One of the joys of owning waterfront real estate is your proximity to the beauty and recreation made possible by the water itself. However, in a generally small portion of waterfront locations there is the potential for floods. Waterfront property owners in these locations have long been able to rely on flood insurance for peace of mind and for help when the worst happens. But last year the 2012 Biggert-Waters law went into effect, which left some homeowners reeling over flood insurance premium increases. Thankfully, Congress has crafted and passed the Homeowner Flood Insurance Affordability Act to help waterfront property owners by correcting the problems that the Biggert-Waters law created.
Why the Biggert-Waters Law Was Created
The National Flood Insurance Program is run by the Federal Emergency Management Agency, which oversees dozens of private insurance companies that offer flood insurance coverage to waterfront property owners. In the past, the income from premiums failed to cover the program’s costs during years in which widespread major flooding occurred. In fact, after the U.S. was hit by Hurricanes Katrina, Rita, and Wilma in 2005, FEMA had to temporarily stop making payments on legitimate claims due to lack of funds. The Biggert-Waters law set out to address the National Flood Insurance Program’s $24 billion debt by gradually phasing out flood insurance policy subsidies. But when the law was enacted, it became apparent that for many waterfront homeowners the effect was not gradual at all.
How the New Act Helps Waterfront Property Owners
The Homeowner Flood Insurance Affordability Act will implement the following:
- – Set a limit on annual flood insurance premium rate increases
- – Repeal the “property sales trigger” that allowed higher premiums to be set when property was sold, which Realtors feared was depressing the value of some waterfront real estate
- – Repeal the “new policy sales trigger,” which allowed higher premiums to be set if a waterfront property owner chose a different policy or went to a different insurance provider for coverage
- – Refund premiums to homeowners who overpaid when then the 2012 Biggert-Waters law went into effect
This new act will still address the concerns of the original Biggert-Waters law, but will do so in a way that is more manageable to those who live on the waterfront. The focus is on making this a gradual transition that affected homeowners can plan for, rather than an unexpectedly large bill that is immediately due.
What This Means for You
This new law, which is expected to be signed by the President when it reaches the White House, will still result in eliminating subsidies and addressing debt created by the National Flood Insurance Program. However, existing waterfront property owners in the Seattle area and those who are buying waterfront real estate will still benefit from the program as it is gradually phased out rather than being suddenly taken away. You’ll have peace of mind knowing that not only are you covered by flood insurance, if you are in an area where you even desire to have flood insurance, but you will also be better able to afford insurance in the future for your waterfront home.