From spring to summer comes rain and flooding. We will quickly give you the nitty gritty on this news from the National Flood Insurance Program. While we like to add more personality to our posts, it is always good to give you the most up to date and informed information around the insurance world! Let’s deep dive on what’s going on!
Florida is set to experience changes in rates and pricing of flood insurance coverage under the National Flood Insurance Program (NFIP) after the release of FEMA’s new Risk Rating 2.0 system. This comes into effect over the next year and it is wise to understand what the changes will be.
Earlier in April, FEMA released what it calls a “21st century rating system.” This is also named “Risk Rating 2.0—Equity in Action.” The new rating system is designed to provide a better estimate of insurance rates that should be more equitable. This means it would be more evenly distributed by different circumstances such as location, income bracket, and the status of the property. FEMA’s Risk Rating 2.0 aims to be an easier system for policyholders to understand.
According to FEMA, their new rating rubric will transform its pricing methodology that has not been updated in 50 years, thanks to the use of improved technology such as high-powered computers which can provide better and more accurate data when understanding flood risks.
David Maurstad, senior executive of FEMA’s National Flood Insurance Program says “The new pricing methodology is the right thing to do. It mitigates risk, delivers equitable rates and advances the Agency’s goal to reduce suffering after flooding disasters.” This was said during a press conference about the new system.
Quick Fact: The National Flood Insurance Program (NFIP) provides around $1.3 trillion in flood insurance coverage for more than 5 million policyholders in 22,500 communities across the United States.
There will be higher flood insurance rate increases which will affect coastal homeowners and those in flood prone zones. While many parts of Florida fit this description, be sure to check where your property is located, whether it is in a high-risk flood area, or considered to be on the coast. High-value regions such as Florida may see a significant rise in rates.
How we can help: Find out what zone your property is in by requesting a Free Flood Zone Determination.
Premiums will now be based on several factors, such as property value, distance from the ocean and the risk of rainfall related flooding, rather than just the previous rubric of the property’s elevation within a flood zone. This is a more thorough way in providing accurate rates.
The NFIP said this new change in coverage rates could take 5 years for half of their policies to be correctly priced, while up to 90% could be properly priced within a decade.
A quick look at the FEMA press releases states:
“In Phase I: New policies beginning Oct. 1, 2021 will be subject to the new rating methodology. Also beginning Oct. 1, existing policyholders eligible for renewal will be able to take advantage of immediate decreases in their premiums.
In Phase II: All remaining policies renewing on or after April 1, 2022 will be subject to the new rating methodology. “
While this is something to consider when purchasing flood insurance, we are always looking to provide you with the best quote and will be working hard to find all the ways to help you save!
We hope to speak to you about any questions you may have in regard to this news, FEMA’s Risk Rating 2.0, and anything flood related for 2021 and beyond! If you have any additional questions or would like to speak to your agent, please contact us at 850.244.2111. You can also email us at service@harrisinsurance.com. We encourage you to also check out the latest information at FEMA.Gov.
LEGAL DISCLAIMER
Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
