Effect of Biggert-Waters
In order to ensure that flood insurance rates more accurately reflect the risk, Biggert-Waters phases out subsidized rates for non-primary (secondary) residences such as a vacation home occupied only during the summer months. Subsidized rates for other property classes are also being eliminated over time, beginning in late 2013.
These subsidies will be phased out by imposing a 25 percent premium increase every year until rates increase the true risk. These changes will affect the following property owners.13
- Owners of non-primary (secondary) residences in an SFHA
- Owners of business properties in an SFHA
- Owners of property that has experienced severe or repeated losses
The owners of primary residences located in SFHAs will retain their subsidized rates unless or until one of the following conditions occurs.
- The property is sold.
- The policy lapses.
- The property suffers severe repeated flood losses.
- A new policy is purchased.
Grandfathered rates are to be phased out for most properties whenever a community adopts a new FIRM. The phase-out will happen gradually over a 5-year period, with a 20 percent rate increase each year.14