Friday, March 7, 2014

Flood Reform- Light at the End of the Tunnel?

When we were approaching implementation of the Biggert-Waters Flood Reform Act of 2012, our agency had to explain to customers seeking flood insurance that rates were going to skyrocket. It is our job to advise clients, however there was no delicate way to explain the seriousness of the situation. Since that time, many customers seeking new policies in areas considered 'Special Flood Hazard Areas' have been presented with quotes in the thousands of dollars. Many of the homes we were quoting were valued at around $200,000. These were typical families facing rates that could jeopardize their ability to afford their homes.

Without a doubt, you saw flood insurance on both local and nation news programs...homeowners frustrated with the financial burden of these high premiums. Market prices for homes in Special Flood Hazard Areas were drastically lower than before the Biggert-Waters implementation. Signs proclaiming "Not in a Flood Zone!" could be found hanging from for sale signs throughout Pinellas in an attempt to bring in buyers who might otherwise be leery.

Well, relief might be around the corner. The Grimm-Waters act floating around Washington D.C. proposes several changes. Here are just a few:
  • Delays most of the reforms and increases for 4 years
  • Homebuyers may not have to incur the burden of the full risk premium at time of home purchase (this has been the catalyst for the decline in sales of homes with increased flood risk)
  • Possible retroactive refunds for those who had large increases due to the sale or purchase of a home
  • Allows 'grandfathering' to continue (Biggert-Waters eliminated this which caused previously subsidized rates to increase to full risk over 5 years)
  • Caps increases at 15-18% and allow for subsidies for rates on current flood maps
  • Minimize the number of policies that exceed 1% of total coverage on the home
The development of this legislation has been a bipartisan victory. We see members of Congress from both sides of the isle working diligently to provide relief. While we have not seen the final laws go into effect, we can be glad that there is a light at the end of the tunnel.

*This blog is meant for informational purposes only. For specific questions regarding insurance legislation or policy information, contact our main office or the author, Brianne Small (813) 406-2290

By Brianne Ruggeri Small, Personal Lines Agent
Ruggeri Insurance Agency, Inc.
(813) 406-2290
"Your home is with our family." since 1968