New flood insurance legislation taking effect October 1st may result in increased flood insurance premiums. Recently, Doug Wiles moderated an advisory panel for the St. Augustine & St. Johns County Board of Realtors to help explain how these changes will effect the St. Augustine area.
The Biggert-Waters Flood Insurance Reform Act of 2012 became law on July 6, 2012. While its most important provision extended the National Flood Insurance Program (NFIP) for 5 years, there were a number of other changes included that are designed to significantly reduce subsidies provided by the Federal Government. Many of these changes take effect in 2013 – all will result in increased flood insurance premiums.
Of particular importance to consumers is the change relating to what is referred to as “subsidized rates.” A subsidized policy is one written on a structure built prior to the inception date of the National Flood Insurance Program (NFIP) in our area that is not rated with an elevation certificate (EC). Previously, the customer had the choice to use the subsidized rates or obtain an EC and use the EC rates if it was to their advantage to do so.
The NFIP bulletin outlining the changes in rates is 367 pages long. Experts agree that some of the expected changes are open to interpretation by the NFIP, so some rating issues are subject to change. The following is a list of changes recently announced by the NFIP that take effect October 1, 2013:
- The Federal Policy Fee will increase $2-$4 per year depending on the type of policy issued.
- An additional assessment 5% for an NFIP “Reserve Fund” will apply to all policies in a “special flood hazard zone.”
- Depending on the location, all policy premiums will increase from 1-19% (in addition to the above increases).
- Any new policy will require an EC. There will no longer be any subsidized rates for these properties.
- If a policy lapses, an EC will be required, thus eliminating the subsidized rates.
- For policies in force on and before July 6, 2012 with no EC, rates will increase 25 percent per year, effective with the next renewal, until such time as an EC is obtained.
- Pre-FIRM, non-primary dwellings without an EC and insured prior to July 6, 2012 will experience a 25 percent rate increase year for renewals effective January 1, 2014, until an EC is obtained. New purchased and/or new policies on these structures will require an EC and the actuarial rate will be charged. The NFIP defines a “non-primary dwelling” as one that is not occupied by the named insured or spouse at least 80 percent of the year – that’s at least 292 days of the year.
Business properties (categorized as non-residential occupancy under NFIP rules) will be subject to future 25% actuarial rate increases. The NFIP has yet to define the term “business properties.” This will be done as a part of the rulemaking process and announced at a later date.
Questions about your flood insurance or want more information on quotes for a new policy? Call Herbie Wiles Insurance at 904-829-2201 or email us at Info@HerbieWiles.com.