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

Today, we want to talk about the upcoming changes to the National Flood Insurance Program (NFIP) for South Dakota. These changes will be brought by the new Risk Rating 2.0 and considering how, at the time of writing, the northern parts of the state have been subjected to flash floods due to a significant amount of rainfall, we should understand how our shield against these flood threats will impact us.

It's equally important to note that the state is split in half by the Missouri River which is known for its massive contribution to major floods across the state. The Risk Rating 2.0 will start 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. 

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 talk about these changes coming to flood insurance rates starting with the good ones. We'll show this as the green portion in the graph and will be a good change because of how it impacts rates from FEMA.

There will be a decrease of more than $100 (>$1200 per year) when the Risk Rating 2.0 kicks in and will impact 31% or 1,148 policies. This can really help a lot of people who are struggling to keep up with the premium that FEMA is asking for or for those who are opting to go for the federal flood insurance.

The Bad

Now, if there are good things, we can also expect to have bad things with these changes on federal flood insurance rates. This time, we'll show it as the blue portion of the graph which you'll see covers the biggest chunk out of South Dakota flood policies.

The Ugly

Lastly, we want to move into the ugly changes coming to the state. We'll show this as the pink and grey portions respectively. Each will cause a significant increase in flood insurance rates from FEMA and one will be definitely an uglier change between these two.

The pink portion will impact 5% or 192 policies in South Dakota. This time around, there's going to be an increase ranging from $10 to $20 per month ($120 - $240 per year) on your flood insurance rates.

The grey portion, which we mentioned is an uglier change, will cover 4% or 160 of the policies FEMA has in force in the state. If you're part of this portion, you can expect an increase in your rates of more than $20 per month (>$240 per year). This can cause you to have an increase of more than $100 on FEMA rates once the Risk Rating 2.0 kicks in.

You can see the full graph of these upcoming 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 South Dakota, 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.