The Perfect Storm
Two years ago the Biggert-Waters Flood Insurance Reform Act was passed by Congress, which would allow premiums to rise to reflect the true risk of living in flood-prone areas. The idea was to keep the national flood insurance program solvent.
Then Hurricane Sandy came along in October of 2012 and through the entire northeast into chaos.
Oops! The new law would mean homeowners and businesses in coastal areas all over the country would see increases up to 10 times or more of their original insurance costs, making it unaffordable for most. Many people in the wake of Sandy would not be able to afford to rebuild under the new codes, much less pay the crazy flood insurance rates that would be required. (See our report on this from last July here.)
So now even the legislators who put Biggert-Waters through are opting out, and passing new bipartisan legislation. The Grimm-Waters bill (another not so great sounding name if you’re in a flood zone) would give refunds to people who have had large rate increases due to the sale or purchase of a home, and cap average annual premium increases at 15-18% and allow subsidies for rates based on current flood maps.
Now the Homeowner Flood Insurance Affordability Act (HB3370) moves on to the U.S. Senate, where it is expected to pass and then be signed by the President just in time for hurricane season.
For a summary of the bill, click here.