New Changes Coming To Flood Insurance

Dated: 08/08/2013

Views: 1341

New Changes Coming to Flood Insurance

The Biggert-Waters Flood Insurance Reform Act of 2012 has been signed into law and will affect flood insurance rates across the nation.  The legislation extends the authority of the National Flood Insurance Program (NFIP) through September 30, 2017.  The plan is to bring subsidized and grandfathered premiums up to full actuarial rates over a 5-year re-authorization of the NFIP.  According to the NFIP, property owners were paying only about 40% of the full actuarial cost.  Such events like Hurricanes Katrina and Sandy increased payouts and thus increased the debt of the NFIP.  Every new purchase made in a flood zone will be affected.  The legislation is also retroactive to purchases made after July 6, 2012.  

What does this mean to you?
The biggest change will be for those buying homes that were constructed before 1975. Referred to as Pre-FIRM (Flood Insurance Rate Map), these properties that are below Base Flood Elevation (BFE) and are currently receiving "Subsidized" rates. Other properties that were built after 1975 and were either not in the flood zone at the time of construction or the base flood elevation has changed (BFE) are referred to as “Grandfathered” properties.

Here is the breakdown of the changes:

SUBSIDIZED Properties
- Owner Occupied Properties bought after July 6, 2012 - the new rates will be phased in over a five-year period. If you purchased your Pre-FIRM home prior to July 6, 2012 your rates will remain unchanged.
- Non-owner Occupied Properties - the new rates will be phased in over a four year period regardless of purchase date
- NEW policies will be written at the full actuarial rate. This means that during the course of a real estate transaction, if the policy is not assumable to the new owner, the full rate increase will take affect immediately.
GRANDFATHERED Properties
Rates will be phased out and brought to new actuarial rates only after the new flood rate maps are adopted. This is expected to be completed in South Carolina in late 2013 or early 2014.

All Other Properties with Requiring Flood Insurance
All other properties will see rate increases of at least 5%, but could be higher (in the 20% range), but each property is different.

Date of Pre-FIRM
Pre-FIRM in Charleston County means start of construction or substantial improvement was before 1975. For every city and county in South Carolina, go here for the pre-FIRM date.

Please contact your insurance agent before purchasing a property.
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Hunter Reynolds

Hunter Reynolds is a full-time Realtor with Keller Williams Realty in Charleston, South Carolina and is Foreclosure and Short Sale Certified. He specializes in residential properties in Charleston, SC....

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