For years, the National Flood Insurance Program (NFIP) has been losing money and fighting with solvency. In an effort to stabilize the program, recent legislation entitled the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) was enacted and will create some rather drastic changes to the NFIP beginning April 1, 2015. Primarily these changes will be in the form of rate, fee, and surcharge increases. As a result, it will also require new annual documentation requirements for policy holders.


According to Auto-Owners Insurance, one of the NFIP administrators, the premiums for many flood policies will be increasing significantly in 2015. For primary residences, the premium increases are capped at 18%. However, there are also fees related to each policy and the fees are exempt from the premium capping. Therefore, some primary residence policies could see their overall cost increase by much more than 18%. For policy holders on non-primary residences, there is no cap on the increase in premium or fees.

Section 8 of the HFIAA requires an annual premium surcharge for all NFIP policies. The surcharge will be $25 for all primary residences and $250 for all non- primary residential and all non-residential properties. For example, a Preferred Risk policy on a non-primary residence with a premium of $218 last year, would see a $250 policy surcharge, making the premium $468, a 115% increase in cost, before the effect of the potential premium rate increase.


Based upon the NFIP guidelines, a primary residence is one that you live in more than 50% of the 365 days following the flood policy effective date.


Because the rates and surcharges being charged to a property differ depending upon whether the property is a primary residence or a non- primary residence (vacation homes and rental properties), the NFIP will begin mailing requests for documentation indicating the use of the property. Once you receive your annual request for documentation, you will have 30 days to comply or your premium will automatically include the $250 surcharge rather than the $25 surcharge.

Acceptable forms of documentation include:

  • Copy of driver’s license
  • Copy of automobile registration
  • Proof of insurance for a vehicle
  • Copy of voter’s registration
  • Documents showing where children attend school
  • Homestead tax credit form for primary residence


The unfortunate truth about flood insurance is that there are no other options available. Whether you buy your flood insurance through Auto-Owners or State Farm, the price is the same. The companies act as administrators for the program, but the underwriting and pricing is controlled by the NFIP and by law. So if you are looking at buying a home in a flood zone or at risk for flooding (you don’t have to be in a flood zone to be flooded), please feel free to reach out to us to help you assess the cost. If you currently have a policy and have questions about documentation, please feel free to contact us as well.