Now that the House of Representative has passed the Homeowner Flood Insurance Affordability Act of 2013, you may be thinking that we can begin to breathe easier. But not so fast! First it must pass the Senate, become law and be approved by the president.
And then we need to understand that, while we are in a better position today than we were yesterday, there will still be significant portions of the Biggert-Waters Act that will impact us — and our pocketbooks. Here’s the good news.
The big news is that the “grandfathering” of rates for homes built to code under previous rate maps will be reinstated. This means that your new rate will not reflect increased risk due to changing flood maps in your area, for example moving from an A Zone to a V Zone (from risky to very risky).
Annual rate increases will be slowed. Where previously Biggert-Waters required 25 percent annual increases to reach actuarial rates, they will now be limited to 5 percent and 15 percent annually, which allows property owners a little more time to take mitigation actions.
The bill repeals the “trigger” that required homebuyers to pay a full-risk rate for previously subsidized houses immediately at the time of purchase. This should help to stabilize home values that have been wobbling since implementation of Biggert-Water began. Also repealed is the trigger to pay full-risk rates for a newly purchased policy where one was not previously in place.
There are also stipulations that refund policy holders for higher premiums paid since Biggert-Waters was implemented, and this section of the bill includes the ability for buyers to assume an existing policy on a purchased property.
Also very important, FEMA will now be required to certify that its mapping process reflects “technically credible flood hazard data” and modeling. Homeowners and communities can also be reimbursed for expenses incurred in a successful map appeal.
The bill also requires that FEMA develop guidelines for mitigation alternatives other than elevation and requires FEMA to ensure alternative methods of mitigation are taken into account in the calculation of premium rates.
Much of the rest of the bill addresses the need for FEMA to have a better implementation plan, including disclosure of rate structures, clear communications, and ongoing reporting responsibilities. And it requires identification of a Flood Insurance Advocate to assist policyholders and coordinate outreach.
But we must add a caution — the National Flood Insurance Program needs to be fiscally sound, so flood insurance costs will increase. Subsidized rates on homes built before maps were in place will still be going away. And an annual surcharge of $25 for all primary residential properties and $250 for non-primary residences and businesses will be added to each homeowner’s bill.
Our job going forward will be to create resiliency in our communities — to build our homes to sustainable standards, work with community leaders to improve storm protection capabilities in our environment, and stay connected to this reform process.