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 Pennsylvania and how they can impact your flood insurance in the future.
Last year, Pennsylvania faced a lot of issues when it comes to flood due to the storm season. Being a state that is sandwiched between a couple of lakes and the Atlantic coast, this is something that we can expect to happen during the hurricane season.
Today, we want to talk about the upcoming changes to the National Flood Insurance Program (NFIP) in order to better understand how you can protect your property from flood threats like storm surge this hurricane season. The Risk Rating 2.0 will change a lot of things in the NFIP and will start 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 however that property values aren't the only thing that's looked into. FEMA considers a lot of things when it comes to finalizing the flood insurance premiums for homeowners across the country. You also want to look at things like:
- Overall risk of flooding and flood frequency in the community
- History of flood damage and flood loss on the property
- History of flood claims in the last ten years
- Mitigation efforts made on the insured property. Are there flood openings installed? Is the lowest floor above the base flood elevation?
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.
Let’s talk about the good news with the Risk Rating 2.0. This will be represented by that green portion and will impact 30% or 15,573 of the policies that FEMA has in force in Pennsylvania.
The good thing about this change is the decrease it will bring for these residents. This means that you’re going to get more than a $100 ($1200 per year) decrease on your flood insurance rates with FEMA policies.
This can really help a lot of people ease into choosing the federal flood insurance option especially when there are times that private flood may not be available when risks are too high. We’ve seen this happen with other states where the private flood insurance carriers will non-renew or generally won’t provide insurance for these high-risk areas.
When it comes to the bad news, we’re going to talk about the blue portion of the graph. This will impact about 56% or 28,261 policies in the state.
The bad thing about this is that the change will cause a slight increase in the rates of those impacted. This means that you’re going to get that increase ranging from $0 to $10 per month ($0 - $120 per year).
The range can mean that you might not have any change on your rates with FEMA hence the $0 or you can get up to a $10 per month increase.
Lastly, let’s talk about the percentage left in the graph which is represented by the pink and grey portions. Both portions will take up 7% each when it comes to impacted policies in the state.
The pink portion will impact 3,838 policyholders and will cause an increase ranging from $10 to $20 per month ($120 - $240 per year). This significantly ugly compared to before since it assures that you’ll get an increase on your FEMA policies once the Risk Rating 2.0 starts.
The grey portion on the other hand will be the uglier change. This will impact 3,526 of the policies that FEMA has in Pennsylvania. The increase this time around will be more than $20 per month (>$240 per year) which is very drastic. This increase may cause you to pay for up to more than $100 (>$1200 per year) increase on your FEMA policy once the Risk Rating 2.0 arrives in October.
This is the full graph of these changes coming to Pennsylvania:
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. Nowadays, the biggest threat we face when it comes to floods isn't really the flood damage that happens, but our flood coverage or the lack thereof.
If you have questions on these upcoming changes, what are your flood insurance options in Pennsylvania, 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.