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

Today, we're going to Montana to check on the upcoming federal flood insurance update. As the Treasure State, it's pretty important that we value protecting our properties, livelihoods, and families from natural disasters like floods.

We'll show you the upcoming changes as the National Flood Insurance Program (NFIP) prepares to fully roll out the upcoming Risk Rating 2.0. We want you to understand what's staying, changing, and the overall impact of this update on federal flood insurance, flood insurance policy rate increases and decreases, flood insurance premium, and the overall rating methodology in order to treasure what you have long-term.

The NFIP Risk Rating 2.0 is bound to take effect on October 1st, 2021, and this time around, we should acknowledge that the actual flood risk that we're going to face when a flood happens is not the flood water, but your flood coverage or the lack thereof.

The NFIP Risk Rating 2.0 is bound to 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. 

When we talk about this individual property rating structure, we have to understand that FEMA and the National Flood Insurance Program performs a thorough analysis of years of data when it comes to things like:

• Flood risks, flood hazards, and flood plain devolvement
• Amount of flooding in a community/property
• Flood mitigation efforts
• Lowest adjacent grade compared to the local base flood elevation
• History of flood damage and flood claims
• Flood zone designation in the flood map

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

Let's go over the good things coming to Missouri residents once the Risk Rating 2.0 takes effect across the U.S. We'll show this as the green slice of the pie graph.

The good change is expected to be experienced by 37% or 1,618 policyholders. This will get you an immediate decrease of more than $100 ($1200 per year) on FEMA policy rates. Although Montana is not really surrounded by many bodies of water unlike Mississippi or Missouri, it's still important to note that these areas may experience flooding due to runoff.

Furthermore, you can just look at the properties near the Missouri River crossing through the state and think about the possible overflow that will cause flooding on these areas.

The Bad

Now, we'll move into the blue slice which is also the biggest slice in this Risk Rating 2.0 change coming to the state. We call this a bad change because it's going to give an increase in rates for policyholders.

The increase will range from $0 to $10 per month ($0 - $120 per year) and is expected to impact 58% or 2,512 policies from FEMA in the state. You have to keep in mind that being in this high-risk flood zone especially properties close to rivers, lakes, reservoirs, and all that can get you very expensive premiums with FEMA. Despite the lack of huge bodies of water, FEMA may put you in that high-risk zones depending on the situation.

The Ugly

Lastly, let's look at the most significant changes coming with the Risk Rating 2.0. Now, these slices may show up as the smallest however this is one of the "small but terrible" situations.

The pink slice will cover 3% or 131 policies in Missouri. This is what we consider a less ugly change since the increase has a range. The increase in rates will range from $10 to $20 per month ($120 - $240 per year).

The grey slice on the other hand will be a drastic increase to rates with FEMA policies. This slice will cover 2% or 79 policies in the state and will bring that increase to more than $20 per month (>$240 per year). This is why it's the uglier change between these two since you might even encounter an increase of $100 per month.

The full pie graph can be seen 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 Montana, 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.