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

Today, we're going to discuss the upcoming changes to federal flood insurance in Oklahoma. The Sooner State has multiple bodies of water within the state and close to the state's borders like the Canadian River, Arkansas River, and multiple lakes and reservoirs. This can present a huge risk when it comes to flooding. Early in June, Eastern Oklahoma faced a lot of flash floods causing some major roads to be inundated with water and impassable.

Understanding your individual flood risk and getting a flood insurance policy for your property is a great start however this won't really do much if we don't understand the upcoming changes to your policy regardless if it's a policy from the Federal Emergency Management Agency (FEMA) or private flood insurance industry.

This is why it's important to discuss your federal flood insurance with the National Flood Insurance Program (NFIP) which will have a lot of updates and changes with The Risk Rating 2.0.

Nowadays, the biggest flood damage doesn't come from the flood water itself, but the protection you have once floods happen.

The Risk Rating 2.0 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. 

It's important to note that property values won't be the only thing that comes into play in finalizing your flood insurance premiums with FEMA. This doesn't immediately mean that only property owners with expensive properties will get premium increases and all lower-valued homes are expected to get a decrease. There are also flood data that FEMA considers and you might want to consider them too. These things are:

• Overall risk of flood on the insured property and flood frequencies in the area
• History of flood damage and flood loss over the last 10 years
• Mitigation efforts on the insured property. Is your lowest floor raised above the base flood elevation? How many flood openings that the structure has?
• Proximity to a possible flooding source (rivers, lakes, reservoirs, creeks, etc.)
• Designation in Flood Insurance Rate Map (FIRM). Is the property in high-risk areas or not?

Since the NFIP generally follows the 30-day waiting period before they can have your policy take effect on the listed structure, be it a residential property or a commercial one. The National Flood Insurance Program can cover flood damages on your building which maxes to $250,000 and contents up to $100,000.

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 start off the day with some good news. This will be shown as the green portion on the graph and will impact 30% or 3,856 policies in the state.

This is a good change for these residents because their flood insurance rate will get a decrease of $100 or more (>$1200 decrease per year) on their policies once the Risk Rating 2.0 kicks in.

This decrease can really help a lot of people in the states especially when the average premiums with FEMA is around $1000. This amount can definitely become bigger the closer you are to those bodies of water and the data that FEMA has on your property like flood claim history, property value, and flood mitigation efforts.

The Bad

When there's calm, there's also storm and with the good change also comes the bad change. This one will be represented by that blue portion in our graphs.

We call this the bad change because generally all this part does is get you an increase on flood insurance rates with FEMA. This is something that about 60% or 7,920 of the policyholders from FEMA will experience in the state.

The increase will be ranging from $0 to $10 per month ($0 - $120 per year). This means that you will either stick with the current rates you're paying right now (the $0 increase) or you're going to start paying a higher rate (up to $10 per month).

The Ugly

Lastly, we'll cover the remaining portions in this new Risk Rating: the pink and the grey ones. Both of these will still cause an increase on rates for those impacted however this time around it'll be a storm of headaches since it's going to be significantly bigger and one of them is definitely uglier of a change.

The pink portion will impact 6% or 722 policies in Oklahoma. This time around the increase will have a different range. The increase will now range from $10 to $20 per month ($120 - $240 per year).

On the other hand, you have the uglier change, the grey portion which covers 4% or 534 FEMA flood policies in the state. This is the uglier change because the increase will be more than $20 per month (>$240 per year).

Now, both of these will only impact a small amount compared to the good and the bad changes however they pack most of the punch. This increase can easily get you to that $2000 mark on your premiums or even more once the Risk Rating 2.0 arrives.

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 Oklahoma, 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.