The Build Back Better Act has been going back and forth on whether or not it aims to tax the higher-earning households or not. A lot of things are coming with President Biden's expansive social and environmental bill that aims to create a better quality of life for families across the United States. This includes providing and helping American families during crisis especially after what we experienced due to COVID-19 and addressing climate change impacts to our communities.

Does Build Back Better Mean Better Flood Insurance?

In the midst of the shape-shifting nature of political parties, the initial intent to address the risks and dangers of climate change is being scaled down. We won't dwell into the politics of it all despite it having a firm grip on how Build Back Better goes; that's a story for another day.

Will Build Back Better really build a better structure against climate change and really address the needs of our country's first line of defense against floods? Is Build Back Better just building a broken flood future for America?

What Build Back Better Includes

In the article of MSNBC on explaining the coverages of this act, they covered the following: $380 Billion will be for Child Care and Education, $555 Billion will be for Climate Change and Clean Energy Investments; this generally covers the $12,500 incentive for those looking to buy an electric car like Tesla or install solar panels. Capping prescription drugs costs at $2,000 per year for seniors as well as including Medicare coverage for hearing benefits, and $200 Billion for child tax credit extension to name a few.

Does Build Back Better Mean Better Flood Insurance?

However, as the bill was passed a lot of things got changed such as taking out the dental and vision coverage, free community college, lower prescription drug costs, and the paid family leave which was something that public polls were really hoping for.

The changes also include a significant scaling down of funding for the risk mitigation for climate change which is, to be honest, what Build Back Better was for.

Does Build Back Better Include Flood Risk?

Flood Map

We want to focus on the significant changes on how Build Back Better addresses one of the key concerns with climate change and safeties of families across the country: the federal flood insurance.

Build Back Better was initially drafted to cover $3 Trillion to ensure that all items are ticked by dotting all the i's and crossing all the t's, but across its 12-week course, a lot of things were cut down and only about $1.75 billion was approved by the senate. Simply put, this meant that some areas' overall costs were also lowered.

Does Build Back Better Mean Better Flood Insurance?

Initially, the original Build Back Better draft provided $3 Billion to improve the flood mapping hence addressing the overall understanding of the flood hazard of communities with or without an extreme event like disasters, hurricanes, and things like that. This proposed amount intends to create a system in which federal flood insurance will be able to provide you and your community with updated flood risks based on the flood mapping.

You might be thinking, this number's too big just to address flood mapping in which we would say the Association of State Floodplain Managers stated that FEMA would need between $3 billion and $12 billion to address this concern with flood mapping across the country.

This intends to prepare for the impacts of climate change especially with the frequency of flooding and its severity. With this funding, flood hazard mapping will not only address your current flood risk but also your future flood risk. This can really be helpful especially for disadvantaged communities who don't even have a flood map. In some cases, some flood maps take 15 years to get updated.

According to E&E News, the approved bill ended up cutting down the funding for this area to $600 million. That amount is just 20% of the proposed costs needed to make sure that flood mapping will be accurate and up-to-date.

Does Build Back Better Mean Better Flood Insurance?

It's important to keep in mind that the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP) don't have a flood map for all and communities across the United States. The impact of cutting down the funding for this area can mean that your community will still have to wait a year or maybe even more just to get a flood map that reflects your current flood risks.

Additionally, what officials should know is that flood maps are crucial in understanding where the water is coming from. This also helps everyone understand where and how to build developments as this direct changes how floodwater behaves especially for vulnerable communities like those surrounded by rivers or the coasts.

The thing is flood hazard mapping isn't just for everyone to know their flood zones for flood insurance, but also to understand first the risk of flooding in the area.

Flood Insurance Premiums

Another area of flood insurance that Build Back Better wanted to address is allotting $1 Billion for subsidizing flood insurance premium cost within the federal flood market. This intends to allow low-and-moderate income households to be able to buy flood insurance from FEMA and the NFIP. 

Generally, flood insurance with FEMA and the NFIP averages at about $1,000 per year, and with the Risk Rating 2.0 Program, this number can get more expensive for policies. It's important to keep in mind that a lot of people who aren't required to get flood insurance don't buy one because of its costs.

Does Build Back Better Mean Better Flood Insurance?

This funding helps get the program running and helps people understand that the cost of flood insurance can be cheap without the risks of not getting enough coverages. A lot of homeowners would be buying cheap flood insurance, not knowing that it won't fit their coverage needs. People do this to avoid the well-known affordability costs with FEMA and the NFIP.

