Insurance Helper Blog




Flood Insurance Rates Going Up, Up, Up

Flood insurance in the United States has long been a government subsidized program.  I’m not sure if it was originally designed to be so heavily subsidized but the reasoning goes like this.  Flood insurance, by its very nature, is a game of adverse selection.  In other words, only people who have a strong need for it will buy it.  Fire insurance is different.  Anyone’s house could burn, so we have the law of large numbers and a slim likelihood of any one consumer filing a claim.  That allows homeowners insurance or auto insurance to be affordable as the risk of loss is spread among many who have only a very slight chance of ever filing a claim.  But flood insurance is very different as the risk of loss only applies to those in known flood zones.  So, for this reason, the federal government took on the chore of creating a flood insurance marketplace and either from the beginning, or over time, allowed the rates to be set far below what is needed to pay the losses generated in the program.

Now, with a government looking to cut costs, the National Flood Insurance Program (NFIP) found itself squarely in the sights of legislators.  The Biggert-Waters Flood Insurance Reformation Act of 2012, while reauthorizing the NFIP through September 30, 2017, included a mandate to eliminate the offering of NFIP coverage at subsidized premiums.  So, many of those who buy flood insurance will now see the end of subsidized rates and can expect huge rate increases for years to come.

The rate increases will happen on one of two ways.  Flood insurance policyholders will either see 25% rate increases each year for an undetermined number of years into the future, or they will see immediately higher rates as their policy is forced into a post-firm conversion to post-firm rates.  No matter which method your policy falls into, you will be facing much higher flood insurance rates for all renewals and changes that take place after October 1, 2013.

So what are these pre-FIRM and post-FIRM categories that determine how quickly your rates will increase?  Pre-FIRM buildings are those built before January 1, 1975 or built before their community first adopted its first Flood Insurance Rate Map (FIRM).  And while there are some exceptions to the rule, if your home is a pre-FIRM home, located in flood zones A, V, or D, then you can expect 25% rate increases on your flood insurance policy each year for the foreseeable future.  If your building or home is a pre-FIRM building and located in flood zones A, V, or D and the building was not insured on a NFIP policy prior to July 6, 2012, or was purchased by a new owner after July, 6, 2012 or have experienced a lapse in flood coverage on or after October 4, 2012, then that building will be immediately forced into the higher cost post-FIRM rating.  This means that you will experience all of the rate increase needed to remove all subsidies immediately.

If you have a home or building that will have to move from pre-FIRM to post-FIRM categorization immediately, then you will have to take some steps to make sure that you maintain your eligibility to purchase flood insurance.  This will require that you submit a new elevation certificate on your property as well as photos of the front and back of you building. 

With the elimination of flood insurance rate subsidies, some homeowners will find themselves facing higher premiums and perhaps even some paperwork duties.  If you have a flood insurance policy in place now, then you can expect to receive some notifications of the rate changes, along with instructions on what you must do to remain eligible.  Please read all of this information carefully to insure that you keep the ability to purchase this insurance for your flood risk building.  If you need any help with your flood insurance or have questions about this program, please feel free to call us, toll free, at 877-687-7557.


Employers Beware – Obesity Is Now A Disease

This Summer, the American Medical Association classified obesity as a disease instead of a medical condition and this new classification has implications for all employers.  With the label of disease, obesity now becomes a major risk liability for employers on many different fronts from the ADA to federal disability law to Equal Opportunity Employment Commission suits.  And bear in mind that since the definition of obese can include someone who is possibly only 30 pounds over recommended body weight for their age, height and sex, this greatly increases the number of people that can now be recognized as disabled with rights under the 2008 amendments to the Americans with Disabilities Act.  And this could be an expensive deal for many employers since almost one third of Americans are classified as obese while another third is considered overweight.

To be fair, the AMA says that recognizing obesity as a disease will likely help change the way the medical community tackles this issue.  And this should offer hope to those that suffer from this disease.  And while the AMA’s new definition does not carry the force of law, it does make is much easier for an obese employee to argue that he or she is disabled.  And keep in mind that disability law says an impairment is something that affects a major life function, which could include walking or sitting.   We must now watch the EEOC for any change in its definition of disability.  Currently that definition is limited to the category of morbidly obese. 

One more area of concern for employers resides in federal disability law.  An employee who isn’t morbidly obese and who isn’t limited in any major life functions might still qualify as disabled if the employer’s actions show that the employer regards them as impaired.  For example, if a worker is passed over for promotions or hiring because of obesity, then that employee may be able to show that they were denied work because the employer acted in a way that indicated that the employer considers them impaired.

So what should a business owner do to protect the company from the risk of lawsuits and disability claims due to obesity?  Well, first of all you should understand if your company falls under the rules of the ADA amendment.  If so, then you need to be aware that you may have a disabled person working for you and you may need to modify the work environment to accommodate them.  Next, understand that if you don’t treat the person as disabled in terms of the work that you give them or the promotions that they receive, then you will have made a step in the right direction in terms of making it harder for them to claim that they are disabled as proven by the way they are treated in your company.  Also, if you don’t carry workers compensation insurance, then get that taken care of immediately.   Last of all, make sure that you have purchased and have in force, an Employment Practices Liability Insurance policy and be sure that your coverage in this policy will extend to discrimination against obesity.

The laws in our country are changing fast and if employers don’t stay on top of these changes, then they could be bitten by one.  Treat all of your employees fairly in all hiring, firing and promotions, without regard to physical attributes and you will have gone a long way toward protecting your business.  But bear in mind that you must stay on top of changes to rules and definitions like this or you may suffer damages for ignoring them.

If you would like to discuss and Employment Practices Liability Insurance (EPLI) policy, please give us a call.  We will take as much time as you need to help you understand your risks and your options for insurance protection.  You can reach us, toll free, at 877-687-7557.