Personal Insurance Blog

Here is an overview and timeline of what you can expect for changes with flood insurance as a  result of the passage of the Grimm-Waters Homeowner Affordability Act of 2014. New rates will not be in effect for another 9-11 months.

• FEMA needs six months to develop regulations and mandates a 45-day consultation period with Write Your Own (WYO) carriers before final implementation.
• Carriers will need several months to rewrite software; address process changes; and train staff before sending out renewals 45-60 days before the law's effective date.
• Biggert-Waters will continue to be in effect for almost another year - some property owners may pay higher Biggert-Waters rates for two premium terms.
• The legislation caps annual rate increases at an average of 15 percent for most residential policies. Recently, the full actuarial rate went into effect under Biggert-Waters, bringing annual premium increases of 18 percent for primary homeowners.
• New policies on pre-firm properties will not require elevation certificates and photos.
• Homebuyers do not need to pay the full-risk rate for pre-FIRMS at the time of purchase as required under Biggert-Waters.
• Repeals the provision in Biggert-Waters that required pre-FIRM property owners to pay the full-risk rate if they voluntarily purchase a new policy.
• Grandfathering is restored. Cap rates are increasing between 5-15 percent.
• Newly mapped properties will be treated like subsidized, grandfathered properties.
• Full-risk actuarial rates will be required for policies after Biggert-Waters enactment unless the decision to permit the lapse is because the property is no longer required to retain such coverage.
• The new legislation will require FEMA to issue a refund to policyholders who have overpaid premiums under Biggert-Waters. FEMA has not determined when and how this will happen.
• Businesses, secondary homes and severe-repetitive properties will continue to see their premiums go up by 25 percent a year until reaching a level consistent with their real risk of flooding.
• Most homeowner policies will include an annual $25 surcharge, while businesses and second homes will accrue a $250 fee.