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.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.