Florida Flood Insurance: New Federal Flood Insurance Risk Rating 2.0

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 Florida and how they can impact your flood insurance in the future.

Florida is very famous for its beach and the warmer climate throughout the year however it's also important to remember that this state, being that it's on a coast, is under constant threat of coastal flooding especially during the hurricane seasons. There also a lot of flood risk that the state faces especially when that hurricane season starts where storms, storm surges, and flash flood can happen at any time.

At the same time, since this is a very popular state, a lot of development are happening and sometimes these actions can lead to further worsening the overall flood damage on properties and homeowners. Flood frequencies can be expected to rise due to the development made for the locals.

Today, we'll discuss how the upcoming changes to the National Flood Insurance Program (NFIP) will impact the Sunshine State of Florida, and what it means to federal flood insurance, and flood insurance options as well.

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. Other than the Federal Emergency Management Agency (FEMA) making updates on flood maps, cost of flood insurance, and finding better coverage from flood claims, they also want to make sure that the rates for flood policies are justifiable.

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 flood insurance premiums would now be based on the value of your property or home starting this October 1st. 

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 range bars. Now, each of these colors represents the good, the bad, and the ugly changes coming to each state.

Now, let's talk about how these colors will change federal flood insurance in Florida once this update kicks in.

The Good

Let's start with the green range bar and go from there. The green area that you're going to be seeing in these reports shows a good change when it comes to flood insurance rates since this is talking about a decrease of more than $100 per month ($1200 per year).

Now, what's important to note with this is that the decrease may be an immediate change as well, meaning that it automatically kicks in with your flood insurance policy if you're included in this range. This is expected to affect 20% or about 342,142 policies in Florida. 

Generally, a lot of people will find the federal government flood insurance to be hard to manage especially due to its higher rates, so you want to move into the private flood insurance market to better maximize the flood insurance costs that you have to manage. This makes it easier for that 20% since they can eliminate the chances of not having any flood insurance at all due to the private market pulling out due to the risk of flood in an area. 

The only thing you might need to worry about is that 30-day waiting period especially since we're already in the hurricane season where the threats we mentioned before can happen overnight. Which is one of the perks from private insurers since they have shorter waiting period for policies to take effect.

The Bad

Now, we're going to move into the biggest range that we'll see in this report which is shown by that pink range and is what we call the bad change since it's going to cause an increase in your flood insurance rates.

This will impact 68% or a whopping 1,178,074 FEMA policies in force in Florida. The increase starts at $0 and will go up to $10 per month ($0 - $120 per year). Considering that Florida averages about $600, your premium can bubble up to $700 or more depending on the value of your property.

Generally, lower-valued homes may not even feel this change, but it can be very hard for those with higher-valued homes and commercial policies since the federal flood industry, since time in memorial, have been putting expensive premiums on these properties.

The Ugly

Lastly, we want to move further down the rabbit hole and discuss the ugly changes which are represented as the pink and the grey range. It's important to note that these are different ranges and the former is certainly less ugly than the latter.

Starting with the pink range or 8% of federal flood insurance policies in Florida (134,572 policies), this range shows that these policies and thus their respective properties will get an increase on their monthly flood insurance rates starting from $10 up to $20 ($120 - $240 per year). 

On the other hand, you want to look at that grey range or 4% of policies in the Sunshine State which will get a significantly higher increase in rates. This is because about 73,113 policies will get an increase of more than $20 monthly (more than $240 yearly).

We call this the ugly change since they can really blow your flood premiums right out of the water and become a headache if you're not really prepared for these changes.

You can see a full graph of these changes right here:

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.

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 Florida, 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.