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

Today, we want to talk about the Cornhusker State of Nebraska. The National Flood Insurance Program is bound to change at the latter part of this year through the Risk Rating 2.0. Considering that the state had a devastating flood two years ago that totaled $1.3 billion in damages in the state alone, we want to cover the federal flood insurance.

Every year, the United States experience floods due to multiple reasons. When moving into the Spring season, a lot of states are facing a lot of spring runoff from the melting of all that collected ice and snow from Winter and spring thaw that oversaturates the ground.

We also have flash floods in urbanized areas where any data would show you might create enough flood damage to render a community as if it's a ghost town. Then, we also have the floods related to the hurricane season like storm surges on the coasts, overflowing of rivers, lakes, creeks, and other bodies of water inland, and flash floods due to heavy rainfall.

This is why it's important to understand that comes to flood insurance policies at all times. Regardless if you're getting flood insurance through the NFIP or through private flood insurance companies. The Risk Rating 2.0 is one of these changes and when you are in those flood-prone areas like Big Papillion Creek at Omaha, you want to make sure that you have the right protection from the flood losses due to flooding.

The Risk Rating 2.0 is expected to take effect starting October 1, 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 individual property rating structure considers a lot of data backed up by years of research by the Federal Management Emergency Agency (FEMA). The property values might be the biggest consideration by the federal government in assessing your flood insurance rate however it's also important to keep in mind that there are important things that they account for and you should too such as:

• Overall flood risk in your community
• Flood map designation and catastrophe models
• Flood hazard, flood trigger, and flood frequency
• History of flood damage and flood loss
• History and frequency of flood claims made in the last 10 years
• The construction of your home or residential property. Is it above the base flood elevation?

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 look at the green slice or what we generally call the good change. This is because of the decrease in flood insurance rates that people under this slice will get once the NFIP 2.0 starts.

For Nebraska, 43% or 3,964 policies are going to experience this good change. The decrease will be more than $100 ($1200 per year) and this can immediately take effect once the NFIP 2.0 kicks in on October 1st.

The Bad

Next up, we're going to talk about the bad change coming to federal flood insurance with this new Risk Rating 2.0. This will be shown by that blue slice and is a bad change since it will cause a small increase in flood insurance rates.

The blue slice in Nebraska is composed of 45% or 4,140 policies from FEMA. These people will get an increase ranging from $0 to $10 per month ($0 - $120 per year) on federal flood rates.

The Ugly

Lastly, we want to cover the ugly changes which will be shown by the pink and grey slices. Now, both of these are ugly changes coming to federal flood insurance, but it's important to note that one is definitely uglier of a change compared to the other.

Starting with the pink or magenta one, this will cover 5% or 417 policies from FEMA in Nebraska. This will cause a slightly bigger rate increase ranging from $10 to $20 per month ($120 to $240 per year).

On the other hand, policyholders in the grey slice will experience an uglier change due to a significantly higher increase in rates once the Risk Rating 2.0 goes live. This will impact 7% or 609 policies from Nebraska which will get an increase of more than $20 per month (>$240 per year). This generally means that you may even start to get an increase of $100 or more monthly.

You can see the full pie 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 Nebraska, 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.