Surcharge and Residency Verification
As of April 1, 2015, every new or renewed NFIP policy includes an annual surcharge required by the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA). The surcharge amount depends on the use of the insured building and the type of policy form insuring the building, regardless of its flood zone designation or date of construction.
To ensure that your policyholders pay the correct surcharge at renewal, they must complete and return a Verification of Primary Residence Status form to their flood insurance provider, which will have mailed the form before the renewal notice. The policyholder is required to respond within 30 days of receipt.
Policies for owner-occupied, single-family detached buildings and individual condominium units that are the primary residence of a policyholder insured under the Dwelling Policy Form will include a $25 HFIAA surcharge. Contents-only policies insured under the Dwelling Policy Form and held by a tenant in the tenant’s primary residence will include the $25 HFIAA surcharge. Policies for all other buildings will include a $250 HFIAA surcharge.
If the form and documentation are not received within the 30-day period, your client’s renewal premium will default to the $250 HFIAA surcharge.
Make sure the correct surcharge is applied at renewal. Confirm that your clients—especially those with policies on primary residences—return the form within the designated time period. For more information about the HFIAA surcharge, please review WYO Program Bulletin W-14053 and the HFIAA Surcharge Fact Sheet.
Premium Changes
Recent legislation phases out subsidies for some buildings in high-risk flood areas constructed before their communities’ first Flood Insurance Rate Maps (FIRMs) took effect. Owners of these pre-FIRM buildings will see annual rate increases of 15 to 25 percent until their premiums reach full-risk rates. In addition, all policyholders—including those whose buildings are in moderate- to low-risk flood zones—will be subject to new assessments and surcharges.
Map Change Impacts
Grandfathering remains an option when maps change. As of April 1, 2015, Preferred Risk Policy (PRP) rates are available for buildings newly mapped into high-risk flood areas for 12 months after the new FIRMs become effective. Read more about it in the Newly Mapped Procedure Fact Sheet.
Get the latest details about flood insurance reform and rating options to ensure you provide your clients the most current information.
Reform Materials for You and Your Clients
For You:
For Your Clients:
- How Recent Legislative Changes Affect Flood Insurance
- How April 2015 Program Changes Will Affect Flood Insurance Premiums
- Map Changes and Flood Insurance: What Property Owners Need to Know
- Flood Insurance for Businesses: Impacts of Recent Legislation
- The HFIAA Surcharge Fact Sheet
- Elevation Certificates: Who Needs Them and Why
- Building Higher in Flood Zones: Freeboard – Reduce Your Risk, Reduce Your Premium
- Build Back Safer and Stronger – What You Need to Know
- Interim Office of the Flood Insurance Advocate Fact Sheet
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