In 2014, U.S. Representative David Jolly (R-FL) introduced the Flood Insurance Premium Parity Act of 2014. The legislation, known as H.R. 4313, resulted largely from the omission of commercial property and secondary homes from the Homeowners Flood Insurance Affordability Act, which provided relief from the sweeping reforms of the Biggert-Waters Flood Insurance Reform Act of 2012. Under Biggert-Waters, older commercial buildings and second homes in low-lying areas that have received a lower-than-market flood rate for decades now face an annual maximum increase of 25 percent.
While H.R. 4313 died in last year’s session of Congress, Representative Jolly recently re-introduced the Flood Insurance Premium Parity Act as H.R. 141, which seeks to ensure fairness in premium rates for coverage for business properties and second homes under the National Flood Insurance Program, and for other purposes. In an article for The Key West Citizen, reporter Timothy O’Hara spoke with Floridians on the bill’s benefits as well as its flaws.
The lack of protection to second homeowners and commercial properties sparked a public outcry in Florida, where there are many second homeowners and where apartments are the last bastion of affordable and worker housing.
“This legislation is critical for the State of Florida and especially for my constituents in the Florida Keys,” Curbelo [U.S. Representative Carlos Curbelo, R-FL] said. “Soaring flood insurance rates threaten our real estate market and the viability of small businesses that employ hard-working Floridians.
“The legislation does not specify how long a second homeowner must reside in the second home to realize any premium reduction. This distinction should not be left up to Federal Emergency Management Agency (FEMA) rule-making,” FIRM [Fair Insurance Rates in Monroe] board member and Monroe County Commissioner Heather Carruthers said.
In many situations in the Keys, second homes are rented to permanent residents for years at a time until the owner retires and has the opportunity to move to the Keys, Carruthers said.
“These homes, while not classified as ‘commercial,’ fulfill a rental housing need for our workforce,” Carruthers said. “For true parity, they should be granted the same parity relief as those occupied by owners. While this bill is a step toward improving the real estate economy and providing premium relief, true NFIP (National Flood Insurance Program) reform must become a priority.”
“It’s not perfect but it should help a bit,” Carruthers said of the Flood Insurance Premium Parity Act.
As the Flood Insurance Premium Parity Act moves through the Congressional process, govtrack.us, a project of Civic Impulse, LLC, predicts H.R. 141 will suffer the same fate as its predecessor. For this reason, commercial property owners subject to flood insurance requirements cannot pin their hopes on flood insurance relief. Instead, they must be proactive and diligent about their risk.
- Stay informed of rate map changes in your area.
- Contact your legislative representatives and tell them unequal treatment of property owners is unacceptable.
- Conduct a flood risk evaluation, a proactive strategy to mitigate flood risk, protect the real estate investment and verify whether the structure is built to minimize the risk of flooding.
Contact AmeriFlood Solutions for more information including a complimentary flood risk evaluation performed by an expert team of flood risk professionals.