So we are “drowning” in flood changes……..A Stop Gap measure was approved, while we wait forthe vote on a 4 year overall delay in implementation.

On Jan. 16, 2014, Congress passed a spending bill that prohibits FEMA from implementing future premium increases on “grandfathered properties” for nine months. BUT, it does not limit premium increases triggered by the sale of a property, which FEMA implemented Oct. 1, 2013. (“Grandfathered” property owners are allowed to keep the lower rate from older maps when new maps are issued.)

On Jan. 27, 2014, the Senate is scheduled to vote on the Homeowner Flood Insurance Affordability Act (S. 1926) that calls a 4-year timeout on increases both for the property buyers (including buyers of a second home or business) and the owners of grandfathered properties.  The bill also establishes a flood insurance advocate within FEMA to investigate rate increases and assist property owners with multiple or miscalculated rate quotes.  This is a make-or-break moment for the bill in its current form.  It will take 60 votes to move forward.

The Biggert-Waters Act (BW-12) has some additional revisions that are effective June 1, 2014.  These changes involve homes that are NOT primary residences so Berkshire multifamily homes may be impacted, as well as second homeowners.  As it stands now, the following changes have been enacted.  

• The limit of coverage available for Building Coverage for 5 or more family dwellings has been increased.  The previous coverage limit was $250,000…..as of 6/1/14, it will increase to $500,000.  This is great news if your buyer actually WANTS more coverage, but could be bad news otherwise, as the lenders may now ask for coverage up to that new maximum limit.
• Some changes were also made in regards to the occupancy of the home…primary vs. secondary.  The definition of primary home has been revised to: “A building that will be lived in by the insured or the insured’s spouse for more than 50 percent of the 365 days following the policy effective date.”  The law now requires a signed verification statement as well as proof of primary residence.  Please note thought that for replacement cost coverage on claim settlements, the dwelling must be the insured’s “Principal Residence” and the insured or their spouse must live in the dwelling 80% of the 365 days preceding the loss.

At least 90 days prior to expiration, homeowners will receive a Notification Letter with the revised definition and documentation requirements. Failure to provide acceptable documentation within 30 days of the date of the Notification Letter, the policy will be renewed as a non-primary residence with the new 25% higher phased-in BW-12 premium.  Documentation must show proof of primary residence, such as:

– Driver’s license
– Automobile registration
– Proof of insurance for a vehicle
– Voter’s registration
– Documents showing where children attend school: or
– Homestead Tax Credit form for primary residence