Congress passed a bill last week that will protect thousands of New York homeowners from huge flood insurance premium rate hikes — or having their property values decimated when they try to sell.
By a 72-22 vote, the Senate passed the Homeowner Flood Insurance Affordability Act of 2014 on March 13 to remedy unintended consequences of the current Biggert-Waters flood insurance legislation and bring an end to what the legislation describes as “egregious flood insurance rate hikes” that many homeowners are facing.
Biggert-Waters was passed before Hurricane Sandy, and restructured the National Flood Insurance Program in order to make it more financially sustainable. It removed subsidies that kept federal flood insurance premiums low, and homeowners faced a 25 percent increase in premium rates each year until their new premium amount was reached.
“Homeowners throughout Long Island can breathe a sigh of relief now that the specter of massive and immediate rate hikes are off the table,” said U.S. Sen. Charles Schumer, who co-sponsored the bill. “Families could be faced with the loss of their home, or the inability to sell their home, due to these crushing rate increases, and this compromise bill addresses both of those serious concerns. The legislation does not do everything we wanted, but it is a significant improvement from the disaster far too many homeowners faced under Biggert-Waters.”
Specifically, the bill places a cap on annual rate hikes; removes the “sales trigger” that would have decimated home values by applying the new, higher rates to anyone purchasing a home in a high-risk flood zone; and repeals provisions of the law that forced drastic premium increases on homeowners who built to code and then were subsequently mapped into a higher risk area. The bill also requires the Federal Emergency Management Agency to complete an affordability study and address affordability issues before flood insurance premiums could be raised.