President Obama recently signed the Homeowner Flood Insurance Affordability Act (H.R. 3370) into law, after the senate approved the house’s amended version of it by a vote of 72-22. What are the implications of this bill? Well, for starters, flood insurance premium increases are limited to a maximum of 18 percent per year. For reference, the Biggert-Waters Flood Insurance Reform Act of 2012 had premiums increasing by anywhere between two and ten times what policy holders were originally paying. The intention was to make the National Flood Insurance Program (NFIP) financially sound, but at such a huge expense to policy holders, something was going to have to change.
The bill also makes the Federal Emergency Management Agency (FEMA) accountable for the implementation issues of the Biggert-Waters Act. FEMA no longer has the power to increase premium rates at the time of sale, or when a new flood map comes up. They will also refund excessive premiums to those who bought a property before FEMA warned them about the rate increase.
One of the goals of the new law is to encourage FEMA to strive to set a premium that costs no more than one percent of the value of their coverage, such as $2,000 for a $200,000 policy. Another important change is the removal of the provision that required an immediate hike to actuarial levels when a home changed ownership, which inhibited home sales in many communities at risk for flooding. FEMA is also required to complete a study on ways to keep the program affordable without such extreme financial demands on policy holders.
If you’re following the Maui real estate market, or any real estate market for that matter, you won’t be surprised to hear that the new bill is expected to have an immediate positive impact on real estate. Even here on Maui, this legislation matters, particularly in areas like Kihei, in South Maui. We hope this bill has made a positive difference for you, and that if you need our assistance realizing your dreams when it comes to West Maui real estate, you’ll contact us using the information at the bottom of the page. Mahalo!
mauiluxuryrealestateteam.com – By Robert J. Cartwright, Principal Broker
