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

Today, we'll take a dive into the Land of 10,000 Lakes, Minnesota. As the state that borders Canada, is in close proximity to Lake Superior and has a lot of inland bodies of water within the state itself, you can expect that flood can happen anytime even with a small amount of rain. With this in mind, we want to cover the upcoming changes to federal flood insurance in Minnesota.

The National Flood Insurance Program (NFIP) is heading closer to the changes it will have on flood insurance rates and more with the Risk Rating 2.0 that will arrive 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. 

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

Starting with the good things first, 29% or 3,094 policies will be experiencing the good change from this NFIP 2.0 update. The reasoning behind this is because those who are in that green slice will get an immediate decrease on flood insurance rates of more than $100 ($1200 per year).

When it comes to states like Minnesota where most properties are in that high-risk flood zone or the special flood hazard area (SFHA) like Flood Zone A or AE, flood insurance rates can become really expensive. Getting this type of decrease can really help a lot of people get more flood insurance.

The Bad

Now, let's talk about the change that's impacting most federal flood insurance policyholders in the state: the blue slice. This blue slice actually represents a bad change for 64% or 6,760 policies in Minnesota as this will cause an increase in flood insurance rates.

The increase will range from $0 to $10 per month ($0 - $120 per year). This means that you may not get any changes with your flood insurance rates or you can get than $10 increase by the time October comes with this NFIP 2.0 update.

The Ugly

Lastly, let's talk about the pink and grey slices which we call the ugly change. Now, we'd like to put a disclaimer that this falls under the same change with an increase in flood insurance rates, but one is significantly uglier than the other.

The pink slice will cover 4% or 397 policies and will get you an increase ranging from $10 to $20 per month ($120 - $240 per year). Now, if you compare this with the blue slice, you might get double the increase that they will be getting, and depending on your property's value, flood mitigation efforts, and flood zone, this should sound like you're going to start paying for that more than $1000 premium.

The grey slice is the uglier change between this two because of how drastic the increase is with your flood insurance rate. This will impact 3% or 292 policies in the state and will cause an increase of more than $20 per month (>$240 per year). This means that you might even start to get an increase of $100 per month on your flood insurance rates with FEMA and the NFIP.

You can see a 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 Minnesota, 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.