Congress Rolls Back Flood Insurance Rate Hikes

March 31, 2014


Your flood insurance premiums won’t rise more than 18 percent a year under a flood insurance bill passed by Congress and on its way to President Obama. Premiums for homes located in one of the nine flood risk categories insured by the National Flood Insurance Program can rise no more than 15 percent in a year.


The new law sets aside big changes Congress made in the flood insurance program back in 2012. Those changes caused premiums to rise for homeowners, in some cases by tens of thousands of dollars a year.


The NFIP, run by the Federal Emergency Management Agency, should also “strive” to limit premiums to 1 percent of the policy amount. For a homeowner taking out the maximum $250,000 in building and $100,000 in contents coverage in the highest risk area, that would be a $2,500 premium.


The bill also reinstated a prior FEMA policy that let homeowners who pay lower “grandfathered” flood insurance rates pass those rates along when they sold their homes.


Flood insurance rates can rise because FEMA adjusts flood maps and building regulations change.


The 2012 flood insurance bill limited the grandfathered rate to the current home owners. That meant new buyers had to pay flood insurance premiums so high that it was making it hard to sell homes in some areas.


Now, homeowners who had to pay the increased premiums after the 2012 bill will get refunds. And homeowners who faced higher premiums because of flood map changes will have their premiums limited to 18 percent annual increases.


Going forward, all primary home owners will pay a $25 annual surcharge. Owners of second homes and investors will pay a $250 per year surcharge.

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