However, this funding for the financial assistance when purchasing a federal flood insurance policy was also cut down to $600 million as well

The Future of NFIP

Looking at the bright side of the fence, it's still a good thing that federal flood insurance will still be included in the conversation as we move forward with the Build Back Better act.

Despite the funding being significantly scaled-down, this additional funding for FEMA and the NFIP can address the issues within the federal side of flood insurance. However, this action of scaling down what the Federal Emergency Management Agency (FEMA) really needs makes one ask...

When will flood risk become a priority for the government? For now, only time can tell as the Senate modifies this part of Build Back Better.

If you have any questions on how this will impact you, about your flood insurance, or maybe your flood insurance is trash and you want to update, click below to contact us.

The Flood Insurance Guru | 2054514294

You can also access our Flood Learning Center where we try to answer your common questions about floods, flood insurance, and everything in between.

Flood Insurance Guru | Service | Knowledge Base

Remember, we have an educational background in flood mitigation which lets us help you understand your flood risks, flood insurance, and mitigating your property long-term.

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The federal flood insurance industry has changed a lot since the Risk Rating 2.0. One of the biggest changes is how the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP) will look at flood zones. FEMA, NFIP, and mortgage lenders would have to only follow the new rating system and regulatory standards of the Risk Rating 2.0.

Are Preferred Flood Zones Gone?

As natural disasters are becoming progressively more destructive and unpredictable, we want to discuss how changes on looking at flood maps would change.

Risk Rating 2.0

The implementation of the Risk Rating 2.0 or simply NFIP 2.0 significantly impacts the rates going around with federal flood insurance. For the most part, this means that there will be an increase in rates as the new program gears towards a more accurate flood risk per property. We'd like to call this the fingerprint of your flood risk due to the nature of having an individual property getting a unique risk rating score.

This program basically says that each property will get a unique flood risk score per variable with the rating engine system in from both the legacy program from Federal Emergency Management Agency (FEMA) and new things coming into consideration.

The things that will carry over from the legacy program which will still have a bearing on your flood insurance rates are as follows:

  • Flood zone designation based on community flood maps. Flood zones also have the bearing to require flood insurance if you're in the Special Flood Hazard Area (SFHA) or High-Risk Zones
  • Flood Insurance Claims. Despite changing to a claims variable system, flood claims with FEMA may still impact your overall rates.
  • Policy assumption and policy transfer.
  • The Grandfather Rule.
  • Pre-FIRM and Newly Mapped discounts.

Are Preferred Flood Zones Gone?

The new things that will impact your rates will be from:

  • Types of flooding that your property experience.
  • Flood frequency.
  • Distance to any water source.
  • First-floor height or distance of the first livable area to grade (ground).
  • Elevation of the structure or the property itself. How high is the first floor of the property compared to the ground hence properties that are elevated are most likely to get a decrease due to this.
  • Replacement costs. This means that higher-valued homes will get an increase and lower-valued homes will get a decrease due to the overall expenses to rebuild the property due to flood damage.
  • Flood Risk Mitigation Measures made on the property.

Despite these changes to the overall rating engine systems in the Federal Emergency Management Agency (FEMA), your flood insurance policy will still follow the same amount of $250,000 for building and $100,000 in contents max for flood coverage.

The Increased Cost of Compliance (ICC) is also one of the things that will carry over from the legacy National Flood Insurance Program to this new program as well as the Community Rating System (CRS) discounts.

 

Are Preferred Flood Zones Gone?

Traditionally with the National Flood Insurance Program (NFIP) and even in private flood insurance companies, you'll see low-risk flood zones and special flood hazard areas (SFHA) or high-risk flood zones. I can even remember the time where I can tell your flood insurance premiums in these low-risk flood zones like Flood Zone X depending on the coverage amount. So you'd see immediately how these low-risk zones or preferred zones immediately impact your rates and these rates are about $400 to $600 per year.

On the other hand and you would notice with the new program through Risk Rating 2.0, flood zones no longer impact your flood insurance rates with FEMA and the NFIP. So the perks of being in a preferred zone and that preferred rate will no longer be in the picture. This means that federal flood insurance will no longer rely on a Flood Insurance Rate Map (FIRM) to say that you will get a preferred rate since flood zones don't impact rates anymore.

Are Preferred Flood Zones Gone?

