Flood Insurance 2
The changes that have been implemented in the revised flood insurance laws are designed to make the National Flood Insurance Program more financially sound and fiscally viable. What will happen this year is that properties that are currently receiving rate subsidies will be receiving revised quotes and a Reserve Fund charge will be assessed. The insurance premiums are going to more accurately represent the risk involved to insure the structure.
The good news is that more than 80% of policy holders (and there are 5.6 million policies) are not subsidized. The remaining 20% that are subsidized will see larger premium increases of up to 25% annually until the premium represents the full risk amount due for the property. Those subsidized policy holders who own non-primary residences, businesses and “severe repetitive loss” properties will immediately see the 25% increase.
New purchases, expired policies and new policies will not be subsidized any more by the government.
Most policyholders will not see large increases and those who are not subsidized will see a new charge to assist with the reserve assessment as required by the bill. All policies are initially going to be subject to a 5% assessment unless they are considered to be Preferred Risk Policies. Those Preferred Risk Policies will be assessed in the future but that has yet to be determined.
The policy holders who are affected the most are the ones that are located within Special Flood Hazard Areas and whose properties have not been elevated. These are likely to be properties that were built in the 1970’s and 1980’s. Those have likely been the recipients of subsidized rates which are already being phased out for non-primary residences and in the fall, businesses will be phased out of subsidies. Other affected property owners who are going to be phased out in the fall are those properties with severe repetitive loss and those properties whose flood related damage claim payments are in excess of the fair market value of the property.
If an owner requires a new policy, the policy has lapsed or the property has been sold, the full risk rate will be charged to the new owner upon the sale/purchase of the property. A full risk rate is the premium amount that accurately gauges the risk assumed by the insurer and the expenses associated with administering the policy; covering all possible flood issues as well as the rare catastrophe such as left behind by Hurricanes Katrina or Sandy.
naples florida homes for sale, naples fl real estate, naples florida real estate for sale
