Home > Property & Casualty > Flood insurance changes to note as Hurricane Joaquin hits the East Coast

Flood insurance changes to note as Hurricane Joaquin hits the East Coast

flood_businessHurricane season began back on June 1st, but people often forget that it extends until November 30th. The summer along the East Coast was very mild in terms of the number and intensity of storms, but the emergence of Category 1 Hurricane Joaquin has disrupted this lull with its torrential rain and flooding. Ninety percent of all natural disasters include flooding, which highlights the importance of possessing flood insurance. Bear in mind that everybody is in a flood zone, but some areas are at greater risk than others. Even if you do not live or own a business on the east coast and are far away from Joaquin’s path, all 50 states have been hit by floods or flash flooding in the past five years.

Specifically for residents and business owners in Boston, FEMA issued a letter to the city on July 9 of this year stating that they have resolved Boston’s appeal of the 2013 Preliminary Flood Insurance Rate Maps (FIRMs) based upon the data and mapping information provided by the city. The Revised Preliminary FIRMs are available on FEMA’s website. To find out if your property will be affected by remapping, find your panel number and then search the Preliminary Flood Hazard Map page for your panel number.

In addition, new changes to the National Flood Insurance Program (NFIP) took effect on April 1, 2015 due to the $28 billion debt they are facing. The changes include increased premiums, fees to policyholders, and surcharges in order for the program to raise reserve funds. The NFIP is no longer able to make flood insurance available at subsidized rates that do not reflect the true risk of flooding due to the costs associated with recent major storms.

Here are a few other important changes to the program:

  • There is a $250 surcharge for non-primary homeowners for new and renewing policies. Non-primary residences are defined as living at the property for less than 50 percent of the time.
  • Depending on the location and size of the property, annual premiums could spike. Policyholders are also faced with an annual increase in cost of approximately 10 percent over the next five years due to added fees and surcharges. However, premiums cannot increase over 25 percent for secondary residences or other properties.
  • If you buy a policy before a new flood map’s effective date, you can secure a rate at the previous zone level. While this may delay rate increases, it will not prevent them outright.
  • Grandfathered rates are to be phased out in 2016.

About the Author

Mary Broderick_jpgMary Broderick is an Area Senior Vice President and the leader of Gallagher WGA’s Property Practice. Ms. Broderick is responsible for the design and implementation of complex property insurance programs for Gallagher WGA’s corporate clients’ and has many years of experience working with complicated Business Interruption (BI) and Contingent Business Interruption (CBI) issues.

617.204.6709 | Mary_Broderick@ajg.com | Connect with Mary on LinkedIn
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