professionals who spoke to a group of local Realtors recently on the
National Flood Insurance Program (NFIP) said the first thing to understand is
that it is a federally regulated program.
Bob Haskins of Selective Flood Insurance and Keith Taege, vice-president of the
Insurance Agency Connection at the Van Dyk Group, conducted a seminar on the NFIP
hosted by the Ocean County Board of Realtors at the Clarion Inn in Toms River.
comes to policies under the NFIP there is no such thing as shopping around for
rates,” said Haskins
The NFIP sets the rates and guidelines, he said.
The program is also meant to people “get back on their feet,” not fully replace their loss, especially if a home is not the owner’s primary residence, Haskins said.
people may get different quotes from different companies is often because of
how the documentation, especially the elevation certificate, is interpreted,
“No two homes are alike even if next door to each other, and as little as a half inch in the grade can make all the difference,” he said.
The pair went
over many other aspects of the NFIP including premium increases, preferred risk
insurance, FEMA’s (Federal Emergency Management Agency) flood insurance rate maps
(FIRMs) and recent changes made by the federal Home Flood Insurance Act of 2014.
The act rolled back many of the controversial changes put in place by the Biggert-Waters Act of 2012 that went into effect last October.
“The new act has reinstated grandfathering of existing properties, which is huge,” said Taege.
Under Biggert-Waters property owners mapped into higher elevations would have had to either raise their structure or have higher rates phased in over five years.
Those properties, known as pre-FIRMs, owners’ rates “skyrocketed” when new preliminary maps were released last year placing many of them in zones with higher elevations, said Taege.
Now those property owners will continue to pay a premium based on the map that was in effect when they purchased their policy, he said.
can mean the difference of hundreds, if not thousands, of dollars in premiums
for these pre-FIRM owners, said Haskins.
In addition, FEMA is now required to refund policyholders for overpaid premiums on polices that were renewed or sold when rates based on the new maps went into effect, said Taege.
Other important changes of the Homeowner Flood Insurance Affordability Act of 2014 they touched on were:
• It creates
a firewall on annual rate increases – Prevents FEMA from raising the average
rates for a class of properties above 15 percent and from raising rates on individual
policies above 18 percent per year for virtually all properties.
“On average we’ve only seen increases in the 10% range, but before the rates could have gone up as much as 25% a year” said Taege.
the provision in Biggert-Waters that required homebuyers to pay the full-risk
rate for pre-FIRM properties at the time of purchase.
This provision caused property values to steeply decline and often made many homes unsellable, said Haskins. Now homebuyers will receive the same treatment as the home seller, he added.
•Repeals the provision in Biggert that required pre-FIRM property owners to pay the full-risk rate if they voluntarily purchase a new policy. Property owners can now purchase a new policy under pre-FIRM conditions.
Haskin also said that NFIP has a “preferred rate” program for near by properties that are not in designated flood zones, but that could be impacted.
It's possible to lower rates by choosing to take a higher deductible or purchasing a policy for coverage that is less than the maximum amount allowed, Taege said.
The NFIP currently allows for coverage up to $250,000 for a single family structure and $100,000 for contents. For “non-residential” or commercial properties the maximum amount of coverage is $500,000 for both structure and contents.The pair also stressed the importance of the proper installation of flood vents in properties with raised foundations or enclosures.