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 Georgia and how they can impact your flood insurance in the future.
The Empire State of the South, Georgia, is one of the states that's on the news in recent years due to floods in recent time. This is bringing a lot of concerns when it comes to flood insurance options since there's always this looming threat of the private flood market backing out when it comes to providing flood insurance in the state. Although this isn't the case, it's best that we prepare and understand your flood insurance options.
Today, we'll unpack the upcoming changes to the National Flood Insurance Program (NFIP), the federal government answer to flood risks, in October as the Risk Rating 2.0 becomes and changes federal flood insurance in the future. We'll discuss the good, the bad, and the ugly changes that the NFIP 2.0 will bring to residents of the Peach State itself.
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 flood insurance premiums would now be based on the value of your property or home starting this October 1st.
When it comes to the rate changes happening across the country, you're going to see these colors in ranges which are the green, blue, pink, and grey range bars. Now, each of these colors represents the good, the bad, and the ugly changes coming to each state.
Now, let's talk about how these colors will change federal flood insurance in Florida once this update kicks in.
Let's start with the good change first which is generally presented by the risk report as the green range bar. What's more important is the percentage and its impact on flood insurance rates.
The green range of good change is the immediate decrease in rates. This decrease can be more than $100 per month ($1200 per year) and will affect about 24% or 19,931 of the NFIP policies in Georgia. This type of decrease can really help a lot of people to stick with their federal flood insurance policy and those who are in more flood-prone areas, which have policyholders face higher premiums.
This can also change how flood insurance options work. Now, maybe you don't have to move into the private flood insurance market who has a history of pulling out from homeowners who have a lot of flood claims and doesn't really like to provide policies for areas where the risk of flooding can be very high.
Now, we have to address the range that takes up most of the room in this update, the blue range which we also like to call the bad change. This is due to the fact that 69% or 56,668 policies will get an increase in their federal flood insurance rates.
The increase starts at that $0 mark per month which can mean that there will be very little change and up to $10 per month ($120 per year). This increase of $0 to $10 per month may seem not that big of a change, but it's important to note that this will be on top of that $700 average premium. This increase can mean that you're going to start paying about $820 on average for your FEMA policy.
Lastly, we want to discuss the ugly changes represented by both the pink and grey range in FEMA's report. These two generally take a small percentage of the policies in a state but present the biggest and most drastic increase in rates.
Starting with the pink range, the increase in federal flood rates will start at $10 up to $20 per month ($120 to $240 per year) and will affect 5% or 3,804 of the total policies in force in Georgia. This can bring up your premiums to that $1000 mark easily.
On the other hand, the grey range is a much uglier change that will cause an increase of more than $20 per month (more than $240 per year). This can really hurt you since premiums will be sure to be more than $1000. This will impact about 2% or 1,598 FEMA policies in Georgia.
You can see a graph of these Risk Rating 2.0 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.
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 Georgia, 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.