New Flood Insurance Law Provides Relief for Palo Alto Property Owners
In March of this year President Obama signed into law the Federal Homeowner Flood Insurance Affordability Act of 2014 which amends previous law – now homeowners in flood plains and districts, like Palo Alto, East Palo Alto, and Menlo Park will be provided relief.
Due to ever-increasing flood insurance premiums many Palo Alto homeowners took measures to help reduce the premiums they were paying for coverage pursuant to the Biggert-Waters Flood Insurance Reform Act of 2012. The measures included the procedure of applying for a Letter of Map Amendment (LOMA) which exempted properties within flood zones from mandatory flood insurance if the LOMA could show that the individual property was at a higher elevation then the most at-risk properties. The new law repeals the removal of the grandfather clauses which previously existed, thus allowing the property owners relief from the Biggert-Waters provisions, which means lower insurance premiums. Even though Congress hasn’t been fully engaged yet Palo Alto homeowners should be happy as their premiums will be lower.
All of Palo Alto is in a flood-zone, but only certain portions along San Francisquito Creek are designated “high-risk” Special Flood Hazard Areas (SFHA). In fact most of Palo Alto is located within a designated area that doesn’t require flood insurance, but the burden is on the property owner to prove that to their lender. Thus, to prevent the unnecessary insurance a property owner must hire a surveyor to provide an “elevation certificate” for a fee (usually between $500 and $2,000).
Federal regulations require that loans for properties in SFHAs must have flood insurance if the property is collateral for a loan or is free of encumbrances. Clever Palo Alto residents in this predicament have procured surveyors to get LOMAs. Importantly, not all people in this situation know about LOMAs or this option. With the implementation of the Homeowner Flood Insurance Affordability Act of 2014 properties can retain their subsidized premiums (grandfather clause) instead of being forced into premium increases when existing policies terminate or the properties are sold. In a bonus section of the law FEMA is required to refund policy holders who have overpaid for premiums under the old law.
A flood insurance presentation will be on display on Wednesday, April 23 at 730P at the Palo Alto City Council Chambers. The meeting will also be broadcast on cablecast Channel 26.