As a result of nationwide concerns regarding the rapidly increasing flood insurance rates, Congress prepared, and the President signed into law on March 21, 2014, the Homeowner Flood Insurance Affordability Act of 2014.
The intent of the Act is to mitigate and, in some cases, undo the major hikes in flood insurance rates for residents and business owners that had not been foreseen as a result of the passage of the Biggert Waters Act of 2012.
The Homeowner Flood Insurance Affordability Act of 2014 will do the following:
- Reinstates subsidized (lower-cost) flood insurance rates for newly purchased homes built before the community entered the National Flood Insurance Program (NFIP) and FEMA issued the community's Flood Insurance Rate Maps.
- Reinstates subsidized (lower-cost) flood insurance rates for new policies of homes built before the community entered the NFIP and FEMA issued the community's Flood Insurance Rate Maps.
- Reinstates grandfathering which allows properties to keep their previous and less expensive flood zone designation for flood insurance rating purposes, when the flood maps are revised to show an increased level in the flood hazard. Under the Biggert-Waters Act, the insurance rates were to increase over a five-year period for these properties until they reached their full actuarial risk rate.
- Lowers the maximum annual rate increase in the flood insurance rates from 20 percent per year to 15 percent for a class of properties and 18 percent for individual policies.
- Imposes a $25 surcharge on all flood insurance policies for primary residents and $250 for business properties and vacation homes to establish a reserve fund for future claims.
- Refunds policyholders for insurance premiums that were overpaid due to the Biggert-Waters Act.
- Requires the completion of a flood insurance affordability report within two years.