April 1, 2015 NFIP Changes

Effective April 1, 2015, the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) requires the following changes to all NFIP policies. The changes will affect the total amount a policyholder pays for a flood insurance policy, and will include implementation of an annual surcharge on all new and renewed policies, an increase in the Federal Policy Fee, an increase in the Reserve Fund Assessments, annual premium increases, and introduction to the new program – Newly Mapped into the Special Flood Hazard Areas (SFHA).

A new annual surcharge of $250 will be charged for all multifamily, non-residential and condominium buildings. This is a flat non-refundable fee applied to all policies based on occupancy type and is not associated with the flood zone in which the building is located or the construction date of the building.

The Federal Policy Fee will increase by $1 from $44 to $45 for all policies except the Preferred Risk Policies (PRP) which will remain $22. Residential Condo Building Association Policies (RCBAP) will increase based on the number of units per policy.

Preferred Risk Policies (PRPs) will start contributing to the Reserve Fund for the first time. The Reserve Fund Assessment applicable to Preferred Risk Policies (PRP) will be an amount equal to 10{b73b969d192d8eafaea0090998e86317c7e4c69160e33071b50feed6bdb2d318} of the premium. The Reserve Fund Assessment applicable to all other policies will increase from 5{b73b969d192d8eafaea0090998e86317c7e4c69160e33071b50feed6bdb2d318} to 15{b73b969d192d8eafaea0090998e86317c7e4c69160e33071b50feed6bdb2d318} of the premium.

NFIP premiums for all policy types will increase by an average of 9.9{b73b969d192d8eafaea0090998e86317c7e4c69160e33071b50feed6bdb2d318}, with premium increases ranging from 5{b73b969d192d8eafaea0090998e86317c7e4c69160e33071b50feed6bdb2d318} to 15{b73b969d192d8eafaea0090998e86317c7e4c69160e33071b50feed6bdb2d318} for most policies, and a cap for any individual policy of 18{b73b969d192d8eafaea0090998e86317c7e4c69160e33071b50feed6bdb2d318}. The total cost per flood policy will increase an average of 19.8{b73b969d192d8eafaea0090998e86317c7e4c69160e33071b50feed6bdb2d318}, which includes the premium increase plus the new Annual Surcharge and Federal Policy Fee. There are some exceptions to the annual premium increase that apply to subsidized programs such as Severe Repetitive Loss (SRL), Pre-FIRM and Non-Primary Residence, which may increase by a greater percentage.

A new procedure for properties newly mapped into the Special Flood Hazard Area (SFHA) offers a cost-saving flood insurance option for property owners whose buildings were newly mapped into an SFHA. The premiums will be identical to a Preferred Risk Policy (PRP), which means you will pay lower premiums than the SFHA premiums for the first year for eligible residential and non-residential buildings, before adding the Reserve Fund Assessment (RFA) and Federal Policy Fee (FPF).

More information can be found in FEMA WYO Bulletin (W-14053).

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