President Obama Will Sign Flood Insurance Relief Bill

By Andrew Taylor | March 16, 2014
Flood Insurance

  • March 17, 2014 at 1:25 pm
    JR Insurance Guy says:
    Hot debate. What do you think?
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    One of the objective of the Biggert-Waters Act was to discourage people from living in flood prone areas. The point was to price them out of the policy by charging the correct premium for the risk. Obviously people were not going to want to pay that. Most of our clients were looking to move away from their shore residence. That’s not the case anymore.

    We’re right back to square one.

    • March 17, 2014 at 2:38 pm
      KR says:
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      The comments are a bit short-sighted on this. I do not live on a shore. I live in the midwest. I creek flows through the town. A creek, not a river, not the ocean. The home is over 100 years old and has NEVER flooded. If the Biggert Waters had remained, mandatory flood insurance would have increased for a new policy to $5000 a year on a 140k home. That’s doubling a mortgage payment…not doable for most. Not to mention the basic homeowner, BW would have paralyzed the economy of the small town as no one could purchase a new business with such rates. Not everyone affected by flood insurance has chosen to reside on a coast.

    • March 17, 2014 at 7:24 pm
      Clemuel says:
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      What makes it the government’s job to determine where I live? The require me to pay a tax they call insurance? How about getting government out of my pocket and my home and letting me assume my risk for my home and my family?

      • March 18, 2014 at 7:51 am
        Ron says:
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        Clemuel,

        It is not the government that forces you to have insurance on your home, it is your mortgage company.

        • March 18, 2014 at 3:05 pm
          Scott Fraser says:
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          Actually it is the government. During the early 1970s, Congress passed a law saying if you needed a mortgage and got one from a federally backed lender – and most are – then you’re required to maintain flood insurance.

          The lender will get a significant fine if it fails to ensure flood coverage remains in effect.

          • March 19, 2014 at 6:52 am
            Will Mays says:
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            Correct, unfortunately.

          • March 19, 2014 at 10:38 am
            Ron says:
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            Do you think it is OK for a mortgage company to require homeowner’s insurance? I see no difference if a private mortgage compay wants to protect their asset, why shouldn’t the government be allowed to do the same? They are guaranteeing the mortgage afterall.

            if you do not like being forced to carry homeowners/flood when you have a mortgage, do not get a mortgage. It is part of the deal.

          • March 19, 2014 at 11:22 am
            Libby says:
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            True, but shouldn’t the bank then bear the expense of protecting their investment and not the mortgagee? If I have a mortgage of $150,000 on a $200,000 property, I’ll insure $50k and the bank insure $100k, not including my contents.

          • March 19, 2014 at 2:22 pm
            KY jw says:
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            So, the feds require the mortgage company to make sure there is flood insurance. Ok, that almost becomes a difference of semantics: gov’t requires mortgage co; mortgage co requires borrower.

    • March 19, 2014 at 6:51 am
      Will Mays says:
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      I could not agree more! One of the comments by yet another oblivious politician included “through no fault of their own.” These folks bought or built in a flood zone. Millions of Americans will continue to subsidize this through no fault of our own!

  • March 17, 2014 at 1:45 pm
    bob says:
    Hot debate. What do you think?
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    right on, JR. haven’t accomplished a thing as far as making the flood program charge proper rates.
    privatize it and get it out of the hands of the pork barrel politicians.

    • March 18, 2014 at 7:53 am
      Ron says:
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      bob,

      I agree with you 100%

  • March 17, 2014 at 1:58 pm
    Crane says:
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    This clearly proves that congress is the opposite of progress. We could have saved billions of tax dollars between flood and crop insurance. They opted to act on neither one. Time to vote all of them out and start over.

  • March 17, 2014 at 2:34 pm
    william Clark says:
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    Does anyone know if this just affects homeowners or if it revises the changes for commercial properties as well?

    • March 20, 2014 at 9:48 am
      Scott Fraser says:
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      H. 3370 which is now headed to the President for signature, doesn’t offer relief for commercial property owners.

      • March 20, 2014 at 10:31 am
        Libby says:
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        Interesting…

  • March 17, 2014 at 7:21 pm
    Clemuel says:
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    Hidden due to low comment rating. Click here to see.

    • March 18, 2014 at 10:54 am
      Libby says:
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      The government does not force you to buy flood insurance. Your mortgage company does.

      • March 18, 2014 at 11:41 pm
        Pattie says:
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        Sorry Libby but your comment above is not true. Your mortgage lender is required under the flood laws to make sure that if you are in a flood zone, you must have flood insurance. If Obama does not sign by 7/5, the goverment will also require you to escrow your flood insurance regardless of how long you have been paying flood insurance on your own. The OCC heavily fines mortgage lenders if they are audited and you do not have flood insurance. Since financial institutions are regulated by the government, the government can make them enforce whatever our elected official dream up. Biggert-Waters was full of requirements that harm consumers, thankfully Grimm had enough common sense to push to re-write BW-12.

