ln case you haven’t heard yet, October 1 ushers in the new National Flood Insurance Program Risk Rating 2.0 program from FEMA.
The idea behind the new 2.0 program is to get Flood Insurance rates to levels that won’t generate deficits with each new storm.
Here’s some info on the new program and how it can affect you and your Flood insurance.
Why did The Fema Develop Risk Rating 2.0?
Up until recently, the NFIP has been basing premiums on out-of-date data that was generated in the 1970’s for large-area Flood Zones.
In order to spread the risk, homes in low risk flood areas paid the same premium as homes in high flood-prone areas.
This kept premiums low for high risk flood zones, but resulted in low risk inland homes subsidizing high risk coastal and riverside zones.
Those in high risk zones would consistently make claims that cost the Flood program billions in unfunded claims.
And Congress had to use taxpayer money to make up these shortages.
How much is The Flood Insurance Program in Debt?
Its gotten so bad that the National Flood Insurance Program is currently $20.5 billion in debt.
And that’s after Congress cancelled $16 Billion in debt in October 2017!
Most of this debt is the result of Hurricanes, but also from the swelling of rivers and lakes after rain storms and snow melt.
Not to mention ever-rising high tides caused by the melting of the polar ice caps from Global warming.
With Risk Rating 2.0, Congress is insisting that each home pay Flood insurance rates based on their actual risk of flooding.
What’s going to happen to Rates in Flood 2.0?
Risk Rating 2.0 uses more advanced tools to more accurately gauge individual flood risk and to ensure premiums match that risk.
This means that 23% of current NFIP policyholders will likely experience a premium decrease.
But a full 66% will see an increase of up to $10 per month.
Some homes in Low risk flooding areas are actually going to see their rates decrease.
Are there any other changes You should know about?
An Elevation Certificate is longer required to quote a flood policy for any flood zone, regardless of the year built.
The use of big data that is rating each individual home for Flood exposure no longer requires this survey to provide Elevation data.
That should save a new home buyer, or a homeowner who wants to insure against flooding, a couple hundred dollars.
When does Risk Rating 2.0 go into effect?
Risk Rating 2.0 goes into effect on October 1, 2021, for new flood insurance policyholders, and April 1, 2022, for renewals.
Existing policies that are subject to premium increases will be grandfathered into their new premiums at a federally mandated rate of no more than 18% per year.
What can You do to if your rates are increased?
We can shop the Private Market to see if there is a better deal for you.
There is one survey out there that says Private Flood can save money for 77% of homeowners in High Risk areas.
Quote your own Private Flood Insurance Here.
We can try adjusting coverages or deductibles to see if you can save on your current policy.
We can also shop and tell you that you already have the best deal on Flood insurance for your particular home.
We are here and ready to help you with your Flood Insurance questions.
Cronin Insurance, low rates, choice of companies, and personal advice from local agents.
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