FEMA has completely revamped the rating system for the National Flood Insurance Program (NFIP). Starting October 1st, 2021, the rates for new NFIP policies take effect. Policies will renew on the new system starting 4/1/22. The new rates will better reflect the true risk of flooding. Some coastal premiums will sharply increase!
FEMA has revamped the rating system for national flood insurance
Skyrocketing coastal home insurance! What you need to know is the current NFIP program subsidizes many risky coastal homes. Homeowners have all been paying much more than they probably should have to subsidize coastal or high-risk homes in other parts of the country.
Florida, Louisiana, and Texas for example will see huge increases. Policies that once cost $800 are jumping up to over $7,000+!
Up here in New England, we should expect to see modest decreases in many cases. Some coastal communities and more expensive homes will see some increases, but nothing like the pain being felt in the southern states.
How the new program rating system works
The new program takes into account distance to a water source, elevation, prior flood claims, size of the home, and the cost to rebuild. Large homes near the ocean could see higher jumps in rates. FEMA’s goal is fairness. They aim to educate homeowners to better understand their flood risk. The days of subsidized rates are GONE!
We have rated several properties in the new system already and the vast majority of them are seeing a reduction in rate. According to FEMA, 39% of Massachusetts homeowners will see a decrease, 49% will see modest increases, and 12% will see substantial increases.
FEMA will also be “phasing-out” grandfathering
FEMA will also be “phasing-out” grandfathering. This means that your policy will increase to the “full risk rate” over a period of years. The rate increases are capped at 18% per year.
Under the new program, elevation certificates are no longer required. FEMA is able to get fairly accurate elevations via satellite. Sometimes an elevation certificate can help if there is a discrepancy in your elevation. It gives the agent an exact picture of your home and its potential flood risk.
How we save clients money on coastal insurance
Our agency has over 21 flood carriers that we write with. FEMA / NFIP is just one of our markets. If you are better off in the Private Market vs. FEMA, we will give you the best quote. Remember that a policy in the Private Market is the same, if not better.