Considering preferred risk flood insurance and home insurance ...

Under the general remit of the Department of Homeland Security, the Federal Emergency Management Agency has been running the National Flood Insurance Program which assumes the role of default insurer when the private insurers refuse cover against the damage resulting from flooding. Since the private insurers are for profit and have found it difficult to maintain the usual percentage return, the government has been forced to step in for two reasons. Flood prone areas have seen far more houses being built than is prudent and we have been suffering from a lot more flooding that usual over the last ten years, despite the protests of the climate change deniers.

FEMA is therefore going to extend eligibility under the Preferred Risk Policy. Anyone holding this policy can continue paying the lower premium rates until the evaluation under the Biggert-Waters Flood Insurance Reform Act of 2012 has been completed. In practical terms, this means at least two more years of lower premiums with the full-risk ratings deferred. This is very important because the flooding map was redrawn in 2008 and both home owners and renters had been at risk of significantly higher premiums if they lived in the newly declared high risk areas.

So everything now comes down to your claims history. If you have made two or more claims or one claim has been for more than $1,000, you are not eligible for the preferred risk cover. The benefit may not sound great but your premium increases cannot exceed 13%. This keeps your home insurance rate significantly below the full-risk premium.

To give you a better grasp of the benefits, you might live in an area with aging flood defenses or where there have been changes to the lay of the land. In theory, this should mean you pay the full-risk rate. But if you can take advantage of the Grandfather Rule, you may get cover for home and contents for as little as $129 in the first year. You will know this represents a big saving on the usual home insurance rates so check what has happened to your local map and whether the Rule will save you money.

This entry was posted on October 9, 2012, 12:28 pm and is filed under Uncategorized. You can follow any responses to this entry through RSS 2.0. Both comments and pings are currently closed.

Source: http://www.cbwc-ontario.org/considering-preferred-risk-flood-insurance-and-home-insurance.html

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