In an attempt to keep NJ coastal residents as informed as possible pertaining to
changes in both flood insurance and construction issues impacting them, I will be
routinely be posting updates on these concerns. These are very fluid issues that
have been changing frequently and I would suggest checking the GFH
CONSTRUCTION web site (WWW.GFHCONSTRUCTION.COM) on a regular basis
to stay current on changes. Listed below I outline key points of the Biggert - Waters
Act. This is EXTREMELY important as it explains how you will be paying flood
insurance going forward.
In July of 2012 President Obama signed the Biggert-Waters Flood Insurance
Reform Act changing how Flood Insurance Rate Maps (FIRMs) affect the premium
rates of flood insurance policy holders. No longer will structures built before changes
to flood maps be “grandfathered” under cheaper rates. It is important to note that
this was done pre-Sandy and had bipartisan support. NJ representatives included.
The law was conceived as a response to a $23 billion and escalating deficit in
the National Flood Insurance Program (NFIP), which is run by FEMA. This
deficit is a pre Sandy number!
The act will affect anyone who currently has a flood insurance policy through the
NFIP. FEMA claims the new rate more accurately reflects the flood risk in specific
areas. In some cases, the current rate of $2,235 a year may rise to $25,000 or more
per year.  New rates are based on a structure’s elevation compared to the base
flood level in FEMA’s most recently revised maps. Those with structures below the
new elevations, even if they have never flooded, can brace for dramatic increases.
Highlights of the Biggert - Waters Act:
Removes subsidized rates (pre-FIRM rates) for the following classes of structures
and allows rates to increase by 25% per year until actuarial rates
are achieved: The effective date is July 1, 2012.
• Any residential property that is not the primary residence of
an individual
• Any severe repetitive loss property
• Any property that has incurred flood related damages that cumulatively exceed the
fair market value of the property
• Any business property
• Any property that after the date of the Bill has incurred "substantial damage" which
is determined as 51% of assessed value or has experienced “substantial
improvement" exceeding 30 percent of the fair market value of
the property.
• Any new policy or lapsed policy, or any policy for a newly purchased property.
• Any policy for which the owner has refused a FEMA mitigation offer under HMGP,
or for a repetitive loss property or severe repetitive loss property.
* Severe Repetitive Loss means four or more claims payments of over $5,000 or
two claims that exceed the value of the property.
In addition the bill states that beach nourishment is not an
allowed mitigation activity, and adds elevation, relocation, demolition,
rebuilding or flood-proofing of utilities as allowed mitigation activities.
In summary, while many are hoping that there may be some relief of the Biggert Waters Act, the probability is very slim. FEMA has lost a tremendous amount
(Billions) and with the current policy of deficit reduction, it is highly unlikely. It is
important to remember that FEMA is in the insurance game because the private
sector views it as too risky. Tax payers in non flood areas do not want to see their
tax dollars used to subsidize flood prone areas. Don't kill the messenger here, just
stating the facts.
If you live in a property that requires flood insurance your best bet is to mitigate and
become FEMA compliant through ICC monies, SBA grants, Community
Development Block Grants, bank workouts, or whatever resources you may have
available to you.
If you have additional questions please check my website at
(WWW.GFHCONSTRUCTION.COM) or feel free to email me at
Cgallagher@gfhenterprises.com and I will do my best to assist you in getting a straight
answer. I wish you the best in dealing with this very unfortunate and challenging situation.