        • April 9, 2014 at 5:26 pm
          williemjm says:
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          Patty,
          Had a call from a lender about the escrow requirements of a flood policy after July 2014, but I honestly wasn’t aware of them till today. We are a small community and do not write very many flood policies at all so it is difficult to stay on top of all the changes.
          Where would I go to find the requirements. I found an article that said the requirements have been placed on hold until 2016. Do you know if that is also correct.
          Want to be informed for my insureds and their lenders.
          Thank you

          • April 10, 2014 at 12:58 pm
            Scott Fraser says:
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            A few days ago, FEMA published an overview of the BW-12 fix signed into law a few weeks ago.

            Under the section entitled “Other Provisions” it reads:

            “The law mandates that FEMA develop an installment plan of non-escrowed flood insurance premiums, which will require changes to regulations and the Standard Flood Insurance Policy contract.”

            http://www.fema.gov/media-library/assets/documents/93074

    • March 18, 2014 at 12:10 pm
      KY jw says:
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      If you own your property without a mortgage, you have the option to skip flood insurance. It’s not the government’s requirement. It is the government’s program, though.

    • March 18, 2014 at 6:13 pm
      Don't Call Me Shirley says:
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      Actually, Clemuel, the NFIP and FEMA are the socializing factors. The Biggert-Waters bill would have made it less socialistic. I’m not saying I agree with everything about B-W, but flood insurance is being subsidized for the worst risks by the better risks.

      By signing this new bill, “Obummer” is being more socialist. I wonder how many conservatives will scream “socialism” over this. Probably very few, since many of them will benefit from this form of socialism. It’s only wrong if it doesn’t benefit the rich.

  • March 18, 2014 at 11:32 am
    Curtis says:
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    Right the mortgage company requires it if you have a mortgage. But if you are buying a home in a flood zone the American Tax payers should not be paying to protect your home from flooding. “it your choice to buy a home on a flood plan not mine”.. so you pay it yourself.. The government needs to stop paying for peoples choices!

    • March 18, 2014 at 1:52 pm
      Libby says:
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      Is your home in a flood plane? You should check. You’d be surprised how many people’s homes are that don’t know it. Not to mention, they keep changing the flood maps. There are many people not anywhere near a body of water that get flooded every year, from run-off, excessive rain or sewer back-up.

      Don’t think it’s just coastal properties that are flooded. It’s not.

      • March 18, 2014 at 4:37 pm
        Amy says:
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        This is very true, Libby. Also, as someone affected by this, those changing flood maps are a huge part of homeowners’ problems. My home was not in a flood zone when we purchased it, but several years later, the maps were changed and now we are, even though our neighborhood has never even come remotely close to flooding (and never will unless some global catastrophe occurs that will affect everyone, not just the people in my neighborhood). We were grandfathered in, so our rates aren’t too bad, but as things are now it will be difficult to sell our home because prospective buyers can’t afford the exorbitant flood insurance costs they would have to pay. Likewise, we can’t purchase another home in town (one that’s also never flooded) because darn near the entire town is supposedly in a flood zone and WE can’t afford the ridiculously high rates.

        For the great majority of homeowners in my town (again, most of whom have NEVER made a flood insurance claim and never will) the signing of this bill is great news. Perhaps an alternative would be to revert the flood maps back to the more realistic zones they used to designate.

      • March 19, 2014 at 12:40 pm
        Maria says:
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        I live in a home for the past 50 plus years. Always in a zone “X”, which is the best zone to be in. Never once a drop of water. Home is a mile and a half away from shore and no bodies of water near it as well. Sandy comes and I get 7 ft of ocean water in my basement. Now the new maps put me in a Flood Zone and Flood Insurance will be required. I did however, have flood insurance even though it was not required, I purchased it because it was a Preferred rate and very inexpensive. It did not help me much for my Sandy loss, people around me received more money from FEMA assistance. Now I will be taken out of “X” and put into “AE” and the price will skyrocket, and doesn’t cover much anyway……So a once in a 200 year storm comes along and a home that is 1.5 miles away from water gets a map amendment. Something is wrong here….I did not chose to live in a home that was coastal. And probably will never be able to sell it as well. Who in their right mind will want an additional $400 to $500 added onto their mortgage payment.

