Homeowners in flood prone areas will face increases in flood insurance premiums under provisions in the Biggert–Waters Flood Insurance Reform Act of 2012 (the “Act”), certain provisions of which went into effect October 1, 2013. For homeowners in designated areas, the National Flood Insurance Program provided federal subsidies for flood insurance premiums for flood prone properties since 1968. The purpose of the National Flood Insurance Program was to enable homeowners in flood prone areas to purchase flood insurance which was unavailable from private insurance providers.

In recent years, many more claims were made than were covered by the premiums paid. The Act was a response to address the losses to the National Flood Insurance Program from the increased number of claims. Many mid-state residents with homes on the New Jersey, Maryland or Delaware shores will likely see their flood insurance premiums rise as much as 25% per year until the rates are adjusted to accurately reflect the current risk of flood to such property. The Act requires that the increase to premiums in Special Flood Hazard Areas for renewal policies rise up to 25% per year until they meet full-risk premium rates.

The foregoing rate increases are applicable to renewal rates on existing properties. If you are planning to purchase a property in a flood prone shore area for which you will want to purchase a flood insurance policy, investigate the premiums for a new policy as the premiums will not be “grandfathered.”

A number of bills have been introduced in the United States Congress to delay the imposition of the rise in flood insurance premiums under the National Flood Insurance Program although such changes to the Act are uncertain.