Flood Insurance Changes - 4/1/2016

Beginning April 1, 2016, FEMA will finally be implementing many of the rate increases identified in the flood insurance reform bills of 2012 and 2013.

Currently, most of the homes and businesses in the floodplain in Lansing are considered Pre-FIRM (built before 1981, when the first flood maps were created for the city). These properties have subsidized flood insurance rates. Without the subsidies rates would be much, much higher. Those unsubsidized rates are usually called “full-risk rates” or “actuarial rates”.

Here are the most important changes starting 4/1/2016:
  • Subsidies are being phased out for non-residential businesses. That means a 25% rate increase for businesses renewing their policies after April 1, 2016, and annual 25% increases until they reach full-risk rates.
  • Any property owner (business or residential) that lets their flood insurance policy lapse for more than 90 days will lose their subsidy and have to pay full-risk rates immediately. Those rates will stay in place as long as they own the home. Anyone buying the home will be eligible for subsidized rates again. They are saying that this will be effective for anyone who has ever let their policy lapse for more than 90 days in the past, but it remains to see how strictly that will be enforced.
  • Residential policy holders should expect rate increases of between 5 and 10% at their next renewal after April 1. Additional rate increases could be made in October, 2016.
If you have any questions about these changes, or are interested in knowing that your full-risk rates could be, call 517-483-4110 or contact your insurance agent.