On the other hand, it's a different story when it comes to the private flood insurance industry. We're still noticing a lot of private flood carriers who look into these low-risk zones and provide that same preferred rating on premiums of about $400 to $600. It's important to note also that since these insurers are managed by private companies, they don't necessarily need to follow the changes coming to federal flood insurance.

Despite these changes and flood zones only becoming more of a factor that determines whether or not you're not required to buy flood insurance for your property, it's still important to get a form of security for a property. If you want us to help you get a desirable quote from both federal and private flood insurance, click the link below to reach us.

Buy Flood Insurance Now!

We also have a flood learning center where we try to answer your frequently asked questions about flood and flood insurance.

Flood Insurance Guru | Service | Knowledge Base

Remember, we have an educational background in flood mitigation which lets us help you understand your flood risk, flood zone, flood insurance, and mitigating your property long-term.

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

Oregon has been through a lot of floods in more recent years and this is with heavy consideration to their long history of flooding just like most states. What’s notable is that in recent years, these flood events occur earlier in the year just before the spring season starts.

The Flood Insurance Guru | Oregon Flood Insurance: New Federal Flood Insurance Risk Rating 2.0

Considering that it’s most likely that the state of beaver state is prone to floods due to spring thaw, wherein the ice and snow from the previous winter starts to melt and seep in the ground which causes a lot of runoff as well as the constant possible threat of beavers causing a widespread flood.

Getting flood insurance policies is a great start for homeowners in preparing for flooding everywhere. However, this won't really get you much if you fall out of the updates and miss the upcoming changes. This is why it’s important that we cover the changes coming to the National Flood Insurance Program (NFIP) with the Risk Rating 2.0.

The Risk Rating 2.0 update 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. 

It's important to note however that there are a lot of things that will come into play when finalizing your flood insurance premiums with FEMA. You want to consider these things as well such as:

  • Overall risk of flooding and flood frequency in an area
  • History of flood damage and flood loss
  • History and frequency of flood claims in the last 10 years
  • Mitigation efforts made on the property. Is the lowest floor raised above the base flood elevation? Are there flood openings installed?

This is just to name a few, so as you can see this doesn't really mean that an expensive property will immediately get a rate increase and all people that have lower-valued homes will get a decrease.

The Flood Insurance Guru | Illinois Flood Insurance: New Federal Flood Insurance Risk Rating 2.0The Flood Insurance Guru | Oregon Flood Insurance: New Federal Flood Insurance Risk Rating 2.0

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 National Flood Insurance Program provides coverage on flood damages to buildings which max to $250,000 on residential property and up to $500,000 on commercial property. This is with coverage on damaged contents or personal property that maxes to $100,000. If you're planning to go through FEMA for your policy, you will have to adjust to that expected 30-day waiting period. 

The Flood Insurance Guru | Illinois Flood Insurance: New Federal Flood Insurance Risk Rating 2.0The Flood Insurance Guru | Oregon Flood Insurance: New Federal Flood Insurance Risk Rating 2.0

The Good

First, let’s start with the good changes coming to federal flood insurance rates. This will be shown by that green portion and will cover 30% or 7,511 policies in the state.

The good change will come in form of a decrease in flood insurance rates. The decrease may be up to more than $100 ($1200 per year). Since this change can be immediate, this can really help a lot of people who find it hard to manage flood policies with FEMA because of its more than usual price increases on flood policies.

The Bad

Now, let’s talk about the bad changes which will be in that blue portion of the graph.

This bad change is because generally, this portion represents a small increase in flood insurance rates. The increase will be ranging from $0 to $10 per month ($0 - $120 per year). This will impact about 58% or 14,399 policies in Oregon.

What this range means is that you might not even experience an increase if you fall down the $0 mark however it’s important to note that most of these properties in the blue portion will be getting up to a $10 increase with the Risk Rating 2.0.

The Ugly

Lastly, we want to cover the last two portions which are also the ugly changes. These will be in the form of the pink and grey portions in the graph. Both will bring an increase in rates significantly.

The pink portion will cover 8% or 1,942 policies in Beaver State. This will bring an increase to these residents ranging from $10 to $20 per month ($120 - $240 per year).

When it comes to the grey portion, we’re going to start to talk about the uglier change which will impact 4% or 1,000 policies in the state. This will cause you to get an increase of more than $20 per month (>$240 per year). The increase can easily go up to more than $100 per month (>$1200 per year) for some of the policyholders in the state.

You can see the full graph of these changes below:

The Flood Insurance Guru | Oregon Flood Insurance: New Federal Flood Insurance Risk Rating 2.0

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 Oregon, 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.

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