Flood Insurance - Significant Revisions

Flood zones were used in the past to determine flood insurance rates.?This system, however lead to disparate pricing for a lot of properties and sent the National Flood Insurance Program into a “hole” to the tune of about $20 billion.

On October 1, 2021 FEMA announced Risk Rating 2.0 as a means to correct this through the use of updated technology and use of historical data to determine more equitable pricing in flood insurance.

This new system of determining rates will be applicable to new polices and those renewing after October 1, 2021, and for all policy holders after April 1, 2022.

?Here is what goes into the new rating “soup”:

·?Specific property features to include foundation type, and height of lowest floor relative to the base flood elevation (BFE).

?·?Replacement cost of the dwelling

·?Sources of flood such as river, coastal, or heavy rain

·?Distance of structure from the source of flood and the elevation

·?Prior flood claims for the structure

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To come up with the Risk Rating 2.0 rates, FEMA uses data from a lot of different sources:

·?Existing flood mapping information

·?Claims data

·?National Oceanic and Atmospheric Administration (NOAA) data

·?Sea, Lake, and Overhead Surges (SLOSH) data

·?U.S. Army Corps of Engineer data

·?Third party sources for replacement cost data

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You may or may not see an increase in flood insurance premiums under Risk Rating 2.0.?However, there are still several options a consumer can use to lower their flood insurance premiums.?Contact me for more information.

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