New Mexico: 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 New Mexico and how they can impact your flood insurance in the future.

New Mexico is a generally dry state however this doesn't exempt the Land of Enchantment from flood risks. In fact, in recent years, the state had face a lot of flooding from flash floods and monsoon floods. Today, we want to cover the upcoming changes to the common flood insurance option: the National Flood Insurance Program (NFIP) or federal flood insurance.

The NFIP is bound to change with the Risk Rating 2.0 impacting everyone across the country for the good, the bad, and the ugly. The Risk Rating 2.0 will start to take effect on 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. 

It's important to note however that your property value isn't the only measurement that FEMA will use when it comes to its rating structure changes to flood insurance costs with FEMA with this upcoming update to the National Flood Insurance Program. You also have to consider the following things:

• Overall flood risk and frequency of flooding
• History of flood loss and flood damage
• History and number of flood claims
• Flood map designation

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.

Nowadays, the actual risk that we're facing in a time of floods is not the flood water and flood damage, but our flood insurance policies, protection, or the lack thereof. 

The Good

Starting with the green slice or what we'd like to call the good change. This will impact 36% or 4,116 of the policies FEMA currently has in force in the state. We call this a good change for those impacted since people here will get an immediate decrease in flood insurance starting this October.

The decrease will be more than $100 ($1200 per year) for these residents. Considering that the current average premium in New Mexico is about $1000, this can really help a lot of people move into the federal flood insurance market or keep their current policy with FEMA.

The Bad

Now, let's talk about the blue portion which is composed of 55% or 6,403 policies from New Mexico. These people will experience what we deem as the bad change because of the small increase they're going to get on their rates.

The increase ranges from $0 to $10 per month ($0 - $120 per year). This generally means that if you fall on that $0, you'll experience no change with your rates.

The Ugly

Lastly, let's talk about the ugly changes which will be shown as the pink/magenta and grey portions of the pie graph. This two are somewhat similar despite the one is an uglier change than the other.

The pink/magenta portion will cover 7% or 779 of the policies FEMA has in force in New Mexico. If you're part of this percentage, you're going to get an increase on rates of $10 to $20 per month ($120 - $240 per year).

On the other hand, the grey slice will impact 2% or 258 of the active FEMA policies in the state. This is what we call the uglier change since the increase in rates is more than $20 per month (>$240 per year). This means that you can easily land on getting a $100 increase per month on your FEMA policy starting in October.

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 New Mexico, 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.