Homeowners in coastal and flood-prone areas may receive much needed financial relief after the Senate voted 67-32 last week to pass the Homeowner Flood Insurance Affordability Act. Due to large insurance payouts made after recent hurricanes Katrina, Isaac and Sandy, the National Flood Insurance Program, the government-run flood insurance program, has suffered serious fiscal problems and incurred upwards of $24 billion dollars in debt. The step taken by the Senate, if signed into law, would delay certain provisions of the Biggert-Waters Flood Insurance Reform Act of 2012, which resulted in elevated insurance rates for many properties that had been previously “grandfathered” and premium rate increases for recently purchased homes. Many homeowners who are required to purchase flood insurance as a condition of their mortgage fear that the required flood insurance will be unaffordable once insurance premiums increase ten-fold or more.
The Senate’s bill would delay the insurance premium increases for up to four years and preserve federal subsidies for older homes built before the newer risk maps were developed for the setting of premiums. In addition, the bill would modify sections of the Biggert-Waters Flood Insurance Reform Act by requiring the Federal Emergency Management Agency (FEMA) to conduct an affordability study and report within two years of the date of enactment, removing a $750,000 cap on the affordability study, requiring reimbursement to homeowners for successful map appeals, certifying the accuracy of flood-risk maps, submitting a homeowner affordability framework based on its findings, and designating a Flood Insurance Advocate to advocate for the fair treatment of policyholders and property owners, all of which will take several years. With the Senate’s approval, the bill will now be considered by the House of Representatives.
Questions? Contact Lee Epstein at Weisbrod Matteis & Copley PLLC.