Flood Insurance Changes Affecting Coastal Alabama

When Congress passed the Biggert Waters Flood Insurance Reform Act of 2012, it was meant to stabilize the National Flood Insurance Program (NFIP). Instead, it has sent rates sky-rocketing for many business and homeowners, particularly along the Gulf Coast.

While the act requires the NFIP to raise rates to reflect true flood risk, it also phases out grandfathered rates for properties built to code at the time of construction but now considered out of compliance; phases out subsidies for non-primary (vacation) homes; and redraws flood-zone maps that will classify more properties at risk.

Since 1968, the NFIP has enabled property owners to purchase flood insurance from the government. Members of Congress are asking the Federal Emergency Management Agency (FEMA) to delay implementing parts of the law while they consider changes that will limit premium increases.

The three major challenges with NFIP under the Biggert Waters Act are:

  • Phase-out of grandfathering; many of the properties affected have never flooded;
  • Incomplete and inaccurate mapping; new maps outlining base flood elevations do not recognize anything other than 100-year levees or certain pump systems;
  • Questionable actuarial calculations; rate increases seem to have no correlation to property value or risk.

The potential impact to Coastal Alabama is that some properties could become uninsurable and unsellable. There are nearly 59,000 NFIP policies currently in force in Alabama.

CAP, along with other regional organizations, is closely monitoring this situation. For more information, click onto the following links or subscribe to our monthly newsletter, for updates.

Biggert Waters Flood Insurance Reform Act of 2012 (PDF)

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