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

The Free State of Maryland has always been subject to floods; its proximity to the coasts and bodies of water within the state itself are catalysts for these floodings to become devastating in one blink of an eye. In recent years, we've seen the state victimized by floods from storms. Today, we want to help our friends over in Maryland with your flood insurance.

On average, more than millions of property owners and properties experience losses that even go to more than a billion dollars due to flood damage. Hurricane season, which generally starts in the month of June also has a lot of data showing how much flood damage the impacted areas get. 

Federal flood insurance is considered the most well-known option when it comes to protecting property from floods. FEMA continuously looking to provide adequate protection to residents through the National Flood Insurance Program (NFIP).

We'll unpack the good, the bad, the ugly changes with the Risk Rating 2.0, and how it will impact federal flood insurance policyholders in Maryland once it kicks in 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. 

We've already covered this in our podcast below, but keep in mind that the NFIP can provide you coverages for damages on your personal property and residential property or commercial building that maxes at $100,000 and $250,000 respectively. In order to get through FEMA and the NFIP, one thing that hasn't changed is that you still need to follow that 30-day waiting period before your flood insurance policy can take effect on your insured property.

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.

The Good

First, let's begin with the good things coming with this NFIP 2.0 update. We'll show this as that green slice. When it comes to this change, we're really happy to see that 61% or 39,905 of federal flood policies in Maryland will experience this change.

Properties affected by this change will get an immediate decrease of more than $100 ($1200 per year). This year, Maryland is about $620, this can really help residents to opt into the federal flood insurance option especially knowing that they can take all risks and rarely non-renews policies.

This can help a lot of homeowners who also can't get a policy written from the private flood insurance market. The private sector is known for its limitless flood insurance coverage and shorter waiting period. Generally, you can have your policy take effect on the same day you pay for it, with a 10-day waiting period, or 14-day waiting period which is significantly quicker compared to FEMA.

However, one of the issues we always see with this sector that gives anxiety for homeowners is that the private insurance company can be in moratoriums when the risk of flooding is too high for their comfort. There's also this chance that after filing for a flood claim and they see that the property has a high risk of flood that they will non-renew your flood insurance policy.

The Bad

Now, the blue slice is going to be a different story here. If you're one of the policyholders included in this change, you're going to have to deal with the bad change with it. This is expected to impact 36% or 23,060 policies in Maryland.

The bad change is due to the fact that there will be an increase ranging from $0 to $10 per month ($0 - $120 per year). This means that you're going to start paying about $700 starting this October. Generally, since we're only talking on average, depending on your property's value, you may even have to pay for more than that amount.

The Ugly

Lastly, we want to cover the smallest percentages you'll see with this Risk Rating 2.0: the pink and grey slices. These two are somewhat similar, but it's important to note that the latter is definitely an uglier of a change than the former.

The pink slice or 2% (1,355) of the active flood insurance policies from FEMA in the state will also experience an increase in their flood insurance rates, but this time around it's going to range from $10 to $20 per month ($120 - $240 per year). This generally means that you're going to have a flood insurance premium of $900 on average.

On the other hand, the grey slice will impact 1% or 624 policies in Maryland. This is what we consider as the uglier change between the two and the ugliest among the rest because the increase will start at $20 per month (>$240 per year). This means that we may even see more than a $100 rate increase.

You can see the full graph of these changes below:

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 Maryland, 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.