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Alaska Flood Insurance: New Federal Flood Insurance Risk Rating 2.0

Posted by Chris Greene on May 28, 2021 1:00:00 PM
Chris Greene

The Federal Emergency Management Agency (FEMA) is rolling out changes when it comes to flood insurance rates across all states in the country. Today, we will unpack these changes coming to Alaska and how they can impact your flood insurance in the future.

Alaska Flood Insurance: New Federal Flood Insurance Risk Rating 2.0

Alaska has been a victim of multiple floods throughout the years and one can even say that the cold temperature is contributing to spring runoff, frozen bodies of water melting, or simply the overall oversaturation of the land. In this upcoming update with the Risk Rating 2.0 in the National Flood Insurance Program (NFIP), we want to look at the good, the bad, and the ugly changes.

Note that these changes, or the NFIP 2.0, will kick in on October 1st this year.

The NFIP 2.0

The Risk Rating 2.0, or commonly known as NFIP 2.0 as well, is more of a move of equity. This update on the federal flood insurance program itself will allow you to no longer pay more than your fair share when it comes to premiums as this would now be based on the value of your property or home starting this October. 

Alaska Flood Insurance: New Federal Flood Insurance Risk Rating 2.0

When it comes to the rate changes happening across the country, you're going to see these colors in ranges which are the green, blue, pink, and grey ranges. Now, each of these colors represents the good, the bad, and the ugly changes coming to each state.

For this one, we want to focus on Alaska which seems to be one of the states that are getting mostly good changes. Let's unpack these and see what they mean for flood insurance.

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The Good

Residents of Alaska will be happy to know that most of the policyholders they have in the state will experience a decrease in flood insurance premiums. We call the green range bar on this Risk Rating 2.0 report the good change. In fact, the Risk Rating 2.0 shows that 86% (1,923 policies) will be in that green range. This means that these people will get an immediate decrease in flood insurance premiums of more than $100 per month. This eventually totals to $1200 per year.

It's important to note that out of these 1,923 policies, 200 of them are written for single-family homes across Alaska. Since these good changes are effective immediately, it means that you get to lower your rates once October 1st arrives.

Alaska Flood Insurance: New Federal Flood Insurance Risk Rating 2.0

The Bad

Now, if there are good changes, there will also be bad changes bound to happen. In the case of residents of Alaska — specifically, ones doing a flood policy with FEMA and NFIP — we're going to see about 12% of policies in the state experience this bad change. This is generally represented by that light blue range where you can expect that you'll get up to a $10 increase per month on your premiums (up to $120 per year).

This change will affect about 271 policies where about 77% of these policyholders are doing a single-family home flood insurance. Now, this may not sound as bad especially if you're going to look at the increase alone, but it's important to note that this increase of up to $10 per month will be on top of your flood insurance rate.

Alaska Flood Insurance: New Federal Flood Insurance Risk Rating 2.0

The Ugly

Lastly, we want to cover the 1% going in the pink and another 1% for the grey range bars. Now, these are what we include in what we call the ugly changes.

When you're part of the affected policies by this ugly change, you're going to get an increase in your rate from $10 to $20 per month. The pink range is less ugly than the grey area since this more of a range. Depending on your property value, you may get that $10 or that $20 per month which is about a $120 to $140 increase per year.

This is even uglier with the grey range since we're talking about more than a $20 increase in premium rates per month (>$240 per year) for those 24 NFIP policies in Alaska.

You can see a full graph of these changes below:

Now that we all know what these changes will mean, one of the questions you might be asking right now is when this is going to be in effect.

When Will It Happen?

Now, the date when you can adopt this program really depends if you're doing a renewal or if it's a new business policy. You see, you can expect these changes to start on October 1st and you're going to adapt to these rate changes if you're buying flood insurance from FEMA on or after that date. 

On the other hand, if you're doing a renewal with FEMA after that date then you don't have to take in these new rate changes until April 1st, 2022.

So, you want to be very ready for this. We've been talking about this since last year since basically the NFIP is already 30 years old already and is in need of this change. 

If you have questions on these upcoming changes, what are your flood insurance options in Alaska, or anything about flood, reach out to us through the links below. You can also watch this on our YouTube channel.

Remember, we have an educational background in flood mitigation and we want to help you understand flood risks through education and awareness in flood insurance and preparedness.

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Topics: Insurance agents, FEMA, national flood insurance program, flood insurance, NFIP Risk Rating 2.0, flood insurance alaska, federal emergency management agency, alaska flood insurance, flood insurance in alaska, alaska, Loan Officers, realtors, investors, property owners, Title Company, Closing Attorney, Mortgage Company

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