When you purchased your home or if you are looking for a home with a view, you may not have been concerned about flood insurance, but some important changes to the law have made it important to consider the cost of flood insurance. A 2012 federal Act, the Biggert-Waters Flood Insurance Reform Act, has placed additional homes in the high-risk flood zone and eliminated grandfathering of properties allowed to use old flood data. There have been many tragic weather events in the news, including the recent typhoon in the Philippines and fresh in our memories Hurricane Sandy. The Biggert-Waters Flood Insurance Reform Act is a direct result from the damage done by Hurricane Katrina.

Prior to the federal Act, if the flood lines were redrawn and a property’s risk profile changed, the old premium cost was grandfathered in.  So, if you bought your property in a flood zone and that zone were changed to a high-risk zone, you could sell your property and the new owners could maintain the same flood insurance risk cost that you held. The new Act will end that practice. However, the National Flood Insurance Program problem is not easily resolved. Recent storms, including Hurricane Sandy, have left the program $25 billion in debt. In order to continue having a flood insurance program, changes are necessary.

The federal Act is resulting in the increase of some insurance policies to the point of devaluing properties. Your ideal house may include a view of the water or a beautiful vacation home by the ocean, but with the changing laws and the cost of insurance rising, it is important to consult an attorney before you purchase your dream home.

Author: Davi M. Peters, Esq.