Flood insurance rates may increase; Residents could see premiums increase in the coming months
The new system, called Risk Rating 2.0, kicked off on Friday. It will first be introduced for new policyholders, and existing customers are expected to see new rates in April. The ceilings in federal law are increasing by 18% per year.
The National Flood Insurance Program typically covers up to
The 2.0 risk rating aims to make charges fairer and assesses more factors in determining a property’s risk of flooding than the old system. The system uses factors such as historical flood records, type of flooding, distance to water source, cost of reconstruction, and other property characteristics such as elevation.
“It’s a major change, it almost goes towards what I’m going to call what a normal insurance company would do,” said
Experts also said the change is a step to help the flood program get rid of billions in debt, partially accumulated after years of underestimating the cost of flood damage that has only been exacerbated. by climate change.
“Thanks to the risk rating 2.0
But several members of
“At a time when many residents are struggling to recover from the financial difficulties suffered during the COVID-19 pandemic and given the high number of homeowners who will see their rates increase,
The senators’ letter also mentioned concerns that up to 900,000 homeowners will drop out of the program over the next 10 years because of the higher rates.
Ifkovic said she was also concerned that
“You could say, ‘Well, I really need it’ or you could say, ‘Well, I’m going to take a chance,'” Ifkovic said.
Ifovic added that when people have doubts, she encourages them to take out flood insurance to cover risks.
“We are committed to closing the insurance gap and reducing the suffering caused by disasters by increasing the number of disaster survivors who are insured,” the
Ifkovic said she suspects parts of the interior may see the most declines. Many of the reductions can be based on the cost of rebuilding a home, experts said.
“If your house is only worth
Some areas of
The old system for decades underestimated the cost of flood risk, experts said.
The areas with the highest growth in economic losses from flooding were to be
“We found on average 4.5 times more economic risk than what
The 2.0 risk rating addresses some of those concerns, but the floodplain maps – which most mortgage lenders use to determine whether a buyer should purchase flood insurance – still don’t show the total risk, Porter said. .
In recent years,
“We had a lot of flooding in areas that weren’t mapped floodplains,” she said. “It’s basically urban drainage, poor drainage, overflowing storm sewers, that sort of thing.”
And due to climate change, flooding is happening more often, experts said.
Over time, people may start to see larger increases, making it more difficult to afford to live in areas prone to flooding,
“It’s kind of one of the big questions that we kind of have going forward, can you get to a place where people can’t afford flood insurance. ? ” he added.
But the increases will likely make the flood insurance program more tax-efficient,
The program has been in debt for years, Porter said.
While Ikovic said many details of how the factors will be weighted and calculated remain unclear, the 2.0 risk rating should present a more personal way of measuring flood risk for homeowners.
“Really before they map out what flood zone you are in and your ground elevation. Now it looks like they might be considering 10 things to try and capture each property’s individual risk,” he said. she declared.