We are going to have to watch this. Forgiving the NFIP debt, and Congress taking responsibility for disasters over a particular value, would level the field with tornadic or wildfire disasters. This is not being proposed. Raising coverage to $500,000, without any guarantee that a policyholder will be able to recover that value misleads the consumer.
As we have a rather vested interest in this, we will add this to the Economic Development Committee agenda.
The report notes that year over year, housing prices increased by 11% AND mortgage rates went up, pushing homes further out of reach for those in need of affordable housing. Complicating matters more, personal income over the same time period only grew by 0.4%.
Looking at another set of numbers, Consumer Prices increased about 2.4% year over year, with the cost of shelter increasing 3.5%. Clearly, exceeding the growth in personal income.
A not too rosy picture of what may be to come for homeowners in the flood zone.
The Dennis Planning Board is bringing a Zoning Amendment to Town Meeting to remove some of the red tape involved in bringing existing structures up to flood zone elevation standards. The goal of the zoning amendment is to make it easier for existing non-conforming structures to be lifted to, or above, base flood elevation. The proposal allows existing non-conforming structures to be lifted to place the first floor up to three feet above Base Flood Elevation without the need to go before the Board of Appeals. Lifting a house higher than three feet, or reconstructing a house to be larger than the existing home (except for an allowed utility/laundry closet) will still require a visit to the Board of Appeals.
The goal of the amendment is to make it easier and quicker for existing homes to elevated before we get hit with a big storm. Additionally, the hope is that, with this change, it will be a quicker recovery after a big storm.
Looking at the newest FEMA flood insurance rates based upon the exposure of homes to flood waters, there can be big annual savings in flood insurance for lifting existing structures. A house that is exposed to three feet of flooding can expect to pay up to $7,279+ in annual flood insurance costs. A house built right at Base Flood Elevation can expect to pay $1,529+ annually and a house lifted to three feet above Base Flood Elevation might only pay about $350+ in annual flood insurance costs. (These costs do not include FEMA surcharges which might add about $150 to each of these amounts annually).
This zoning amendment will allow someone exposed to flooding to save between $1,200 and $7,000 annually on flood insurance.
The new 2017 Flood Insurance Rates have been released. The following provides some ideas of what these costs might come to. Obviously, check with your insurer for accurate rates. There are many different tables that might apply. These are my best attempts to decipher the tables. These costs also do not include any of the surcharges.
Pre-FIRM (1978) Single Family-Primary Residence home in an A Zone, No Elevation Certificate (Basic Insurance $60,000 coverage/Full Insurance $250,000 coverage)
No basement: $594/$2,304
With basement: $630/$3,157
Pre-FIRM (1978) Single Family-Second Residence home in an A Zone, No Elevation Certificate (Basic Insurance $60,000 coverage/Full Insurance $250,000 coverage)
No Basement: $1,212/$4,537
With Basement: $1,302/$6,204
Post-FIRM (1978) Single Family-Primary Residence home in an A Zone, (Basic Insurance $60,000 coverage/Full Insurance $250,000 coverage) With Elevation Certificate in relation to lowest floor and Base Flood Elevation
+3 feet: $192/$350
+2 feet: $282/$453
+1 foot: $522/$769
0 feet: $1,212/$1,592
-1 foot: $3,156/$3,631
-2 feet: $4,506/$5,494
-3 feet: $5,550/$7,279
From FEMA transcript and link to their video.
Change continues to come to the National Flood Insurance Program this spring. Some of the changes result from the continued implementation of the Homeowner Flood Insurance Affordability Act of 2014 and the Biggert-Waters Flood Insurance Reform Act of 2012.
This video will review NFIP Program Changes discussed in Write-Your-Own bulletin w-16071.
You can download copies of this and other bulletins by going to nfipiservice.com. The April 1st Flood Insurance Manual is available for a free download at fema.gov.
So, let’s go ahead and get started.
Highlights of the program changes effective April 1, 2017 include the following:
Updated premium rates conforming to the premium rate caps established by Biggert-Waters and the Homeowner Flood Insurance Affordability Act;
Updated premium multiplier tables for policies rated under the Newly Mapped procedure; and
Clarifications for policy rating and loss adjustment for Pre-Flood Insurance Rate Map substantially improved properties.
One other item to single out from the bulletin is the next scheduled update to the Community Rating System Eligible Communities list. It is effective May 1st.
Let’s first review the impact of premium increases and surcharges.
Overall, premiums will increase from an estimated average of $827 per policy to $878, for an average increase of 6.3%. Now, these amounts do not include the Homeowner Flood Insurance Affordability Act surcharge or the Federal Policy Fee.
When those are included, the total amount billed the policyholder will increase from $953 to $1,005, for an average increase of just 5.4%.
Just as a reminder, the premium increases effective April 1st, comply with all the requirements of both Biggert-Waters and the Homeowner Flood Insurance Affordability Act.
Premium rates for four categories of Pre-FIRM subsidized policies must be increased 25% annually until they reach full-risk rates. Those categories consist of:
• Non-primary residential properties
• Business properties
• Severe Repetitive Loss properties, which includes cumulatively damaged properties, and;
• Substantially damaged or substantially improved properties;
Also, the average annual premium rate increases for all other risk classes are limited to 15% while the individual premium rate increase for any individual policy is simultaneously limited to 18%; and the average annual premium rate increase for all other Pre-FIRM subsidized policies not covered by the first categories mentioned must be at least 5%.
Now, there are some limited exceptions to the 18% cap on premium rate increases for individual policyholders. These include policies on the properties that are subject to 25% annual premium rate increases. These also include premium rate increases resulting from changes in the Community Rating System class, misratings, and increases in the amount of insurance purchased. The specific scenarios that constitute a misrating are described in the Flood Insurance Manual.
When premium rate increases are evaluated for compliance with these caps, the building and contents premium, the Increased Cost of Compliance premium, and the Reserve Fund Assessment are all included.
However, the probation surcharge, Federal Policy Fee, and Congressionally-mandated surcharge are not considered premium and, therefore, are not subject to the premium rate cap limitations. As a result, the increase in the total amount charged a policyholder may exceed 18 percent in some cases.
Finally, for policies issued on or after April 1, there will be no changes to the following:
• Deductible factors
• The Federal Policy Fee
• Reserve Fund Assessment percentage
• HFIAA Surcharge amount
• Probation Surcharge amount, and
• ICC premiums
More specific information about premium increases related to certain flood zones and rating methods can be found by reviewing Attachment A of bulletin w-16071.
Thank you for reviewing this video segment on premium increases and surcharges. For more April program changes information, please see the other video segments posted to this site.