  • March 18, 2014 at 2:03 pm
    Lauren says:
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    I live in a stilt home on the gulf coast of FL. Paid $170K for the home. Last month we got a statement saying our flood insurance (for BUILDING ONLY) was increasing $300 PER MONTH. We have nothing but concrete stilts that are 14′ high and then our 700 SF home sits on top of the 14′ concrete stilts! Flood water will never go that far up on my home PLUS there is NO BUILDING to claim if there ever is a flood. This law is crazy. Anyone know WHEN this bill will be signed and put into effect? We just got our first mortgage bill with the $300 increase.

  • March 18, 2014 at 2:21 pm
    Don Hester says:
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    Congress has been too quick to act without foresight.
    Assuming most reading this are in the insurance field look at this flood program and consider how it differs from normal insurance. Insurance over the centuries is based on risk and exposure and probability. If the policy holder has claim after claim in the real insurance world the rates would go up. A very significant number of loses fall into this category of claims Losses are not affected by the ownership of the house being primary or secondary. Claim prone is claim prone. Don’t lump second homes with loss prone and claim actuarial integrity!
    If as a result of multiple claims the carrier doesn’t give a grant to mitigate future losses like fema does..and further specify only to owner occupied homes, not seasonal or rentals.
    A real Carrier would make available coverage for realistic mitigation as an insurance coverage . House raising in the NE corridor costs 60-90,000 not thirty. Reform ut! .
    A real carrier would make mitigation costs available as a separate amount ,not capped by the 250,000
    A real carrier wouldn’t waste thousands of dollars annually with a separate mailing telling their customers they didn’t have a claim. If you have a policy ,you know what I am talking about. If they were as unprofitable as FEMA’s they would seek to cut costs.
    The program has a deficit of under thirty Billion since it started back in the 1970′s One need only look at the farm subsidies and their annual deficits to realize this program is not that unprofitable but needs some one with better management skills to cut out some expensed and offer revised coverages to reduce the deficit

  • March 18, 2014 at 3:09 pm
    Scott Fraser says:
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    While flood insurance reform is needed, BW-12 created impacts that simply weren’t sustainable. If left intact, those impacts would have imploded; the only question being how long and how much damage would have occurred in the meantime.

    In many instances, the supposed 25% annual cap on increases didn’t apply. Owners of some Pre-FIRM homes saw immediate 500-1,00% increases in their annual premiums.

    This occurred because of a back-door trigger with the new requirement for Elevation Certificates. Previously, these older Pre-FIRM homes were presumed below flood to some unknown degree, and all rated much the same.

    Elevation Certificates caused these homes to be rated individually according to their exact level below flood. While this seemed reasonable on the surface – why shouldn’t they be rated relevant to risk – the result was some policies going from $2,000 annual premiums to $49,000.

    When three years of annual premiums will exceed the value of your home, then something clearly is wrong.

    Certain opponents to the BW-12 fix relished portraying this as a problem for wealthy owners of ocean-side second homes, but that was far from accurate.

    Caught in this trap, were middle class working and retired people who’d advanced from renters to home owners. Suddenly they found themselves unable to pay these horrific rate increases, unable to afford elevating or rebuilding their homes, and unable to sell them.

    The apparent solution rapidly approaching was to simply walk away from their mortgages – à la 2009-2011. We certainly didn’t need to revisit that era.

    Most of these buildings were built long before floodplains had been identified; long before flood insurance was even an option.

    • March 20, 2014 at 9:50 am
      Scott Fraser says:
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      Typo “500-1,000%”

  • March 18, 2014 at 7:56 pm
    Tim says:
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    Everyone experiencing high rate quotes need to check out flood smart.com! They are selling flood insurance @ affordable rates. In my case I had a 6300.00 premium on a commercial property with a $20,000.00 deductible and they quoted me $1929.00!!! Now that seems more like it !!!

  • March 19, 2014 at 9:46 am
    liz says:
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    I feel the love here in Florida! Especially heart warming how much the federal gov’t is looking out for the homeowner! LOL! REALLY? Have you shopped Citizens Property Insurance lately?? Yes, it is the states answer to “affordable” home insurance. Well, that was then. Now that reality has set in, the rates are more than TRIPLE what they were and little old ladies with $140,000 homes pay $3000-$5000 a year for a policy! This is a real example of why GOVT should NOT be in the business of ANYTHING! Just can’t keep their hands out of the cookie jar!! As far as forcing homeowners to get insurance… you don’t have to if you buy your home for cash! Yes, you get less home, but oh the freedom of not having banks and gov’t telling you what you HAVE to do! WOW, what a punch that would be! Imagine the control we take away from banks and gov’t when you are LESS DEPENDENT on them!

