Coastal residents may soon have relief from worries over changes to the National Flood Insurance Program (NFIP) that would cause their insurance rates to skyrocket. Earlier this week, HR 3370 was sent to President Obama for his signature. The bill rectifies many changes to the program that was created by the Biggert-Waters Act of 2012.
We extend our sincere thanks to Congressman Bradley Byrne for his diligence in helping to guide this bill through the House of Representatives. Before he was sworn into office, Congressman Byrne approached us for input on this issue. He made a big impact as soon as he arrived in Washington, D.C. by helping to successfully move the Homeowner Flood Insurance Affordability Act through the House with a 306-91 vote.
The bill delays the implementation of parts of Biggert-Waters, which was initially passed to help stabilize NFIP. Instead, it drastically increased rates for many business and home owners, particularly along the Gulf Coast.
HR 3370 reinstates grandfathering of properties that were built to code at the time of construction and protects those structures from rate hikes due to new flood mapping. The grandfather clause stays with the property—not the policy—even after if it is sold or if a flood insurance policy lapses.
Among other changes, the bill also:
- Caps annual rate increases at 15%;
- Refunds policyholders who purchased affected homes after July 2012 and were charged higher rates;
- Permanently removes the policy sales trigger that allowed a purchaser to take advantage of phase-in rates; the new purchaser is treated the same as the current property owner;
- Allows for annual surcharges of $25 for primary homes and $250 for second homes and businesses until subsidized policies reach full risk rates;
- Funds the Affordability Study mandated by Biggert-Waters and mandates completion in two years;
- Returns the “substantial improvement threshold” (renovations and remodeling) to 50% of the structure’s fair market value; under Biggert-Waters, premium increases were triggered at 30%.