Starting this month , anyone buying a flood insurance policy will see a shift in prices due to a set of changes the
“The way that the rates are actually set is long overdue for an overhaul and has not been updated in decades, so Risk Rating 2.0 really brings the whole insurance system into the 21st century with updates that are based on more granular data about an individual property,”
“Policyholders with lower-value homes that have been paying more than they should will no longer bear the cost for the policyholders with higher-value homes who have been paying less than they should. Risk Rating 2.0 fixes this injustice,”
The NFIP has historically been deeply in debt due to massive losses from storms like Hurricane Katrina and Hurricane Harvey. And losses are likely to mount as climate change continues to exacerbate natural hazards like hurricanes and heavy rainfall.
Flood insurance is typically not covered by homeowners’ policies.
New policies purchased after
Flood insurance rates have historically been based on whether a property sat in a specific zone. Rates were largely based on how flood-prone
“Your policy is now going to be property specific. It’s going to be tailored exactly to the location and the characteristics of your house, and so the prices are going to change to reflect that additional information,” said
“It gives a more comprehensive picture of the flood risk of a structure but also individualizes that to that specific location,” Garrett said. Because the new formula considers replacement cost, he added, it better accounts for the actual risk posed by a specific property.
How will this impact what I’m paying for flood insurance?
The answer comes down to your specific property.
There are 139,842 active flood insurance policies across
While the caps could be helpful right now, Hino said, gradual increases could lead to problems for some property owners.
“You might be living in a house where your insurance is affordable right now and it might be for another couple of years, but it’s quickly going to get more expensive than you can tolerate,” Hino said, adding that homeowners need to know what their final cost of insurance will be once the full increases have taken effect.
Flood insurance premiums for single-family homes will be capped at
What does this mean in the Triangle?
Like most of
Is Risk Rating 2.0 more equitable?
“It’s aimed at fixing a longstanding imbalance in the program where because it was based on this antiquated system, many lower-value, lower-risk homes were paying too much and many higher-risk, higher-value homes were paying not enough,” Lightbody said.
Risk Rating 2.0 also does away with a discount for insurance that
“That’s no longer the case,” Hino said, “and so it’s less likely to be the case that the owner of a comparatively lower-value property would be paying more to insure than the owner of a higher-value property.”
Will this change who needs to buy flood insurance?
No. Under Risk Rating 2.0, owners of any buildings that stand within a
“The in-or-out determination will still be important for the lending institutions to determine which structures are required to have flood insurance under the current regulations, and it’s also still going to be used for floodplain management,” Garrett said.
This story was produced with financial support from 1Earth Fund, in partnership with
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