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 Vermont and how they can impact your flood insurance in the future.
In today's blog, we talk about the upcoming changes to flood insurance in Vermont, the Green Mountain State. The National Flood Insurance Program (NFIP) is bound to change its rating system for the people they provide flood policies to. These changes will be a big part of the Risk Rating 2.0 that's going to start impacting the federal flood insurance landscape on October 1, 2021.
We will understand what the Risk Rating 2.0 changes can mean to flood insurance and answer:
- What are the impacts?
- Who will be impacted?
- The good, the bad, and the ugly
- When will these changes happen?
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.
Starting off with the good things, Vermont residents who have flood policies with FEMA and the NFIP will be experiencing these changes coming to Risk Rating 2.0. The good thing is due to the fact that there will be a decrease in flood insurance rates with FEMA.
This change is something that 33% or 1,103 policyholders will experience. The decrease itself will be more than $100 (>$1200 per year) which can kick in immediately. Considering that Vermont has the highest average when it comes to flood insurance premiums, this can really help a lot of people opt-in to that federal flood insurance market.
There are also some bad changes happening to residents of Vermont when it comes to federal flood insurance. We'll show this as the blue portion of the graph and will cause an increase in flood insurance rates.
This will impact 50% or 1,669 policies in the state who are going to get that small increase. The increase in rates will range from $0 to $10 per month ($0 - $120 per year). Generally, this range can put you in a position where you might not have any change with your flood insurance rates with FEMA which is why there's a $0 there.
Lastly, we also have the ugly changes which will be shown by the pink and grey portions. These changes will impact a total of 17% of the policies that FEMA has in force in the state and will cause a more significant increase in your rates once the Risk Rating 2.0 kicks in. Let's break them down a bit.
The pink portion will cover the bigger 9% of the two or about 307 policies in the state. The increase this time around will be ranging from $10 to $20 per month ($120 - $240 per year) which is why we put this in the ugly change. Vermont has expensive flood insurance premiums from FEMA and when you have to deal with an increase, it may not really help you in choosing federal flood insurance.
On the other hand, we still have to address the grey portion which is the uglier change between the two. This is generally because the increase will be more than $20 per month (>$240 per year). The increase is also expected to have some policyholders even get more than $100 per month increase in their rates with FEMA. This will impact 8% or 252 policies in Vermont.
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. Some would even say that the current NFIP ways are already outdated which really begs for this Risk Rating 2.0 to happen.
If you have questions on these upcoming changes, what are your flood insurance options in Vermont, 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.