What the Homeowner Flood Insurance Affordability Act Means

Flooding is not an issue anybody wants to deal with in their home – home structures and precious items can be virtually ruined by flood waters. To make matters worse, most property insurances do not cover flood damage – you need separate flood insurance. And yet it’s the most common natural disaster in the United States. Just a few inches of water from a flood can cause tens of thousands of dollars in damage. That’s just one of many reasons it’s important to know whether your property is in a risky area and to purchase flood insurance before disaster strikes.

In 2014, FEMA and the National Flood Insurance Program (NFIP) began work to implement Congressionally mandated reforms to the existing flood insurance legislation with the Homeowner Flood Insurance Affordability Act (HFIAA). The new law would slow some flood insurance rate increases and offer relief to some policyholders who experienced steep flood insurance premium increases.

In April 2015, flood insurance rates and other charges were revised for new and existing policies, and other changes (resulting from Biggert-Waters and HFIAA) were implemented affecting the total amount a policyholder pays for a flood insurance policy.

So what does all of this mean for you, the policyholder?

  • The most notable changes were rate changes, as well as the addition of a new policy fee: $25 for a primary residence, and $250 for all others including secondary residences or multi-families.
  • Some policyholders now need an Elevation Certificate to calculate their flood insurance premium for properties in a high-risk flood zone.  They may need to hire a State-licensed surveyor, architect, or engineer to complete an Elevation Certificate for your property.
  • A new procedure implemented for properties newly mapped into the Special Flood Hazard Area (SFHA) and existing Preferred Risk Policy Eligibility Extension (PRP EE) was developed. This is a cost-saving coverage option for property owners whose buildings were newly mapped into an SFHA. The premiums are the same as the PRP EE, which offers low-cost flood insurance to owners and tenants of eligible residential and non-residential buildings located in moderate- to low-risk area that complies with the provisions of the HFIAA.
  • If a new Flood Insurance Rate Map (FIRM) shows your high-risk property is at a greater risk for flooding than shown on the previous map, your rates will likely change. Grandfathering has been restored so property owners who build and maintain to NFIP standards in one flood zone aren’t rated in higher cost zones just because maps change.
  • As required by HFIAA, the maximum deductible for a flood insurance policy will increase to $10,000 for single-family and two- to four-family dwellings. If used, the deductible must apply to both building and contents. For single-family homes, choosing the maximum deductible will result in up to a 40 percent discount from the base premium.

Have more questions about the HIFAA or Flood Insurance in general? Contact us any time.