Menendez-led Flood Insurance Reforms Now Law

Menendez-led Flood Insurance Reforms Now Law

President Signs Homeowner Flood Insurance Affordability Act

NEWARK, NJ - U.S. Senator Robert Menendez (D-NJ) today applauded President Obama for bringing relief to flood-weary New Jersey residents. By signing the Menendez-led Homeowner Flood Insurance Affordability Act (HFIAA) into law, thousands are protected from the financial tsunami that would have resulted from soaring flood insurance rates.


"This critical law, which I originally authored and introduced on the one-year anniversary of Sandy, is a tremendous victory for thousands of New Jersey homeowners who were facing skyrocketing flood insurance costs as they continued to recover from the worst natural disaster in our state's history," Sen. Menendez said.


Sen. Menendez authored and first introduced HFIAA last October on the one-year anniversary of Superstorm Sandy. It addressed the egregious problems with the Federal Emergency Management Administration's (FEMA) National Flood Insurance Program (NFIP), bringing relief to homeowners who desperately needed help, while not significantly impacting the program's solvency. The bill passed the House and Senate with overwhelming bipartisan support.


"Over a year ago, I began hearing from constituents, many who came to me in tears, expressing horror stories of skyrocketing flood insurance premiums that threatened to force them from their homes," said Sen. Menendez. "The more I listened, the more I was convinced that something needed to be done and done quickly."


Specifically, the HFIAA:

  • Creates a Firewall on Annual Rate Increases - Prevents FEMA from raising the average rates for a class of properties above 15% and from raising rates on individual policies above 18% per year for virtually all properties.
  • Repeals the Property Sales Trigger - Repeals the provision in Biggert-Waters that required homebuyers to pay the full-risk rate for pre-FIRM properties at the time of purchase. This provision caused property values to steeply decline and made many homes unsellable, hurting the real estate market. Under the Menendez/Grimm Bill, homebuyers will receive the same treatment as the home seller.
  • Repeals the New Policy Sales Trigger - Repeals the provision in Biggert-Waters that required pre-FIRM property owners to pay the full-risk rate if they voluntarily purchase a new policy. This provision disincentivizes property owners from making responsible decisions and could hurt program participation. The Menendez/Grimm Bill allows pre-FIRM property owners to voluntarily purchase a policy under pre-FIRM conditions.
  • Reinstates Grandfathering - Repeals the provision in Biggert-Waters that would have terminated grandfathering. If grandfathering was terminated, property owners mapped into higher risk would have to either elevate their structure or have higher rates phased in over 5 years. The Menendez/Grimm Bill allows grandfathering to continue and sets hard caps on how high premiums can increase annually.
  • Refunds Homeowners who Overpaid - Requires FEMA to refund policyholders for overpaid premiums.
  • Affordability goal - Requires FEMA to minimize the number of policies with annual premiums that exceed one percent of the total coverage provided by the policy.


The law also establishes a Flood Insurance Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process and flood insurance rates and require FEMA to certify its mapping process is technologically advanced and to notify and justify to communities that the mapping model it plans to use to create the community's new flood map are appropriate.

"Even in an era of partisan gridlock, we can and must come together to do right by the honest, hardworking homeowners who need our support," the Senator said. "I remain committed to working with Federal and State officials, as well as with my colleagues in Washington, to find results for the people of New Jersey."


Sen. Menendez today sent out an email directly to constituents, thanking them for their support and critical input that helped shape this law. He reminded New Jerseyans not to hesitate to call his office for help.


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