House to Vote on New Flood Insurance Legislation

GOP leaders finalized legislation last week that would repeal insurance premium hikes threatening people who own homes in federally designated flood zones. The U.S. House of Representatives is expected to vote on the bill this week.

Under the proposed legislation, individuals who purchased a home since the Biggert-Waters Flood Insurance Reform Act passed in 2012, and without prior knowledge of the resulting premium increases, would be refunded for the increase. Their premiums would also return to the amount the previous owner paid.

Biggert-Waters supporters have raised concerns that a delay or repeal of the 2012 reforms would prove to be detrimental to the National Flood Insurance Program. The rate hikes were intended to reform the financially troubled program by eliminating highly-subsidized premiums for frequently-flooded properties and expensive vacation homes. The 2012 reforms preserved subsidies for people whose main residence is located in a flood zone, but wouldn’t allow them to pass those subsidies along to buyers of their home. About 20 percent of the government flood insurance program’s policyholders received lower-rates for older homes built before communities joined the program.

The new legislation would bring relief to primary homeowners, who would see their rates rise only gradually. For second homes, commercial properties and properties with repeated flood losses, rates will continue to increase by 25 percent each year until reaching a level consistent with their real flooding risk. The bill would also allow primary homeowners to pass on government-subsidized premiums to people who buy their homes.

Just For Buyers Realty will continue to stay on top of any flood insurance changes. Have questions on how this latest legislation will affect you? Give us a call at 910-202-4813.

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