Important Flood Insurance Update Information for Southwest Florida
Hurricane Katrina and Super Storm Sandy had devastating impacts on commercial and residential properties that effected hundreds of thousands of businesses and households. Both storms caused significant flood damage, exposing several deficiencies in the Federal Flood Program managed by FEMA. The public scrutiny lead to significant changes in certain local flood mapping, which lead to significant rate increases.
This lead to yet another review and when the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) was passed by Congress. The new HFIAA law calls for flood insurance rates and other charges be revised for new or existing policies beginning on 4/1/15. Listed below are the additional costs residents should anticipate.
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• Probably the most profound impact will be on homes not considered a Primary Residence. To be a primary residence, the home must be occupied a minimum of 51% of the year. Documentation will be required to prove this. Primary homes will see a new $25 surcharge on their renewal policies. Non-primary homes, even those in the preferred X zones will receive a $250 annual surcharge. Every existing flood policyholder will receive a letter prior to the renewal asking for the occupancy so that the correct surcharge is added.
• In addition to the surcharges outlined above most flood policies will see an overall increase capped at 15%. Add in the occupancy surcharge, a higher Reserve Fund Assessment, and new higher Policy Fees and this will result in a total 18% – 19.9% increase.
• Pre-Firm homes (built prior to ’74 within the City of Naples; ’79 Collier & Lee County) will see their premiums increase an additional 14% for Primary Homes and 24% for Non-Primary homes. This does not include any other surcharges, assessments, and fees that apply on a case by case basis. These increases impacting Pre-Firm homes will continue until the “full rate” is achieved.
• Another change impacting many is those homes that have recently been remapped and removed from the low hazard X zone and classified as high hazard A zone. After 4/1/15, these policyholders will receive, in addition to the new surcharges and overall premium increases, an annual increase of 15% – 18% until the “full rate” is achieved (same as above Pre-firm homes).
• Minimum flood deductibles will change from $1,000 to $1,250 for some policyholders. A new $10,000 flood deductible is available and will apply to both Building and Personal Property. Mortgage lenders may not accept this level of deductible so clients should take time to understand their mortgage lenders standards.