U.S. House Approves Flood Insurance Overhaul Bill

The U.S. House of Representatives voted last night to approve a bill that would overhaul many parts of the Biggert Waters Act of 2012. The Biggert Waters Act's intention was to fix the flood insurance program, but enactment of the bill was met with much criticism as many policyholders were faced with large premium increases.

Key aspects of the  House bill:

  • Restores the grandfathering of properties, including  when they are resold by the current owner. The measure also rolls back full-risk  rates increases for properties that have been resold since the law was passed in mid-2012.
  • Caps the annual increase at 18% for any individual policy per year, and sets a minimum annual increase to average 5% across a      property class.
  • Clarifies that rates for properties newly mapped into special flood hazard areas will get the grandfathered rate for one policy      year and then see the standard rate increases.
  • Mandates that the FEMA administrator must try to minimize the number of insurance policies that annually cost more than one percent of the value of the property being insured.
  • To help pay for the changes, the bill calls for charging every flood policy a surcharge; $25  on residential properties, and of $250 on businesses and second homes. Revenue from the assessments would be placed in the NFIP reserve fund.
  • Allows for premiums to be paid in monthly installments.
  • Eliminates the mandatory requirement  that policyholders buy coverage for detached buildings such as sheds and      garages.
  • Adds requirements to mapping procedures, including that  FEMA must notify each affected community of a new model that will impact      their rate and provide a 30 day period for such communities to consult with FEMA regarding the appropriateness of the model.
  • FEMA will have 18 months rather than two years to  complete the long-awaited affordability study.
  • The bill does not repeal the Biggert-Waters provision mandating that those with a second home in a flood zone and those with      properties that have repeatedly been flooded will continue to have their  premiums increase until they reach actuarial rates.

The Biggert Waters premium increases for secondary homes and severe repetitive loss homes are not affected by the House bill. The bill now goes back to the Senate for approval. 

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U.S. House to Vote on Flood Insurance Bill