Important Flood Insurance Changes 

According to OCAR Affiliate Ryan Ramirez, flood insurance is changing and changing in a big way. 

REALTORS® are advised when showing or listing new property to order a flood determination report from their preferred lender or insurance agent to find out what flood insurance zone a property lies in so they can ascertain all costs associated with the transaction before entering into escrow.   

Home owners must pay upfront to obtain flood insurance and requisite certificate says Aaron Rosen, another OCAR Affiliate member. In general, Rosen explains that if it’s an FHA-insured mortgage or government loan, the FEMA flood insurance policy is what is needed. Private insurance will not be accepted.

The Biggert-Waters Flood Insurance Reform Act of 2012 was passed by Congress and signed by the president in 2012. The changes of this act were designed to make the National Flood Insurance Program (NFIP) more financially stable. 

As a result of the passing of this act, homeowners and business owners will see a substantial rate increase across, particularly in high risk zones such as flood zone A & B. In addition to the rate increase, homes in flood zone A & B built before 1975 will be required to purchase an elevation certificate before binding coverage. 

There are a number of additional changes and provisions that have been implemented as well:

April 2015 changes to the National Flood Insurance Program (NFIP) are results of the Homeowner Flood Insurance Affordability Act (HFIAA) and the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters).

1. Implementation of the first annual rate change that sets rates using rate increase limitations set by HFIAA, for individual premiums and rate classes: 

2. Increasing the Reserve Fund assessments required by Biggert-Waters 

3. Implementation of the annual surcharges required by HFIAA 

This congress-mandated surcharge, the probation surcharge, and the Federal Policy Fee (FPF) are not considered premiums and, therefore, are not subject to the premium rate increase limitations. 

4. Guidance on substantially damaged and substantially improved structures and additional rating guidance on Pre-Flood Insurance Rate Map (FIRM) structures 

5. Implementation of a new procedure for Properties Newly Mapped into the Special Flood Hazard Area and existing Preferred Risk Policy Eligibility Extension (PRP EE) policies 

6. Federal Policy Fee (FPF): 

RCBAP (Residential Condominium Building Association Policies): 

7. New deductible options: 

Increased optional deductible of $10,000 for residential properties (created to help reduce premiums as a result of HFIAA) 

New minimum deductibles for PRP and MPPP policies will be $1,000 for both building and contents if the building coverage is less than or equal to $100,000 and $1,250 if building coverage is over $100,000, regardless of the insured building’s construction date compared to the initial FIRM date. PRP and MPPP contents-only policies will have a $1,000 minimum deductible 


Click here to read a detailed summary of April 1, 2015 changes. For specific questions about coverage, it may be best to contact your insurance agent. 

FEMA has put together a series of short videos to help explain these changes, which may be viewed here.