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Flood rate changes are upon us - The Galveston County Daily News : Business Review

July 23, 2014

Flood rate changes are upon us

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Posted: Tuesday, November 5, 2013 12:00 am | Updated: 12:53 pm, Tue Nov 5, 2013.

The Jack Brown Insurance Agency opened its door in 1999 and services clients on Galveston Island and The Bay Area. Born on the Island, Jack and his daughter, Ashley, have close ties to Galveston County coastal regions and understand the difficulties homeowners face when looking for quality coverage. The Biggert’s Waters Flood Insurance Reform Act of 2012 is legislation our agency has been keeping up with, and we want everyone to be aware of its implications. As part of its annual rate changes, FEMA will be implementing provisions of the Biggert’s Waters Insurance Reform Act of 2012 (BW-12) this year. Key provisions of legislation will require the NFIP to raise rates to reflect true risk, making the program more financially stable and change how the Flood Insurance Rate Map updates impact policyholders. The new law eliminates some artificially low rates and discounts which are no longer sustainable. Actions such as buying or selling a property, or allowing a policy to lapse, can trigger rate changes. Owners of non-primary/secondary residences in Special Flood Hazard Areas (SFHA) will see a 25 percent increase annually until rates reflect true risk beginning January 2013. Owners of property which have experienced severe or repetitive flooding will see a 25 percent rate increase annually until rates reflect true risk beginning October 1, 2013. Owners of business properties in a special flood hazard area will see 25 percent rate increase annually until rates reflect true risk beginning October 1, 2013. Owners of primary residences in SFHAs will be able to keep their subsidized rates unless or until they sell the property, allow it to lapse, suffer severe or repeated flood losses or purchase a new policy. Grandfathered changes expected in 2014 call for a phase-out of discounts, including grandfathered rates, and a move to riskbased rates for most properties when the community adopts a new Flood Insurance Rate Map. So if you live in a community that adopts a new, updated Flood Insurance Rate Map (FIRM), discounts — including grandfathered rates — will be phased out. This will happen gradually, with new rates increasing by 20 percent per year for five years. Implementation is anticipated in 2014. Insureds will need an Elevation Certificate to determine their correct rate. Building or rebuilding higher than the new base flood elevation (BFE) will lower your risk and will reduce your premium. Consider adding vents to the foundation or using breakaway walls while talking about community wide mitigation steps. It is important to note that a small number of flood insurance policies protecting properties in very high risk coastal areas (VE Zones ) — where wave action combined with high water causes increased damage — will see significantly higher premiums. Our insurance agency can provide a detailed premium. Relevant information that will significantly impact the premium quoted include whether or not the property is located in a flood zone and the elevation of the lowest floor. It is important to work with insurance agents to see how policyholders may be able to reduce rates through elevating their buildings and choosing insurance levels and deductibles which provide proper protection.

It is important to note that not everyone will be affected by the new law. Only subsidized premiums for policies covering non-primary residences, businesses and structures with severe repeated flood losses will have premium increases of 25 percent per year until rates reflect the full risk. The 25 percent increases for certain Pre-Firm policies for Non-Primary residences was effective January 1, 2013 and the next increase is effective January 1,2014. Severe Repetitive Loss (SRL) properties and business properties will also feel effects of BW-12 changes A Pre-Firm subsidized policy that lapsed will lose eligibility for grandfathered rules under “continuous coverage” on or after October 1, 2013. A new application and an Elevation Certificate will be required, so do not let your policy lapse past the 30 day grace period. Renewals of policies receiving subsidized rates and covering a property purchased on or after July 6, 2012 are subject to full-risk rating on the first renewal effective on or after October 1, 2013. The preferred Risk Policy in the X Zone will increase an average of 1 percent due to Federal Policy Fee change. All this information and additional information can be reviewed online at sites such as www.fema.gov, www.floodsmart.gov and riskmap6.com. For more information, please contact Jack Brown Insurance anytime at 281-334-AUTO (2886). Ask Jack or Ashley for your Professional Insurance Review today. 

Jack Brown provides a variety of products including Life Insurance, Fixed Annuities, Property And Casualty (home, wind, flood ), Pension Plan Services, Auto and Umbrellas.