Homeowner Flood Insurance Affordability Act of 2014 - What's Changed from BW12?

After many of the new provisions of Biggert-Waters Flood Insurance Reform Act of 2012 (BW12) started going into effect, we had written about discussions and a US Senate bill that was working its way through Congress to roll back many of the BW12 provisions.  While there were many issues that seemed to need some working out, chief among them affordability provisions for the new rates and increasing funding for mitigation projects, a final bill was sent from the House of Representatives to the Senate and was voted on on 3/13/2014.  The President signed the new Homeowners Flood Insurance Affordability Act (HFIAA) into law on 3/21/ 2014.

The new HFIAA certainly does not repeal all of BW12.  You can see a comprehensive list of all of the changes included in the HFIAA that was compiled by the Association of State Floodplain Managers (ASFPM) - Analysis of HFIAA, but here are some of the more prominent provisions and changes resulting from the passage of the bill:

  • Repeals provision that triggered full-risk insurance rates for pre-FIRM properties;
  • All policyholders will receive an annual surcharge on their flood insurance bill: $25 for primary residences, $250 for all other properties;
  • Changes the annual flood insurance policy rate increase cap from a maximum of 20% to a maximum of 15%;
  • Establishes a maximum cap of 18% per year in premiums increases on any individual properties (exceptions are noted in the ASFPM Analysis of HFIAA);
  • The Act establishes a new, slower path to full-risk rates for some properties (increasing premiums by at least 5% per year) where grandfathering is not possible;
  • Provides for some exceptions and options to escrow flood insurance premiums during a real estate closing;
  • Increases the residential deductible limits to $10,000 from $5,000

For more information about the background on the passage of BW12 and HFIAA, there is a good article that was published in Slate Magazine.