HR 3370 Homeowner Flood Insurance Affordability Act of 2014 – Newly Mapped Areas

Now, this section is a critical one given the changes taking place this year. IT IS CRITICAL THAT ANYONE AFFECTED BY THESE MAPS ACQUIRE FLOOD INSURANCE BEFORE JULY 16, 2014.

If you are in an area being remapped into the flood zone by the Flood Zone Insurance Rate Maps (FIRM) that go into effect in July 2014, you are eligible for a Preferred Risk Policy for the first year of insurance. When I checked the FEMA site earlier this week, you could get a Preferred Risk Policy with a value of $250,000 for $460. After the first year of coverage the rate would be subject to the above cited maximum annual increase of 18%, or $82 in the first increase year.

In the past, to get this Preferred Risk Policy, you had to acquire the flood insurance prior to the new maps going into effect. Thus the admonition above regarding applying for insurance before the effective date of these maps.


5 thoughts on “HR 3370 Homeowner Flood Insurance Affordability Act of 2014 – Newly Mapped Areas

  1. Rich

    Love your detailed discussion of our bill, however this section of your analysis is not accurate. This provision was written to be the final safe guard for those who do not buy before the map goes active and can no longer grandfather. It requires FEMA to give such newly mapped owners in the SFHA a preferred risk policy with a preferred rate then phase them up at 5%-15% on average with the 18% individual policy cap.

  2. Daniel Fortier Post author

    Thanks for the correction, the admonition that homeowners here have been given, since back in 2009 when the maps first started the update process was to warn them they needed to buy before the new maps went into effect. So, to be absolutely clear, you are saying a homeowner in a newly mapped area, could wait until after the July 16th effective date and still buy a Preferred Risk Policy at the lower rates, and then phase in to the higher rates after the one year rate freeze period. I will update the post accordingly, but just confirm I am reading your comments correctly for me.

  3. Daniel Fortier Post author

    Again, thanks for the response, as I think about this some more, it does clarify the issue surrounding lapsed policies and the ability to acquire a Preferred Risk Policy Rate when returning to the flood insurance program. So, the correct interpretation, at least until 2017 when NFIP has to be reauthorized again, is that a house that met construction standards at the time it was built, is eligible for a PRP rate regardless of when they acquire the insurance. Am I right to assume that this would extend to homes that exist in existing flood zones that met standards prior to the last update, 1993 here in Dennis, if they decide to acquire flood insurance now? It would seem that, when you look at the provision for lapsed policies, that this would be the case.

    I am guessing, from the “our bill” comment you are on Congressman Grimm’s staff, please convey our thanks to him for his hard work on getting this into place. After the President signs this (today hopefully) we will need Administrator Fugate to act quickly. I am already hearing the “it will take some time” response as to how quickly rates could be rolled back, which just increases the horror stories of home sales falling through due to flood insurance rate shock.

  4. Rich

    Hi Daniel,
    I do work for Mr. Grimm and will pass your thoughts along to him.
    As far as buying before or after a new map goes active I would still advise buying before and grandfathering rather than waiting for the new map to go into effect and taking the preferred risk option with the phase up. The grandfathering option provides a lot more certainty and is what we are pushing in our district (NYC is going through its first remapping since the FIRM was put in place in 1983.)
    As far as lapsed polices it matters whether we are talking pre-FIRM or post-FIRM. A pre-FIRM lapse under the way we treat lapse in amending Biggert-Waters(BW12)is lapse do not matter to restore pre-FIRM subsidization so long as the lapse was caused because the owner was no loner required to carry (mortgage paid off etc..) (however FEMA has said back channel they have NO idea why a lapse occurs and therefore will have to treat all lapses as qualifying for relief, at least for the time being). For a post-FIRM you have two grandfather options a) buy before new map b) prove the building was built to the FIRM in place at its time of construction.
    I hope this helps. I will check back here and if you have any more questions I’ll be more than happy to answer.

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