The National Oceanographic and Atmospheric Administration (NOAA) won't release their forecast for spring flooding until mid-February, but heavy snowfalls this month could trigger a big melt when the weather warms up, and that means floods. Spring storm activity adds to the potential of damaging floods. If you don't have flood insurance yet (flooding is not covered by standard homeowners insurance policies), now's a good time to get it. There is a 30-day waiting period from the time you pay your first premium before your flood insurance goes into effect. If you've found it too expensive in the past, a bill signed into law last March, the Menendez-Grimm Flood Reform Act, has helped to make flood insurance for some homeowners more affordable.
The return of grandfathered flood insurance rates
Menendez-Grimm (M-G) repealed many of the provisions from the 2012 Biggert-Waters Flood Reform Act, which had driven up costs primarily by remapping the nation's flood zones and creating many new higher-risk designations. According to an article posted on the website of the Professional Insurance Agents (PIA)[1], the most important reform in M-G is the restoration of grandfathered rates for one policy year. After that, standard yearly rate increases are capped at either 15% or 18%, depending on the type of property and policy. M-G also includes a proviso that requires FEMA to make every effort to minimize the number of flood polices that annually cost more than 1% of the value of the property being insured. The 15/18% increases will continue until rates are deemed actuarially sound. Somewhere between 800,000 and 1.1 million policies will be impacted by M-G. The PIA article also notes that policyholders on grandfathered properties who already experienced premium increases will receive refunds for overpaid premiums directly from FEMA.
Even if the grandfathered rate windfall doesn't affect you, M-G has some other benefits that could work in your favor to make flood insurance more affordable. M-G also repeals the Biggert-Waters provision requiring homebuyers of pre-Flood Insurance Rate Map properties to pay the full-risk rate at the time of purchase. Instead, those buyers will receive the same 15/18 annual rate increase explained in the preceding paragraph.
Other beneficial changes in M-G include allowing homeowners to pay their flood insurance premiums in monthly installments and the elimination of the mandatory requirement to purchase coverage for sheds and other detached buildings on a homeowner's property.
Floods Happen to Everybody, Everywhere
Regardless of whether or not you benefit from Menendez-Grimm reforms, you should still look into protecting your personal property with flood insurance. According to Chris Edwards of the think-tank Cato Institute, more than 90% of all natural disasters in the United States involve flooding, and there are more than 16 million Americans living in "Social Flood Hazard Areas," up from just 10 million in 1970.[2] As already noted, standard policies for homeowners and renters do not cover damage from flooding.
Where to Buy Flood Insurance
While the federal government administers the National Flood Insurance Program (NFIP), most private insurance companies can sell you a policy to supplement your standard homeowners' or renters' coverage. You can shop for competitive quotes online here
[1] "How new flood law will affect your clients," http://www.pia.org/COMM/news/template.php?s=mn&nid=8007
[2] "National Flood Insurance Program is Financially Unsound," http://www.ncpa.org/sub/dpd/index.php?Article_ID=25125&utm_source=newsletter&utm_medium=email&utm_campaign=DPD
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