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NC 20 Flood Insurance News
President Obama recently signed into law H.R. 3370 – Homeowner Flood Insurance Affordability Act.
The law amends several provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) which made major changes to the rate and premium structure of the National Flood Insurance Program.

NC 20, in conjunction with the Outer Banks Association of Realtors and the Outer Banks Home Builders, has produced a video regarding the highlights of H.R. 3370 - Homeowner Flood Insurance Affordability Act. The video also serves to clarify confusion regarding second home policies. http://youtu.be/7ursb8MX9Pw   Please feel free to share the video link and information below with your constituents.

More highlights of H.R. 3370:

• Reinstates grandfathering on ALL post-FIRM structures – those that were built to a Flood Insurance Rate Map standard. This includes all post-FIRM primary resident policyholders, second home policyholders and non-residential policyholders. A policyholder and any subsequent owner of property built in a flood zone will be allowed to continue to pay to the flood zone and base flood elevation in place at time of construction. The Flood Insurance Rate Map (FIRM) dates vary by County and Town. This should make things "business as usual" for these properties given the fact that FEMA never implemented the provision of the Bigger-Waters Flood Insurance Reform Act of 2012 that removed grandfathering from these properties.
• Pre-FIRM Primary Resident policyholder rates may increase between 5 and 18% a year.
• Pre-FIRM Second Homes: Owners of these properties will continue to see a 25% annual rate increase until actuarial risk rates are achieved. This remains unchanged from BW-12; however, buyers of these properties will now be allowed to assume the flood insurance policy rather than having to pay the full risk rate at time of purchase.
• Pre-FIRM commercial properties and severe repetitive loss properties will also continue to see a 25% annual rate increase until actuarial risk rates are achieved. This remains unchanged from BW-12; however, buyers of these properties will now be allowed to assume the flood insurance policy rather than having to pay the full risk rate at time of purchase.
• Lowers the annual average rate increase cap from 20% to 15%; however, the individual policy rate increase is capped at 18%.
• Allows for residential deductibles up to and including $10,000.
• Excludes detached structures that do not serve as a residence from the mandatory flood insurance purchase requirement.
• Restores the threshold for substantial improvements from 30% back to 50% of market value.
• Requires FEMA to offer monthly installment payments for premiums.
• Refunds any premium paid by property owners after the passage of Biggert-Waters - July 6, 2012 - that was in excess of the 18-25% rate limit increases. This provision may take up to 18 months to be implemented by FEMA.

Imposes a $25 annual surcharge on ALL new or renewed primary residential policies and a $250 annual surcharge on all non-residential and second home policies. Premium surcharges will be deposited in a Reserve Fund.

With regards to any rate structure changes needed, such as establishing new rates for higher deductible, FEMA has from 8 to 18 months to implement these provisions. FEMA's fiscal year is October 1 to September 30 - therefore annual rate changes become effective October 1.

For more information, the National Association of Realtors® has published an Issue Brief and Section by Section Summary of the law: http://www.ksefocus.com/billdatabase/clientfiles/172/4/1983.pdf

Willo Kelly
President, NC 20

Government Affairs
Outer Banks Home Builders Association
Outer Banks Association of Realtors
ncinsurancehelp@gmail.com
(252) 202-7927