Will I Have to Pay 25% Increased Premium Annually?
To be clear, the large premium increases only affect those NFIP policies who pay subsidized rates. More than 80% of policyholders (representing approximately 4.48 million of the 5.6 million policies in force) do not pay subsidized rates. These policyholders will not see these large premium increases.
Not everyone has to pay 25% more.
About 20% of all NFIP policies pay subsidized rates. Only a portion of these policies will see larger premium increases of 25% annually starting this year, until their premiums are full-risk premiums. 5% of policyholders - those with subsidized policies for non-primary residences, businesses, and severe repetitive loss properties - will see the 25% annual increases immediately.
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Here’s a timeline of premium changes this year:
|Began on||Affected Property Owners||Increase in Premium|
|January 1, 2013||Owners of subsidized policies on secondary residences in a Special Flood Hazard Area (SFHA)||25%|
|January 1, 2013||Owners of subsidized policies on property that has experienced severe or repeated flooding||25%|
|January 1, 2013||Owners of subsidized policies on business/non-residential properties in a Special Flood Hazard Area||25%|
Click here to see the full time line of events.
I don’t pay subsidized rates. Does that mean NO rate increases for me?
Most policyholders will see a new charge on their premiums to cover the Reserve Fund assessment that is mandated by BW-12. Initially, there will be a 5% assessment to all policies except Preferred Risk Policies (PRPs). The Reserve Fund will increase over time and will also be assessed on PRPs at some undetermined future date.
Contact Insurance by Allied Brokers at (650) 328-1000 to better understand how the new law affects your policy.