Seven Things to Know About the April 2015 Flood Insurance Changes…with Premium Examples

1. Flood policies are still assumable/transferable. The only policies that I know of that are not assumable/transferable are serviced by USAA.

2. Pre-firm rates are still available. The rates are just going away at an average of 15% rate increases annually for primary dwelling policies until they reach the “full risk rate”. The actual rate increase can be anywhere from 5-18% on an individual policy.

3. Pre-firm Non-primary and non-residential policies will see a 25% rate increase annually until they reach the “full risk rate”.
   • What is the Full Risk Rate? Full Risk Rate is only known by getting an elevation certificate completed and this is strongly recommended on every pre-firm property one is considering to purchase to fully understand their future potential cost for flood insurance.

4. ALL policies will receive a NEW surcharge. $25 for primary properties and $250 for non-primary, rentals, non-residential properties. A property is considered primary if the owner will live in the property 51% or more over the next 365 days…and FEMA will confirm this

5. ALL policies will receive a NEW 15% reserve fund fee (NOTE: fee and surcharge are not a part of the rate increase)

6. Photos are required for all assumed/transferred policies. This is a NEW rule and could cause issues if there is a difference with the current policy and what the photos show. I.E. Lower level is enclosed into a livable space or addition is added that changes the foundation. It is unknown how impactful this new rule will actually be.

7. There is a NEW $10,000 deductible option. This will save approximately 15% when moving from a $5,000 deductible. Always get lender approval prior to making this move.

To learn more about the April 2015 changes, click here.

Examples of how a policy might be affected…

PLEASE NOTE:

• Every property can be different and these are just examples of how a specific property might be affected.

• Remember that rate increases for pre-firm policies will go up by an average of 15% annually if a primary property and 25% if non-primary so this is not a 1 time increase.

• An elevation certificate might help a pre-firm property with their rates but not always.

Property buyers need to understand what it is they are buying and what their true risk could be down the road…

We are here to help.

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