subject to 25% / year increase limits) include:

    1. Non-primary homes, meaning vacation or rental homes;
    2. Properties with severe repetitive losses (paid claims greater than the market value);
    3. Non-residential (e.g. business use) property.

    Properties affected by map changes alone will be limited to a 20% annual ceiling on increases, and those won't take effect until 2014.

    There are exceptions to the 25% ceiling increase transition rule, meaning when new fully risk based rates will take effect:

    1. If you let your policy lapse (by not paying on time), fully non-subsidized costs will kick in right away.
    2. Grandfathering’ rules that used to be in place for property sales are phasing out starting in  2014.  In the past you could continue the rates of a prior homeowner; now non-subsidized rates will apply right away when buying a property from someone else.  One important exception: if a substantial upgrade was made in full compliance with local flood ordinances, grandfathered rates will continue (subject to written confirmation from building inspector).
    3. If you make a substantial improvement to an existing property.  Although if improvements include becoming fully compliant with current flood ordinances,

    Maps under the new law now include environmental sensitivity index mapping in an effort to promote green planning and rebuilding. This will include such infrastructure protection as dunes and other natural habitat that proved effective during Hurricane Sandy.

    Some aspects are NOT changing.

    If your town’s rates increased after 2008, you may still be eligible for a preferred risk policy (PRP). Call our office for details. One stated objective of the new law is to broaden the number of people who buy flood insurance, especially those in less vulnerable zones.

    The NFIP has a monopoly on the pricing of flood insurance, but the underwriting, billing, and policy service functions are outsourced to insurance companies. So if you have a flood insurance policy serviced by Commerce, or Hartford or National Grange (to name a few that we use), remember it’s all still NFIP backing it… and writing the rules.

    In spite of the NFIP monopoly on pricing, that doesn't mean there is nothing homeowners can do. One thing every property owner should do is engage a qualified engineer to provide an “elevation certificate” for your home. If your home is higher than the measured grade, the flood maps may not reflect its elevation properly; an elevation certificate can demonstrate the proper elevation above mean high tide (a primary rating factor). While it’s possible the elevation certificate might NOT affect your rate or even increase your rate, we believe it’s better to know this sooner, as you might be eligible for lower rates right away. In fact, the NFIP is requiring many policyholders to provide an elevation certificate to retain existing zone or rates. This is all part of the effort to achieve more precise rates for each property.

    There are also coverage and deductible options for controlling your costs (although you may find your bank or mortgage company will weigh in on these options as well).

    Lastly, as with other insurance, if you have a small loss, talk to us about whether it makes long term sense to file a claim. Repeat claims are a ‘predictive rating factor’, meaning they’ll charge you more going forward of you file a claim.

    One last comment about flood insurance: the coverage is designed by, and the rates are calculated by the NFIP. They have a monopoly. They are not susceptible to consumer driven feedback. Coverage is limited (e.g. no coverage for items in the basement except house mechanicals such as the furnace). Don’t expect a lot from it. Instead plan for taking steps to secure your property as economically or safely as possible.

    Click below for a personal customized conversation with us.

        INSURANCE QUESTION?

    Geoff Gordon

     

    Tags: flood insurance, flood insurance MA, flood zones, flood zone changes, Flood Insurance Changes, flood elevation certificate, flood map changes

    Microbursts: Surprise Storms

    Posted by Julia Kirslis

    Mon, Aug 26, 2013 @ 09:59 AM

    Have you ever heard of a microburst? I sure hadn't until one of my fellow coworkers in this very office explained to me what they are. Naturally, I had to research them, and what I found is mind-boggling.

    Weather Words

    So if you're into weather speak and meteorology talk, then you'll be intrigued to hear that a microburst is just a bunch of sinking air. However, when this air sinks, it sends little tornadoes and strong winds just in that area.

    Be prepared for home damage from surprise storms with homeowners insurance from andrew g gordon inc

    Microbursts consist of three stages: contact, outburst, and cushion. The first stage is when the air descends from the clouds and to the ground, making contact. The second stage is when the air move aways (typically horizontally along the ground). The third stage is when the horizontal winds accelerate but the initial winds begin to slow down.

    Regardless of which stage a microburst is, there will be very, very strong winds that have the ability to known down trees and buildings. And while hurricanes and other tropical storms can have both strong winds and heavy precipitation, microbursts are different. Why? Mostly because they can appear out of nowhere and are very difficult to predict.

    Damage and Insurance

    I just spent some time telling you how microbursts differ from any other storm. Now I am going to contradict myself and tell you the good news when it comes to insurance!

    Even though microbursts are weird little storms that can really pack a punch, insurance covers for their damage. They are just like any other storm. Most of the damage caused by microbursts comes in the form of falling trees. To protect yourself against loss, make sure you have a wind policy that adequately covers your home's worth, especially if you live in a heavily wooded area.

    For those "wet-microbursts" that come with a lot of flooding, only a flood policy can protect you from loss in the event of a flood. So, similar to the wind situation, as long as you have the appropriate policy, your insurance will cover you in case of a microburst. Hooray!

    Microbursts in MA

    Fortunately, microbursts are not that common. However, that doesn't mean that they do not occur. Recently, Agawam was faced with a microburst that caused lots of damage. For more information on that damage, click here.

    Microburst Video

    Here is a video explaining microbursts and showing some of the severe damage these storms can cause.

     

    If you have any other insurance questions about anything- home, auto, commercial, life- feel free to contact us at any time. Learn about homeowners coverage here.

    Contact Us   Home Quote Request

    Julia Kirslis

    Tags: home, home insurance, house insurance, property damage, flood insurance, Flood, wind, storm, tree damage, tree, house, microburst, windstorm, strong wind, fallen tree

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