27 Mar Whys and Hows: Flood Insurance Reform Act of 2012
In a rare congressional bipartisan move, a bill sponsored by New Jersey Democrat Robert Menendez and New York Republican Michael Grimm was signed into law by President Obama last Friday. The bill, which will reverse key provisions of the Biggert-Waters Flood Insurance Reform Act of 2012, is expected to stop the ever-rising insurance rates for flood-prone areas. Homeowners across the nation are cheering the new law as it effectively caps insurance premium increases and grandfathers in below-market rates for houses bought during the 2012 act.
Opponents of the new law, however, argue that taxpayer money will be used to subsidize beachfront properties for the very rich. While there’s some truth behind those allegations, flood insurance premiums would have risen exponentially, affecting homeowners of all economic backgrounds living in flood areas, especially here in Louisiana. As residents of a high-risk region, we understand the importance of having access to professional advisors to keep up with the evolving insurance landscape.
Now that the hike in premiums has been stopped, Washington needs to focus on preventing the National Flood Insurance Program (NFIP) from going bankrupt when a hurricane hits. The program should be designed to run autonomously at break-even costs so it won’t be a burden on taxpayers. Proponents of a more “actuarially sound” bill, like Sen. James Inhofe, R-Okla, argue the Biggert-Waters reform moved the NFIP closer to economic autonomy. Whether you agree with the new legislation or not, the two biggest takeaways are:
- If your flood insurance premium went up because of the 2012 legislation, you should get a better rate now;
- The introduction of the new caps should bring some certainty to your future, as they prevent the rates from growing exponentially.
As always, we at AWS Insurance & Advising understand the challenges and questions that may arise from new legislation and we are here to get you the best flood insurance policy at the lowest cost. Take advantage of our free consultation with our insurance agents to review your flood insurance policy. You might also benefit from reading the new legislation in its entirety, which outlines the new changes affecting your insurance.
AWS Insurance & Advising serves New Orleans, Metairie, Kenner, and Southern Louisiana by providing protection for your home, business, or family with affordable plans in property insurance, liability insurance, life insurance, car insurance, and flood insurance from our Metairie, LA office. Our corporate clients can rest assured that our dedicated advisers at AWS Risk Management, LLC will help you implement workable solutions that achieve maximum asset protection with minimal cost of risk to your company.
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