For investors who own or looking to purchase properties in a Flood plane, make sure to factor in these future premium increases FEMA will implement April 2015. These costs are in addition to the rates currently being paid.
Primary residential homes/condos will receive a $25 policy surcharge. All others—Investment/non primary/commercial buildings/multi- family residential will receive a $250 policy surcharge.
Average annual rate increase is limited to 15%. Except non-primary residences the max annual increase is set at 25%. And clients required to now have flood insurance by their mortgage company due to remapping will see a max annual increase of 18%.
Federal Policy Fee will increase. See below.
Preferred Risk Policies will be $22.
All other policies will be $45.
Preferred Risk policies that were granted the exception to stay in Preferred due to remapping will be $45.
Residential Condo Building Assoc Policies
– 1 unit: $45
– 2-4 units: $135
– 5-10 units: $360
– 11-20 units: $720
– 21 units or more: $1,800
Clients who are now required by the mortgage company to have flood insurance due to remapping will be eligible for the Preferred program for 1 year or until the rates meet or exceed the standard program rates. The Federal policy will be $45 and the rates will not increase more than 18% per year.
The NFIP’s definition of a primary residence:
–Previously identified when a customer occupied residence at least 80% of the prior year
–As of April 2015, a primary residence is now considered when a customer will occupy their residence more than 50% of the policy term
–Current driver’s license
–Proof of automobile insurance
–Documentation of children’s school attendance
–Homestead tax credit form for primary residence
The NFIP will be sending a form to clients for completion.
New $10,000 deductible
A $10,000 deductible option is being introduced (but must be taken for contents and building). This is for single family homes and two-to-four family dwellings. The customer must make sure this is acceptable with their lender.
@Jason Bott Do you have information specific to commercial property? I have a mixed use building that we have carried flood on for several years. A previous lender required 500k. When we refinanced we dropped the excess coverage. Now FEMA is requiring $500k (and a premium increase of about $5k!). While we are in a flood zone, there hasn't been one in over 100 years, so I'm looking for maximum deductible. Are there larger than $10k deductibles available for commercial? Thanks!
@Curtis Bidwell I do not have an official doc similar to the post above for commercial. I can tell you that I know of 1 national insurance carrier who will write commercial flood. Their strategy has been to target all of the low risk commercial flood policies, basically, properties that have a lender requirement but will probably not have a loss. This company is the only option I know of that is an alternative to FEMA. Their rates are much less that FEMA and would probably have larger deductible options.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!