cciaor flood insurance update
TRANSCRIPT
NATIONAL FLOOD
INSURANCE PROGRAMRyan Castle
CEO
Cape Cod & Islands Association of REALTORS® & MLS
How did we get to where we are?July 2012 – Biggert Waters (BW) passes
May 2013 – FEMA announces BW will be retroactive
June 2013 – NAR starts working on fix to flood insurance bill; NAR launches PAG on flood insurance
October 2013 – Rate increases start taking effect for Pre-FIRM properties
January 2014 – Senate passes a 4 year delay
February 2014 – House passes BW overhaul bill; Senate follows suit
March 2014 – President signs BW overhaul bill
May 1st, 2014 – Point of sale flood insurance increases stop and rates are able to be assumed again
October 1, 2014 – Refunds started to be distributed for those who paid too high of premiums; must be issued by end of calendar year
How many flood insurance policies on Cape Cod?
Barnstable 981 35%
Bourne 1,117 70%
Brewster 94 8%
Chatham 430 23%
Dennis 937 34%
Eastham 186 26%
Edgartown 415 34%
Falmouth 1,963 54%
Harwich 423 20%
Mashpee 510 22%
Nantucket 911 28%
Oak Bluffs 212 41%
Orleans 204 26%
Provincetown 576 30%
Sandwich 398 45%
Truro 199 38%
Wellfleet 184 38%
Yarmouth 1,233 55%
# w
flood
policy
% of
policies
subsidized
Buying a Pre-FIRM home/propertySec. 205-Sale/New Policy Trigger
Below full risk rateFor both primary & non-primary occupied
Original BWProperty moved to full risk rate when triggered by a property/new policy purchase – meaning at point of sale full risk rate was price
New lawRepeals Sec. 205-Sale/New Policy Trigger (including the sale of second home or business)
Returns to allowing the new owner to assume the old policy at the current rate (i.e. policy stays with property, not owner)
Annual Premium Increases for PRIMARY Pre-FIRM properties
FEMA will calculate Subsidized Rate the way they always have calculated it yearly.
Subsidized rate = (Annual NFIP Expenses – Revenue from actuarial policyholders)/#Subsidized Policies
From that determination, Subsidized Rates will have a minimum increase and a maximum increase.
Minimum increase stops when you reach full risk rate, so it’s important to know full risk rate.
Prior to Biggert Waters
Capped Subsidized Rate premium increases at 10% per rate class
no cap per property
No Minimum Increase
Biggert Waters
Capped Subsidized Rate premium increase at 20% per rate class
No cap per individual property
No minimum increase
Post Biggert Waters
Caps Subsidized Rate premiumincrease at 15% per rate class
18% cap per individual property
5% minimum increase
Average yearly increase prior to BW: 7%
Projected average yearly increase post BW: 11%
Policy Assessment: $25 assessment on all NFIP primary homes
Pre-FIRM SECOND HOMESEffective June 1, 2014, the NFIP will implement this provision by defining primary residence to be a building that will be lived in by the
insured or the insured’s spouse for more than 50 percent of the 365 days following the policy effective date.
Policy Assessment: $250 on the businesses and second homes in the NFIP
Pre-FIRM SECOND HOMESEffective June 1, 2014, the NFIP will implement this provision by defining primary residence to be a building that will be lived in by the
insured or the insured’s spouse for more than 50 percent of the 365 days following the policy effective date.
Policy Assessment: $250 on the businesses and second homes in the NFIP
Facebook.com/CharlestonRealtors
Grandfathered PropertiesSec. 207-Remapping Trigger
Grandfathered: Post-firm homes that were built to compliance at the time it was built but laws have changed since.
Original BW5 year phase out of grandfathered rates triggered by when new flood maps are adopted locally
Expected in coastal SC late 2014 to early 2015
New lawRepeals remapping and phase out trigger AND
Restores Grandfathered properties to how they were treated prior to BW
Stays in flood zone it was built in except if hitshome improvement clause (50% of value)
As flood zone rates increase rate will increase as always has happened
TAKEAWAYSNo more Point of Sale flood insurance premium hikes
Grandfathered rates will stay and not be phased out
Some properties will still have high flood insurance costs
Make sure you are using insurance agent that can give you information on flood insurance
All insurance agents will give you same quote as long as they are entering same information
ABOUT REEF:
• Over 28 Years in Business
• Over 1,500 Homes Built on Cape Cod
• Experienced, Dedicated Team
• BBB A+ Rating for 20+ Years
• Best of Houzz.com 2014
Matt Teague Jim Hagerty Chuck Tuttle Jessica
Smith
We Value Realtors!
Joe Thomson
A+
FEMA Flood Zone maps
• New maps for determining • Flood Insurance Rates
• Construction techniques required for
building on the property
• Significantly affects thousands of Cape Cod properties• 100 Year Flood Plain moved inland
• 3,000 properties in Dennis
• 1,000 properties in Harwich
• Issued in July 2013
• Lawsuits pending:• Plymouth County
• Town of Rockland
Flood Insurance
Rate Increases
Halted
FEMA Flood Zone maps
ELIMINATION OF POINT OF SALE
FLOOD INSURANCE RATE INCREASES
DOES NOT DELAY
ADOPTION OF NEW FLOOD ZONE MAPS
FEMA Flood Zone maps
Which home is FEMA Flood Zone compliant?
FEMA Flood Zone maps
Flood map designations:1. “V” or Velocity zone
• waterfront with wave action >3’
• 100 year flood plain
2. “Coastal AE” zone• near water, wave action of 1.5’ to 3’
• 100 year flood plain
3. “A / AE” zone• prone to flooding, wave action < 1.5’
• 100 year flood plain
4. “X” zone• 500 year flood plain,
construction techniques and insurance optional
FEMA Flood Zone maps
FEMA Flood Zone maps
Easy to see why FEMA requires structures
to be above the Flood Plain
FEMA Flood Zone maps
• Septic systems are not impacted:• Depends on water table, not flood plain
• New Construction & Renovations may require:• Engineering to mitigate wave action
• Construction on piers
• Mechanicals above flood plain
• Other Flood Plain compliance techniques
• Renovations and Additions fall under the “Substantial Improvement” regulations
FEMA Flood Zone maps
Substantial Improvement Regulations
“The 50% Rule”
• Items to be included
• All structural elements
• All interior finishing elements
• All utility and service equipment
• Cost to demolish storm-damaged building components
• Items to be excluded
• Plans and specifications
• Survey costs
• Permit fees
• Outside improvements
FEMA Flood Zone maps
Substantial Improvement Regulations
“The 50% Rule”• Example of renovation project
FEMA Flood Zone maps
Example of Flood Zone Impacts
“Hyannisport Home”• Current Flood Map
• Property in 500 year flood plain
• Low risk of flood, not subject to substantial improvement regulations
FEMA Flood Zone maps
Example of Flood Zone Impacts
“Hyannisport Home”• Proposed 2014 Flood Map
• Property in VE zone
• High risk with wave action, subject to substantial improvement regulations
FEMA Flood Zone maps
Flood Zone Construction
Riverfront Home in Flood Zone
• Elevated Mechanicals
• Flood Vents