Flood Insurance - Risk Rating 2.0

The Federal Emergency Management Agency (FEMA) has released an update on Risk Rating 2.0, a new flood-insurance rating system that is expected to be implemented in phases this year and into next year. The new rating system replaces the current approach, which has been in place since the 1970s, of placing homes either in or out of the “100-year” floodplain and instead uses new modeling and data to establish the size of the risk for each individual property based on a range of factors. 

The purpose of this change is to provide more actuarial sound rates for the risk taken.  This has been in the works for some time now and is expected to take effect in October 2021.  What will this mean to individuals currently insured with the national flood insurance program?  The short answer is it depends on many factors. We will not know for sure until the national flood insurance program releases their new rates.  However, we can speculate that since this new methodology is designed to provide rates more closely aligned with risk then those areas that are believed to be under priced will see rate increases. The following states lead the list of potential rate increases; Florida, New Jersey, South Carolina, parts of Texas, parts of Washington state, and parts of California.  The good news is the national flood insurance program is capped on how much of an increase it can take. The bad news is that cap is more than $4,000.  So, the impact could be significant for those who see their national flood insurance premiums go up.

Regardless of where you live, if you currently have a national flood insurance policy you should consult with your licensed independent agent to see if you might be effected and to stay updated as we get closer to when the new rates will take effect.  If you live in Florida, you can always reach out to us for information by texting or calling us at (954) 678-2658 or by email at service@justasktim.com.