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

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

Today, we'll take a dive into the Land of 10,000 Lakes, Minnesota. As the state that borders Canada, is in close proximity to Lake Superior and has a lot of inland bodies of water within the state itself, you can expect that flood can happen anytime even with a small amount of rain. With this in mind, we want to cover the upcoming changes to federal flood insurance in Minnesota.

The National Flood Insurance Program (NFIP) is heading closer to the changes it will have on flood insurance rates and more with the Risk Rating 2.0 that 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. 

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

The Good

Starting with the good things first, 29% or 3,094 policies will be experiencing the good change from this NFIP 2.0 update. The reasoning behind this is because those who are in that green slice will get an immediate decrease on flood insurance rates of more than $100 ($1200 per year).

When it comes to states like Minnesota where most properties are in that high-risk flood zone or the special flood hazard area (SFHA) like Flood Zone A or AE, flood insurance rates can become really expensive. Getting this type of decrease can really help a lot of people get more flood insurance.

The Bad

Now, let's talk about the change that's impacting most federal flood insurance policyholders in the state: the blue slice. This blue slice actually represents a bad change for 64% or 6,760 policies in Minnesota as this will cause an increase in flood insurance rates.

The increase will range from $0 to $10 per month ($0 - $120 per year). This means that you may not get any changes with your flood insurance rates or you can get than $10 increase by the time October comes with this NFIP 2.0 update.

The Ugly

Lastly, let's talk about the pink and grey slices which we call the ugly change. Now, we'd like to put a disclaimer that this falls under the same change with an increase in flood insurance rates, but one is significantly uglier than the other.

The pink slice will cover 4% or 397 policies and will get you an increase ranging from $10 to $20 per month ($120 - $240 per year). Now, if you compare this with the blue slice, you might get double the increase that they will be getting, and depending on your property's value, flood mitigation efforts, and flood zone, this should sound like you're going to start paying for that more than $1000 premium.

The grey slice is the uglier change between this two because of how drastic the increase is with your flood insurance rate. This will impact 3% or 292 policies in the state and will cause an increase of more than $20 per month (>$240 per year). This means that you might even start to get an increase of $100 per month on your flood insurance rates with FEMA and the NFIP.

You can see a full graph of these changes below:

The Flood Insurance Guru | Minnesota 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 Minnesota, 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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Minnesota is a gorgeous state with a lot of history. Some of that history includes some historical floods.

I mean its called the land of 10,000 lakes.

So are there really 10,000 lakes?

That is a question we hear all the time about Minnesota.

Nope there is actually more than than that. It has been said that there are more than 12,000 lakes of at least 10 acres. depending on what you define a lake us there could be considered more than 15,000 lakes.

That is a lot of water for one state. As you can imagine the land of 10,000 lakes could cause you as a property owner 10,000 flood problems but is your flood premium one of them?

That's what we want to talk about today. You can also checkout our podcast below where we discuss this matter.

 

Its very common for Minnesota to have flood issues especially since it is home to the Mississippi river, St. Lawrence river, and Red River North.

Minnesota typically gets a lot of spring runoff from its snow melt. It gets more snow every year than most other parts of the country.

So when this snow melts it has to go somewhere and one of these 10,000 lakes is usually one of the places it ends up.

Some of these lakes maybe considered closed basin lakes.

So what is a closed basin lake?

Closed basin lakes can have a major impact on your flood insurance options in Minnesota.

So are you going to be dealing with $10,000 flood premiums in Minnesota because of these issues?

Maybe or maybe not

Lets look at some factors that can drive flood insurance rates in Minnesota.

Many older homes in Minnesota have full basements which can have a major impact on flood insurance premiums.

Understanding the difference between full basements and walkout basements is important.

This could be the difference between a $800 flood premium and a $2000 flood premium.

Something else to understand is what flood zone you are in.

There are three main flood zones in Minnesota. The videos below give you a brief description of each one of them.

 

 

Its important to understand which flood zones will require flood insurance and which ones will not. Its also important to understand that being in a low risk flood zone does not mean your property will not flood.

Now maybe you have a low flood premium or maybe you have a high flood premium in Minnesota. If you want to look at your different options simply click here.

You can also find more resources on our YouTube channel where we do daily flood education videos.

Remember we have an educational background in flood mitigation. This means we are here to help you understand your flood risks, flood insurance, and mitigating your property long term.