The Biggert Waters Act Flood Reform Act of 2012 mandates some changes as of June 1, 2014. In most cases, policyholders are being given notice of these changes 90 days before renewal. These changes will still occur even though the Act has been since amended.
¨ Apartment buildings with 5 or more units can now be insured up to $500,000, up from $250,000.
¨ For rating purposes, a primary residence is now defined as being lived in by the insured or insured spouse for more than 50% of the 365 days following policy effective date. For Pre-FIRM risks, the policyholder will be required to provide documentation to comply with the new definition. This can be driver’s license, auto registration, Voter registration, proof of vehicle insurance, document showing child attends school, or Homestead Tax credit.
For coverage purposes, a principal residence is one in which the insured lives in the house for 80% of the 365 days prior to the loss and the dwelling is insured for 80% or more of full RC or max NFIP limit. This is not a change.
¨ Deductibles on Post-FIRM and Pre-FIRM elevation rated policies will be $1,000 if building coverage does not exceed $100,000 (no change) and $1,250 if building limit exceeds $100,000.
¨ On Pre-FIRM subsidized policies, the deductibles will be $1,500 if building coverage does not exceed $100,000 (down from present $2,000) and $2,000 if building limit exceeds $100,000 (no change).
¨ Dec pages will now state “Pre-FIRM subsidized” if so rated and will show “Y” (for yes) if a primary residence.
¨ And in the most remarkable and crazy change, the flood policy, by law, must be printed in plain English, in boldface type, and in font size 9-point Arial and 18-point Arial Narrow. This means the present 19 page policy will now be 47 pages!! Failure to comply results in a $50,000 fine!! Perhaps the next revision of BW 12 will require the agent to read the entire policy to the policyholder!!