This past year Congress passed the Biggert-Waters Flood Insurance Act of 2012 which brings with it some significant changes that could effect the cost of your flood insurance. One thing that homeowners who currently have flood insurance can do is insure that there are no lapses in your flood coverage because if you have a lapse in coverage you will be unable to reinstate coverage at previously subsidized rates.
Some of the highlights of the Biggert – Waters Flood Insurance Act are:
Removes subsidized rates (pre-FIRM rates) for the following classes of structures and allows rates to increase by 25% per year until actuarial rates are achieved: The effective date is July 1, 2012.
- Any residential property that is not the primary residence of an individual
- Any severe repetitive loss property
- Any property that has incurred flood related damages that cumulatively exceed the fair market value of the property
- Any business property
- Any property that after the date of the Bill has incurred substantial damage or has experienced “substantial improvement exceeding 30 percent of the fair market value of the property.
- Any new policy or lapsed policy, or any policy for a newly purchased property.
- Any policy for which the owner has refused a FEMA mitigation offer under HMGP, or for arepetitive loss property or severe repetitive loss property.
o Severe Repetitive Loss means four or more claims payments of over $5,000o or two claims that exceed the value of the property.