Flood Insurance: Overview of the Grimm-Waters Homeowner Affordability Act of 2014
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 mandatesa 45-day consultation period with Write Your Own (WYO) carriers before final implementation.
Carriers willneed several monthsto rewrite software; address process changes; and train staff before sending out renewals45-60 days before the law's effective date.
Biggert-Waters willcontinue to be in effectfor 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.