  • March 19, 2014 at 10:23 am
    CJ says:
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    I understand that many people are in favor of doing away with subsidies for the flood ins program and would like the plan to be self sustaining. What I think most are missing is that a proper study at a county by county level has not been done to determine the correct premium. Since so many would like to do away with the flood program subsidy let’s also not for get to eliminate all other federal government subsidies, like for agriculture, earned income credit, etc.

  • March 19, 2014 at 12:36 pm
    Ed Callender says:
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    The government has it backwards. Do not reward people who want to live in a flood plain or on the coast. Let them pay the rate that the risk warrants, not the taxpayer. No one pays for earthquake insurance for Californians. That is discrimination.

    • March 20, 2014 at 9:44 am
      Scott Fraser says:
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      Beg to differ, but when an earthquake disaster hits California, the President signs a disaster declaration to send disaster recovery funding to the affected communities and households.

      Guess where those funds come from… taxpayers.

      So… under your logic, neither should we reward people who build in any earthquake or tornado zone.

    • March 20, 2014 at 10:34 am
      Libby says:
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      Everyone is in some kind of disaster zone, whether it be tornado, flood, hurricane, earthquake, mudslide, or wild fire. The difference is insurance carriers do not typically insure some of those disasters. That is when the government steps in. You can argue that is “rewarding” people, but remember one of those people could be you at any time.

      • March 20, 2014 at 5:57 pm
        joe says:
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        amen

  • March 20, 2014 at 2:11 pm
    Dale says:
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    I bought my home in 2005 for 100,000. In 2009 we refinanced and didn’t require flood insurance. In 2013 we completed a construction loan and we were required to purchase flood insurance prior to construction. It was 1400.00 for the year. We barely could afford it at the time, but we came up with it. Our house is completely remodeled now and we called to get the quote and they say it is going to cost us 4500.00 per year for the life of our eventual 30 year loan. That is 135,000 dollars over the life of the loan. Over half what we currently owe. Our home was estimated to be worth 211,000 last year with the changes we were making. Now I would bet that my home is only worth 100,000 dollars. I hope the revisions that are signed into law will help us. We have never had water in our home and it has not been around our house since 2005 when we bought it. We considered raising our home with grants, but they are only for homes that have been flooded with 50% losses+. We can’t sell, we would be giving it away if we could give it away.

    • March 21, 2014 at 5:13 pm
      Scott Fraser says:
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      Dale,

      The President signed it into law this afternoon, March 21.

  • March 20, 2014 at 7:39 pm
    Kerri says:
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    Hurray for a bipartisan, common sense, stop-gap to the poorly crafted 2012 measure. Insurance, by it’s very nature, is supposed to be about spreading the risks of devastating loss to the many in order to minimize the impact on the few who are affected. Without this stopgap legislation, there would have been a government imposed devastating loss to folks who did everything “right”. Even people who have purchased homes and businesses in low flood risk areas along with homeowners insurance and flood insurance would be forced out of their communities by astronomical rates increases suddenly imposed upon them after 500 year rains or firestorms have changed the flood zones. The pool of insured is large enough that there should be a way to spread the risk appropriately. Sadly though, there must not be enough “profit” leftover after the risk is spread for the “for profit” insurers to touch it, thus it becomes a governmental task. Perhaps there can be a new measure crafted that will spread the risk appropriately without massive profits or tax payer costs!

  • March 21, 2014 at 12:02 pm
    Robert Harkabus says:
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    So WHEN is the president going to sign the bill. My insurance premium is due next week at a 20% increase on a small condo.If he is not timely I will pay last years rate and tell the Ins. Co to bill me for the correct increased amount.

  • March 24, 2014 at 12:16 pm
    KentU says:
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    Biggert-Waters is well intended and needed but, with an implementation that should be spread out over a longer time period. However, every new flood policy that I’ve written the past year saw huge decreases after the homeowner obtained an elevation certificate. The average premium without the elevation certificate is about $8,000 versus with an elevation certificate is about $1,100. Considering the risk – that is manageable.

    KR, even though your home has never flooded the way municipalities are allowing developers to cover ground with concrete the runoff flooding problem is only getting worse. In my area, we have witnessed numerous runoff flooding because the rainwater is getting to the creeks faster.

    • March 25, 2014 at 10:04 am
      Maria says:
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      In reply to KentU….I have had the opposite. When flood elevations certificates have been supplied their rates have tripled! After Sandy, homeowners applied for SBA loans, and in some cases after only borrowing $30k, the flood premium went from $1300 (no elevation cert required) to $4800 (after NFIP implemented the new requirements due to BW12). They cannot afford to stay in their homes and cannot sell them either.

  • March 25, 2014 at 6:29 pm
    Louise Warner says:
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    Check out the complaint on that affordable flood insurance co.



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