Last summer, the Biggert-Waters Flood Insurance Reform Act of 2012 was signed into law. In addition to reauthorizing the National Flood Insurance Program (NFIP) through September 30, 2017, the bill brings substantive changes to the program, including several that alter the way premium rates are calculated.
Key provisions of the bill will:
• Increase the amount of flood insurance coverage for multi-family properties of five or more residences (previously limited to properties of four or less residences).
• Phase out subsidies for severe repetitive loss properties, second homes, business properties, homes substantially damaged or improved (i.e., greater than a percentage of the market value of the home), and homes sold to new owners.
• Allow insurance premium rates increases of 20 percent annually (previously capped at 10 percent); allow for deductibles; and require that premiums be calculated based upon “average historical loss year,” including catastrophic loss years.