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Update: U.S. Senate Passes New Flood Insurance Bill

You may have heard of a new flood insurance bill making its way through Congress over the past few months, in response to steep premium rate hikes and other headaches for coastal homeowners (especially here in Southwest Florida).

Fortunately, for homeowners in low-lying areas that have had to deal with higher premiums – or that were in a position to deal with them this year – the U.S. Senate has recently passed a bill that will help remedy the problem.

If signed into law by President Obama, the Homeowner Flood Insurance Affordability Act will:

  • Help grandfather in properties that otherwise would suffer from redrawn flood maps;
  • Cap increases in premiums at 18% per year, down from 20%
  • Offer a refund for homeowners who purchased homes after the latest bill was passed in 2012 and had to pay higher premiums as a result;
  • Allow coverage to carry over after the sale of a home to a new homeowner; and
  • Reimburse policy holders if they successfully appeal a redrawn map for their home.

The bill is a good bit of news for homeowners in Southwest Florida and other areas that have had to pay more money over the past two years due to the Biggert-Waters act passed in 2012. Notably, the 18% annual cap, while still high, puts a limit on premium increases and saves homeowners 2% per year on their current home flood insurance rates.

We’ll continue to monitor the situation, but the bill is expected to be signed into law by President Obama this week.

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An Update on the Flood Insurance Premium Increase

As you may know, Southwest Florida homeowners have been dreading news about an impending flood insurance premium hike that will take place for most homeowners starting in 2014.

Under the terms of the Biggert-Waters Flood Insurance Reform Act of 2012, rates were raised for the National Flood Insurance Program. Many premium changes have already been implemented, especially for owners of business properties with subsidized rates. The biggest change, though, is yet to come – an across-the-board rate hike for subsidized and non-subsidized homeowners in the amount of 20% per year over the next five years.

The key to the dilemma involves new flood maps that show many homes at lower elevations, subjecting them to a bigger threat to flooding – on paper, at least – that justifies higher rates.

Since Florida is home to 37% of all flood insurance policies, our state will endure the worst of the change, a change that will eventually impact millions.

There is a chance that these insurance hikes will impact home sales, too, in a market that can’t afford to stall its real estate recovery.

There is a chance, though, that key aspects of the law could be changed or reversed. Two laws have been introduced in Congress to fix key problems. These, however, will not be taken up until next week at the earliest and won’t repeal the law in its entirety even if they pass. And given the drive in Congress to cut debt – especially for the NFIP, which is in debt by $24 billion – there is a chance that the laws could be defeated.

Southwest Florida homeowners need to prepare themselves for premium hikes if they have not already been affected by talking to flood insurance agents and real estate agents, particularly if you want to buy new properties in the area.