Don't be Fooled: Flood Insurance Rates Rise 

April 1st 

Rate hikes and other changes to the National Flood Insurance Program (NFIP) go into effect on April Fool's Day. But the list is no joke.

Changes include:

• A Homeowner Flood Insurance Affordability Act (HFIAA)-mandated premium surcharge of $25 for policies covering primary residences and $250 for policies covering non-residential properties, non-primary residences, and entire multifamily buildings;
• Updated premium rates conforming to the HFIAA premium rate caps: Increases of up to 18% for individual premiums, and increases of up to 15% for average rate classes;
• Mandatory 25% premium increases for subsidized policies covering non-primary residences, severe repetitive loss properties, and substantially damaged and substantially improved structures until full-risk rates are achieved;
• New rate tables for substantially damaged and substantially improved structures;
• Increased Reserve Fund Assessments;
• New procedures for properties newly mapped into a Special Flood Hazard Area(replacing the Preferred Risk Policy (PRP) Eligibility Extension procedure);
• Revised deductibles amounts and new $10,000 deductible option for residential properties;
• New minimum deductibles for PRPs and Mortgage Portfolio Protection Program policies; and
• A requirement to identify legal address descriptions in the Transaction Record Reporting & Processing Plan.

For those with policies covering primary residences who qualify for the $25 surcharge, the insurer must validate primary resident eligibility to avoid being hit with the $250 policy increase. If you qualify, be sure to fill out the HFIAA Premium Surcharge Letter to Verify Primary Residence Form.

Congress authorized these new surcharges for all NFIP policyholders to offset the continuation of subsidized NFIP rates for properties built prior to the existence of flood insurance rate maps (FIRMs) and grandfathered properties that pay lower NFIP rates, including properties located in areas where NFIP FIRMs have been revised).

Under HFIAA, the annual surcharge fees will continue on all NFIP policies including full-risk rated policies until all pre-FIRM and grandfathered subsidies are eliminated.

For more information, please contact Program Manager for Environmental Policy Owen McDonough at 202-266-8662.