Last month Congress passed, and President Obama signed, the first long-term renewal of the National Flood Insurance Plan.
The focus of the Biggert-Waters Flood Insurance Reform and Modernization Act of 2012 is to reauthorize the National Flood Insurance Plan until September 30, 2017, to achieve reforms that improve the financial stability of the program, and to increase the role of insurance companies in providing flood insurance.
So what does this new legislation mean to you? The Act, with an anticipated implementation date of 1/1/2013, includes measures to:
- Phase out government rate subsidies for coverage of non-primary residences. This means flood insurance premiums for summer and vacation homes will increase.
- Raise the cap on annual premium increases from 10-percent to 20-percent, to allow the rate subsidy phase-out to have a more rapid affect on premium.
- Provide long-term stability for homeowners who purchase flood insurance through NFIP.
- Update flood insurance rate maps.
- Impose higher minimum deductibles for flood claims.
- Develop a repayment plan for debt incurred from Hurricane Katrina.
- Allow owners of multifamily properties to purchase flood insurance as a commercial client, which increases the amount of coverage available to them.
- Allow use of “actuarial rates” for properties built before flood insurance rate maps were published, if they have sustained severe or repetitive losses. This will increase the cost of flood insurance for buildings that have a severe flooding exposure.
The net result of this legislation, as it applies to the average customer, is increased flood insurance premiums. Contact your trusted Gunn-Mowery representative at 800-840-1243 to discuss higher deductible options – to lessen the effect these higher premiums will have on your wallet.