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

The Pine Tree State of Maine is always prone to flooding due to its proximity to bodies of water like rivers, creeks, and brooks. A flood can happen any time of the year in this state but is most frequent in the Spring season due to the combination of rainfall and snowmelt. Today, we want to help you understand one of your flood insurance options: federal flood insurance.

Every year, millions of property owners face losses from flood damage and since the overall flood risk in the country is only becoming worse due to climate change and urbanization of certain areas, you want to always have a policy in place to make sure that you're properly protected and have sufficient flood coverage on the damages that you might experience especially during this hurricane season.

The National Flood Insurance Program (NFIP) is bound to make changes for its policies and rates with the Risk Rating 2.0, and we want to unpack the good, the bad, and the ugly changes coming to Maine once this update kicks in.

Nowadays, the actual risk we face when it comes to flooding isn't the natural disaster itself, but the coverages from flood damage with your policy or the lack thereof. This is why it's important to understand the actual flood risk you are facing in Maine in order to answer, are the flood insurance costs I'm facing enough to make me bounce back from any flood loss.

The Risk Rating 2.0 will take effect on October 1st, 2021.

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. 

This generally means that your flood insurance policy and flood insurance rates will be considering the current property values across the country among other things. Higher-valued homes may immediately see these rate increases once the Risk Rating 2.0 kicks. You also have to consider the following in determining the overall cost of flood insurance with FEMA and the National Flood Insurance Program:

• Risk of flood on the community and flood frequency
• Flood mitigation efforts done on the property
• Proximity for possible sources of flood waters
• Flood insurance claims history and flood claims frequency
• Flood damage history
• Where the property is in the flood zone maps

When it comes to the rate changes happening across the country, you're going to see these colors in ranges which represent these changes with flood insurance rates from FEMA. Now, each of these colors represents the good, the bad, and the ugly changes coming to each state.

Let's unpack these and see what they mean for flood insurance.

The Good

Let's start with the extreme ranges with the new Risk Rating 2.0. The green slice generally represents what we'd like to call the good change.

This will impact 34% or 2,606 policies in Maine and we call this a good change since it's bound to get an immediate decrease on rates for flood insurance policies. Under this slice will start to get a lower price when it comes to flood insurance premiums of more than $100 ($1200 per year). Considering how the average flood insurance premiums in Maine are about $1100 right now, this can really help people save a lot of money.

The Bad

Now, let's talk about the biggest slice you're going to see with this change. Simply put, once we talk about that blue slice we're going to cover most of the active FEMA flood policies in Maine.

This also covers what we call the bad change since 50% or 3,943 policies will start to get an increase on flood insurance rates ranging from $0 to $10 per month ($0 - $120 per year). This is really significant especially if you're one of those who are moving in a zone where flood insurance is required since you might have to pay for more than $1200 on your flood insurance with FEMA.

The Ugly

Lastly, let's talk about the last two slices coming with the Risk Rating 2.0: the pink and grey slices. Both of these represent an ugly change as it will bring a significantly higher increase compared with the previous one.

The pink slice will impact 7% or 509 policies in Maine and will cause an increase of $10 to $20 per month ($120 - $240 per year). Now, if you compare this to the grey slice, you're looking at an uglier change.

The grey slice will cover a bigger percentage of policies in Maine and will impact 9% or 689 active FEMA policies in the state. The increase will be more than $20 per month (>$240 per year). This means that you're going to start to pay for more than $1500 once these new ratings kick in.

You can see the full graph of these changes 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.

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 Maine, 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.