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Whether you own one home or multiple homes that are covered by flood insurance, it’s important to understand the changes that are beginning to take place due to the one-year-old Homeowner Flood Insurance Affordability Act of 2014 (HFIAA).
HFIAA brought up some changes that are slowly being implemented to FEMA’s National Flood Insurance Program (NFIP) and flood insurance rates across the country are being affected. These changes were designed to make the NFIP more financially stable and unfortunately, some policy holders will pay higher premiums as a results.
As a homeowner, take a look at your flood insurance policies with your insurance agent to understand where some higher rates or fees may come into play. Don’t be taken off guard.
Here are 3 changes homeowners can expect:
1. Rate increases
On April 1 a few changes took place that will impact the overall cost of many flood policies. Many policies can expect to see increases in the Reserve Fund Assessment and increases in the Federal Policy Fee, as well as overall rate increases that are now being capped on most policies.
2. Increase in annual rates for Secondary homes
A secondary home is one that is lived in less than half of the year. Secondary homes in high risk areas that were built before the community’s first Flood Insurance Rate Map (FIRM) was create will receive a 25% increase in their annual rate.
As a note for business owners, businesses that are “pre-FRIM” will also receive a 25% increase in their annual rate. Post-FIRM buildings in high flood risk areas will continue to receive the typical rates of 9-12%.
3. New surcharge.
During the development of HFIAA, Congress had to balance rate rollbacks and refunds and somehow bring in some positive income. In order to do this, they added a surcharge for all flood insurance policy holders. Beginning April 1, primary residents will pay an annual surcharge of $25 regardless of their flood zone. All other buildings, including secondary homes, businesses, etc will pay an annual surcharge of $250.
For more information on the HFIAA, check out the FEMA Fact Sheet.