Flood Insurance Changes Catch Many By Surprise

Dated: 07/08/2013

Views: 1245

Congress recently passed the Flood Insurance Reform Act of 2012 which made a number of changes to the Federal Emergency Management Agency (FEMA), as well as the way the National Flood Insurance Program (NFIP) is run.

One of the key changes requires the NFIP to raise rates to reflect true flood risk, make the program more financially stable, and change how Flood Insurance Rate Map (FIRM) updates impact policyholders. These changes have already meant substantial premium rate increases for many and can create additional costs to homebuyers when buying a new home. Furthermore, in most cases homebuyers are no longer allowed to "assume" the Seller's existing policy, meaning they must apply for and pay the new rates. The application process alone can take 3-4 weeks so it is prudent to investigate the flood insurance needs and costs well ahead of time, otherwise it could delay settlement. In rare cases the new cost may even be prohibitive enough to make you think twice about buying a specific home!
Fortunately FEMA does provide some helpful links and tools to assist you in determining the flood status and needs of any particular piece of property. You can visit FloodSmart to get answers to most of your questions and you can also rate your risks and get estimates for your specific property HERE.
So moral of the story is; make your flood insurance due diligence as important as your home inspection to avoid any surprises down the line!

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