Is Your Flood Insurance Premium About to Change?

Some flood insurance policyholders will soon receive letters announcing rate increases that will phase out or eliminate subsidized rates. Although most flood insurance policyholders are unaware of premium subsidies, the federal government has been subsidizing their premiums for as long as they have had the policy.

Insurance companies will send the letters to policyholders at least 60 days prior to the policy renewal date to announce rate changes effective October 1, 2013. The changes will not affect all policyholders. The changes will only affect certain pre-FIRM properties, which are older buildings constructed before the community joined the National Flood Insurance Program and adopted its first Flood Insurance Rate Map (FIRM). These include properties in most high-risk A and V zones, as well as undetermined-risk D zones.

The letters will explain that the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) requires the phase-out and removal of subsidized rates. Two types of rate changes will be announced:

  • A 25 percent rate increase will be applied at renewal for business and other non-residential properties, properties that have experienced severe or repeated losses, and non-primary residences (this increase began in January 2013).
  • A direct move to full-risk rates will be applied at renewal for a building purchased — or a newly purchased policy with an effective date—on or after July 6, 2012, the date the law was signed. Lapsed policies reinstated on or after October 4, 2012, also will move directly to full-risk rates. The policyholder will be asked to submit a renewal application with additional information, including an Elevation Certificate, so that the building can be elevation rated.

If you would like to learn more about flood insurance and ways to lessen the impact of the premium increase, please contact Tim Russell at 888.926.3564. Tim is happy to help.

The Russell Agency is a full service insurance agency located in Southport, Connecticut. We serve families and businesses in Fairfield, Westport and thoughout Connecticut.

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