Flood Insurance – Always Changing

by Aug 24, 2015

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Living on the water is a luxury, albeit a risky one. Buyers who root themselves in flood zones have to weigh the pros and cons in making that decision and then plan to protect themselves accordingly. But more and more the tax payers are shouldering the burden of the costs that come with floods and federal intervention.

The Biggert Waters Act of 2012 (BW-12) was an effort to prevent this by getting flood insurance to stand on its own, with claims funded by the premiums collected. But when the floods came, the people affected protested to their representatives, who in response created the Homeowner Flood Insurance Affordability Act of 2014.

Here are a few changes that come with the Act:

  1. The Homeowner Flood Insurance Affordability Act of 2014 lowers the rate increase on some policies, prevents some future increases and adds a flat surcharge to every policy. Some changes will be retroactive and some effective with the March 21, 2014 passage.
  2. The National Academy of Sciences has been hired to do an “Affordability Study.”  Is this a study of how much coastal property owners can afford and how does this relate to historical actuarial data?
  3. FEMA- Federal Emergency Management Association’s initial priority will be to assess potential changes to NFIP – the National Flood Insurance Plan’s business processes to stop increases for subsidized policyholders.
  4. Rate increases for subsidized policies were reduced from a maximum of 25% to 18%, but only for primary residences look these up. So the number of years until the premiums reach full-risk rate (this replaces rate adequate) has been stretched out.
  5. And there is now a Flood Insurance Advocate designee, to advocate for fair treatment of NFIP policy holders. The Advocate will educate, assist, aid and respond to those who are getting the rate increases.
  6. The Homeowner Flood Insurance Affordability Act also creates a Technical Mapping Advisory Council to review new mapping under the 2012 and 2014 Acts. Who is paying for this?
  7. Primary residences will include a $25 rate surcharge, all other properties will be surcharged $250.

There are a couple of improvements:

  1. Premium installments for non-escrowed premiums
  2. Higher deductible options
  3. Flood proofing will be considered where there have been map changes

If you have questions email Kyle at or call 203.698.9342.

Written by: Steve Shepard

Founder/Principal, Shepard Insurance Group. At Shepard Insurance Group we begin every relationship with a face to face meeting with the client. In a comprehensive discussion of coverage needs, personal concerns, objectives and finally appetite for risk, we can arrive at the proper insurance solution. Understanding the client is the first step to accurate execution.

August 24, 2015

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