Here’s what you should know about the changes to your flood insurance.
In case you haven’t heard already, FEMA, which administers the National Flood Insurance Program, has rolled out a new program that will affect five million policyholders nationwide. Under this new plan, which became effective on Oct 21, 2021, an estimated 77% of policyholders will see their premiums increase, while 23% of policyholders will see their premiums decrease.
FEMA projects that in the first year, 66% of flood insurance policyholders will see increases of up to $10 a month, 7% will see increases of $10 to $20 per month, and 4% will face monthly increases of more than $20. The “more than $20” category may be paying several hundred to several thousand more each year.
Rather than figuring premiums based on flood zone maps, premiums will now be based on features of individual properties, such as proximity to coastlines or covers, type of foundation, and present-day cost of rebuilding. The goal is to remedy longstanding inequities in pricing over the years. Under the new rate-setting system, “Policyholders with lower-value homes that have been paying more than they should no longer bear the cost for the policyholders with higher-value homes who have been paying less than they should.”
For existing flood insurance policies, renewals will take effect after April 1, 2022. The annual increases of 18% will be capped by law until they reach the new rate. Existing policyholders and anyone shopping for a policy can get a summary of how rates will rise or fall by state, county, and ZIP code under the new system by searching FEMA’s policy and location profiles.
I hope this was helpful. If you have any questions about this topic or anything else related to real estate, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.