Thursday, October 17, 2013

Halloween is not the only scary day this month.

October is here and with it there are many changes in the insurance world. 

The National Flood Insurance Program, NFIP, is being overhauled. In 2012 Congress passed the Biggert-Waters Flood Insurance Reform and Modernization Act. This legislation is intended to help with flood map updating, reauthorized the the NFIP for 5 years instead of one year and it also updates rates to reflect the true risk of flooding based on flood maps. 

It's the last that is the biggest issue. Under the previous rules many areas had rates that where subsidized or grandfathered in by NFIP. These rates did not take into account the changes in construction and disaster relief costs. When Hurricane Katrina hit, the funds in the NFIP where exhausted or nearly exhausted. After Katrina, the Midwest and other parts of the country flooded and continue to flood annually. With these repeated losses the NFIP had to go before Congress annually and ask for more money to insure properties in flood prone areas and to provide disaster relief. BW12 is meant to put money back into the NFIP's reserves and to help keep it from going into insolvency again. 

What this means to you is that if you have flood insurance, you may see your rates increase depending on where you live. It's no surprise that those that live along the coast and near rivers will see the biggest change in rates, but those of us more inland in low lying areas and near foothill run off areas may also see a more modest increase. 

What triggers the increase for existing homeowners is if your policy was originally placed on or before July 6, 2012. If so and you have kept your renewals paid on time, then you will have the current rates applied. If you let your policy lapse (you pay late) or you sell the property then you or the new owner will be rated with the new rates. If you have a non-residential property, a waterfront home, or a repetitive loss property,  then you may see up to a 25% increase in your flood insurance rates. When you sell your home you or the buyer will have to purchase an elevation certificate from a licensed civil engineer in your area in order to get flood insurance, unless you have a complete one already. Sometimes they are recorded with your county,  city or town.  If you or the buyer do not get an elevation certificate, you can still get flood insurance for one year at the new higher rate, however you will not be able to renew or get a new policy until you get an elevation certificate. If you are non-renewed, your lender will force place coverage which based on the rate increase will most likely be much higher than what you could get insurance for on your own. Changes in the flood map could also trigger a rate change. 

Currently there are a few bills in congress to postpone the price increases to allow time to study the impact they will have. With recent battle of the Congress vs. The White House  over the budget and debt ceiling, it may be some time before Congress gets to these bills.  If you want to reach out and touch someone, go to the US House of Representatives and the US Senate, find your person and send them a note. 

Health Insurance is another big change in October. Some of the exchanges are run by the state you live in, others have opted to go with the feds exchange. You can find more info at and conveniently located near the bottom of the page is the spot where you can find your states health insurance exchange or if your state has opted to let the feds handle it. In California the site is and the plans are bronze, silver, gold and platinum. The higher the plan level, the more you pay monthly, but the less you pay for doctors visits, surgery, medications, etc. While the sites for many states and the Fed's have had trouble due to the volume of people using them, they are working out the kinks.  I mean who do you think designed these sites? Certainly not Amazon!

Yes, you can still have your employer sponsored plan if they have one, Yes, you can still buy your own insurance direct from a carrier or keep what you have, however some carriers are pulling out of the individual health insurance markets so you may have fewer options. There is a penalty if you do not have health insurance unless you meet certain conditions. Click here for more information on the penalty.  

I think I feel safer with the vampires, ghosts, werewolves and zombies than I do with the government. You know where you stand with a zombie.