As of May 1, 2014, all buyers of older properties ("pre-FIRM") will see a premium rate reduction under the Homeowner Flood Insurance Affordability Act of 2014. Instead of jumping to "full cost" for flood insurance, buyers will assume the seller's October 2013 rate for a pre-FIRM property.

flood insuranceWhile the lower rates were rolled out with new law, the Federal Emergency Management Agency's (FEMA) National Flood Insurance Program needs time to digest the new rules and calculate individual homeowner's flood insurance rates.

However, the National Association of Realtors® (NAR) asked FEMA to create an interim rate – one that would be charged to current homeowners and buyers before the agency finalized the actual rates.

As a result, FEMA extended the rates levied against a home in October 2013, meaning a homeowner or buyer renewing or seeking first-time flood insurance pays the same rate the owner did last October.

According to NAR, this change impacts:

• All buyers of a pre-FIRM property – not just those whose seller has an existing policy.
• All recent owners who apply for a new flood insurance policy on a pre-FIRM property.
• All recent owners who reinstate an old pre-FIRM policy that previously lapsed for any reason.
• All recent owners who renew a policy on a pre-FIRM property bought or newly insured after the 2012 Biggert-Waters law went into effect.

The change does not yet impact homeowners who already paid a higher flood insurance rate, however. While many can anticipate some kind of refund, FEMA won't be sending checks until it finalizes the new flood insurance rate numbers. NAR says it will continue to push FEMA to release the refunds as quickly as possible.

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