Senator Menendez Introduces Legislation to Avoid Steep Flood Insurance Premium Increases

Senator Menendez Introduces Legislation to Avoid Steep Flood Insurance Premium Increases

Senator Lautenberg bolsters The SHORE Act as original co-sponsor

WASHINGTON, DC - Making good on a commitment he made at Belmar's Boardwalk opening yesterday, U.S. Senator Robert Menendez (D-NJ) today introduced legislation to help homeowners avoid steep increases in flood insurance premiums that were scheduled through a federal law passed before Superstorm Sandy struck New Jersey. U.S. Senator Frank R. Lautenberg (D-NJ) immediately supported the legislation as an original co-sponsor.

"There is no logical reason why New Jersey homeowners who weathered Superstorm Sandy and are struggling to put their lives together should lose the support of the federal government in keeping their home," said Senator Menendez. "The sharp premium increases that have already gone into effect are an unnecessary and cruel burden on those who have already borne enough hardship following Superstorm Sandy. This legislation will help New Jerseyans keep more of their own resources while giving them time to chart the best course for the future. And I am committed to fighting for all the federal help we can get to make New Jersey better and stronger than before the storm."

"As New Jersey families and small businesses continue to recover from Superstorm Sandy, the SHORE Act would prevent a sharp spike in flood insurance premiums," said Senator Lautenberg. "The costs of rebuilding after Sandy have stretched resources thin and many New Jersey families simply cannot afford a major increase in their flood insurance rates, so we will keep fighting to make sure they get the relief they need."

Homeowners with mortgages living in flood zones are required to have flood insurance, which for about 20 percent of properties has traditionally been subsidized or grandfathered at a lower rate by the National Flood Insurance Program (NFIP). Before Superstorm Sandy struck, a federal flood insurance reform bill, the Biggert-Waters Act, was passed as part of a larger legislative package. The Biggert-Waters Act was aimed at reducing, or phasing out, the federal NFIP subsidy at up to 25 percent a year, which would dramatically increase premiums for homeowners and businesses. These sharp increases are intolerable for many New Jersey homeowners affected by Superstorm Sandy.

That is why Senator Menendez has introduced the Saving Homeowners from Onerous Rate Escalation, or "SHORE," Act. The legislation would help homeowners avoid steep increases in premiums by slowing down the reduction of the federal subsidy.

The SHORE Act would spread out the increases in flood insurance rates over 10 years - 5 percent for the first five years, and an additional 25 percent per year afterwards until full risk rate is reached for properties that would have had their subsidies phased out at 25 percent immediately. It would apply to all properties, including secondary homes, in flood zones.

For those New Jersey properties that are added to a flood zone through updated working maps, the premium increases will be extended over 10 years -5 percent for first five years; 15 percent next five years.

Last week, Senator Menendez called upon the Federal Emergency Management Agency (FEMA) to expedite the release of working maps that are expected to incorporate wave analysis not included in the maps that have been released and adopted by the State of New Jersey. It is expected that wave analysis will significantly decrease the number of properties added to high-risk "V" zones.

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