How New FEMA Flood Insurance Changes Impact Texas Homeowners
Many Texans (91%) recently noticed increased premiums caused by a new program under the Federal Emergency Management Agency (FEMA). So how exactly did this affect property owners in Houston?
How Have Federal Flood Insurance Premiums Changed?
The National Flood Insurance Program changed how it calculates flood risk based on unpredictable climate impacts. In the past, flood risks were based on the elevation levels of a property within a zone on a flood insurance rate map.
The restructuring initiative, Risk Rating 2.0, is now tailored to each property, taking into account flood frequencies, distances from water sources, rebuilding costs, and types of flooding, including storm surges, heavy rainfall, and river overflow.
FEMA’s plan is supported by years of flood hazard data incorporating private sector data sets, catastrophe models, and actuarial science revealing higher risks of flooding.
Understanding FEMA Debt
The FEMA-run program has incurred more than $20 billion in debt due to the increase in homeowner policy claims despite Congress canceling $16 billion in debt so that FEMA could pay off claims stemming from hurricanes Harvey, Irma, and Maria in 2017.
The updated program aimed to make the system more equitable by offering lower rates for less expensive homes that are cheaper to rebuild than the more affluent costly properties with high flood risk. These changes went into effect for new policies in Harris County beginning October 1, 2021, and the remaining renewal policies after April 1, 2022.
As a result of the rate changes, 1 in 12 Houston-area property owners dropped FEMA flood insurance.
Local Government Impact
Local Texas governments may be tasked with actions to reduce flood risk and lower insurance premiums for property holders in their jurisdiction. For example, FEMA’s Community Rating System outlines mitigation actions that local governments can implement, such as improved stormwater management and preserving open spaces. This may lower premiums by up to 45%, according to Professor Brody of Texas A&M. The city of Houston currently has a “Class 5 Rating,” meaning federal flood insurance policyholders can save up to 25% a year. At the same time, Harris County is a “Class 7,” meaning policyholders can save up to 15%.
The water damage attorneys at MMA Law Firm can assist Texas policyholder’s as they file for damage claims related to floods by reviewing a policy before claim submission to make sure that all forms and requested documents are in order and that flood damage is covered peril under applicable policy language so there will be less chance of denial. They can also communicate with insurance companies and adjusters to expedite claims in some instances.
The Role of Loss Adjusters in A Flood Insurance Claim
Some providers will try to use insurance adjuster tricks to deny flood claims, so it is in the policyholder’s best interest to get an independent loss adjuster to verify all relevant water and mold damages. Policyholders should make all requests in writing, keep a copy, and list events regarding hurricane damage that include:
- The date and type of loss
- The location and any injuries sustained
- Other people besides residents involved
- Condition of the home
- Detailed description of damaged contents
- Information regarding temporary repairs or complete structure replacement
- Police and emergency service department records
- Be aware of the insurance claim timeline with your insurance company
- Keep a file of documents
Texas Department of Insurance
According to the Texas Department of Insurance, policyholders are entitled to:
- Fair treatment: Policyholders have the right to be treated fairly and honestly when making a claim. If an insurance company has treated the insured unfairly, they should call the Department of Insurance at 800-252-3439 (512-463-6515 in Austin) or download a complaint form from the TDI website. Completion of a complaint form online or fax it to TDI at 512-475-1771.
- Fair settlement offers: Policyholders have the right to reject any settlement amount, including any unfair valuation, presented by the insurance company.
- Explanation of claim denials: The policyholder’s insurance company must explain why a policyholder’s claim or part of a claim was denied.
- Important timelines for claims processing and payment: After filing a claim on a policy, the insureds has the right to have the claim processed and paid promptly. Suppose the insurance company fails to meet required claims processing and payment deadlines. In that case, insureds have the right to collect 18% annual interest and claims attorney fees in addition to your claim amount. Within fifteen calendar days, the insurance company must acknowledge receipt of the claim and request any additional information reasonably related to it. Within fifteen business days after receipt of all requested information, the company must approve or deny the claim in writing. The law allows the insurance company to extend this deadline to 45 days if it notifies policyholders that more time is needed with a full explanation.
Hire An Experienced Claims Attorney in Houston
Policyholders not receiving insurance money to replace damaged property can complain online or mail a paper complaint with attachments to the Texas Insurance Administration. You’ll need the Houston insurance attorneys at McClenny Moseley, & Associates on your side if your insurance company denies a claim, undervalues damage, or doesn’t pay claims following a homeowner or flood insurance policy in Texas. Legal representation is a valuable resource for policyholders when it comes to bad-faith insurance practices.
This blog published by MMA Law Firm is available for informational purposes only and is not intended to be legal advice on any subject matter. The content available on this website may not constitute the most up-to-date legal or other information.