FEMA implements insurance rate relief

Earlier this month, the Federal Emergency Management Agency (FEMA) announced an early implementation of certain provisions of the Homeowner Flood Insurance Affordability Act of 2014.

FEMA, at the National Association of Realtors‘ (NAR) urging, implemented the rate relief seven months early, according to Austin Perez, NAR senior policy representative – environmental issues.

The guidance gives buyers of older properties premium rate reductions instead of jumping to “full cost” for flood insurance. Buyers will assume the seller’s October 2013 rate for a “pre-FIRM” property.

This rate relief was also extended to all homeowners who saw exorbitant rates after the Biggert-Waters Act took effect, according to Perez. “Anyone who paid more than the October 2013 rate will see rates roll back to that rate,” he said. “This ensures that everyone will see a gradual increase; no one will pay the full cost all at once.”

NAR believes many of the extremely high rates homeowners saw after Biggert-Waters were inaccurate because they required a complicated, dizzying set of calculations and judgments by insurance agents.  The bill will simplify the rates and provide a homeowner’s advocate to challenge them when they appear to be too high in the future.

“The Realtor® organizations have definitely been on top of this issue,” Perez said. “Now that FEMA has begun implementing these provisions, it should remove most of the guesswork from rate setting so most could see lower flood insurance costs as they become more accurate.”

Perez urged Realtors® to use caution when discussing specifics of flood insurance rates with clients. “Property specific questions should be directed to insurance agents,” he added. NAR has offered some guidance on speaking with clients.

NAR will continue working with FEMA and Congress to quickly issue these refunds to anyone overcharged for flood insurance under Biggert-Waters.