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FEMA Federal Reform

Have you heard of the Biggert-Waters Reform Act of 2012? If you're living in a flood zone and want flood insurance, or need it for a home mortgage, it's IMPORTANT legislation that may affect you. The Biggert-Waters Reform act passed Congress to phase the Federal Government out of subsidized flood insurance it created in 1968. The Federal subsidies are said to have become too costly to continue due to homes built in flood prone or flood risk areas and because of the significant payout losses associated with catastrophic events like hurricane Hugo, Andrew, Sandy, and Katrina.

October 1, 2013 FEMA will no longer continue to fully subsidize insurance rates for Pre-FIRM properties which are: Secondary or Vacation homes, have let their policies lapse for any reason, have been sold, is insured by a new policy, suffers severe or repeated damages due to floods (rising water), or are commercial properties. As a part of the act, those properties currently with insurance may increase 20% per year over the next 5 years until the true risk is met, plus 5% for a catastrophic reserve fund.

Other changes for Hilton Head and the surrounding area are expected sometime later in 2014 when changes to the flood elevation maps are expected, especially for properties which are near velocity rated edges of the shoreline where minor movements in the flood maps can greatly affect their home's insurance evaluation. When a community adopts new maps, discounts like "grandfathering" will be phased out.

The Town of Hilton Head offers Mitigation Meetings to residents to assist them in compliance issues. If you have a question about specific property in Hilton Head, call the Town Planning Department, they’ll be glad to help. If you’re thinking of buying an older home, flood insurance can be a significant factor. This example is given by the Town of Hilton Head:

Take a $500,000 house built at the base flood elevation, the cost for $250,000 of flood insurance is $4,869 per year. The same house two feet below flood causes the insurance rate to go to $16,011 per year, or 2 feet above is $2,030 per year. Insurance companies are beginning to "get their arms" around what the ratings and differences in existing conditions and construction techniques mean as it relates to the Biggert-Waters Act, so call them and get an idea how it can impact your plans for any particular home.

Don’t be caught with a surprise! With McNair Builders, we minimize costly surprises!