3.8 Million Homeowners Will Pay More for Flood Insurance Under New NFIP Rules
Over 10,000 homeowners each in Florida, Texas, Louisiana, New Jersey and New York will face the highest price increases, ValuePenguin.com finds
NEW YORK, April 22, 2021 /PRNewswire/ -- The Federal Emergency Management Agency (FEMA) is taking steps to more effectively assess the flood risk that homeowners face. The agency's National Flood Insurance Program (NFIP) recently released new flood insurance rating procedures that are meant to equitably distribute the cost of insurance for potential flood damage based on the risk a property faces.
A new ValuePenguin.com analysis of FEMA's Risk Rating 2.0 — the new methodology that goes into effect on October 1st— found that more than 3.8 million homeowners will see rates increase, but 1.2 million homeowners will actually see their flood insurance premiums decrease.
Key Findings:
- Under FEMA's Risk Rating 2.0 system, the cost of flood insurance will increase for 3,846,702 homeowners, but the highest price surges will affect only 192,836 of these policyholders — or 4% total. There will also be immediate cost reductions for 1.2 million or 23% of flood insurance policies.
- The largest proportion of homeowners in Hawaii (87%), Texas (86%), Mississippi (84%), West Virginia (83%), Florida (80%) and Louisiana (80%) will see their flood insurance premiums increase under FEMA's new ratings. More than 10,000 homeowners each in Florida, Texas, Louisiana, New Jersey and New York will face the highest price increases.
- More than 8 in 10 existing flood insurance policies in Alaska will see immediate decreases because of Risk Rating 2.0. At least half of the policies in the District of Columbia, Maryland, Michigan and Utah will have lower rates.
- FEMA's rate changes promise to set right the problem of policyholders paying rates that don't reflect the true risk they face, but rate increases will be moderate. Despite the fact that many homeowners will need to pay more for flood insurance after Risk Rating 2.0 goes into effect, existing limits on annual rate increases will still be in effect. This means that most homes won't experience year-over-year price hikes that are more than 18%.
According to Andrew Hurst, Insurance Data analyst at ValuePenguin.com, "Homeowners should be aware of the limitations of a federally backed flood insurance policy, which come with a 30-day waiting period before taking effect. Between the time you purchase a policy and the date when that policy becomes effective, you effectively have no coverage from flood damage". He adds, "With Hurricane season nearly upon us, homeowners need to make sure they have enough flood insurance, because you can't buy flood insurance right before a storm hits. You can consider private flood insurance, which can be cheaper, allows for more customization and has a shorter waiting period (10-14 days)."
To view the full report, visit: https://www.valuepenguin.com/new-risk-rating-flood-insurance-rate-increases
ValuePenguin consolidated the information published by the Federal Emergency Management Agency (FEMA) National Flood Insurance Program (NFIP) regarding the number of policies in effect and those scheduled to see a decrease or increase after the implementation of Risk Rating 2.0. The analysis includes rate changes for each of the 50 states and the District of Columbia.
Where Will the Largest Proportion of Homeowners Pay More for Flood Insurance? |
||||
State |
Total no of Flood Insurance policies in effect |
Percentage of homeowners who will pay more for flood insurance |
Percentage of homeowners who will pay less for flood insurance |
Percentage of homeowners whose flood insurance premiums will increase more than $240 a year |
Hawaii |
61,400 |
87% |
13% |
4% |
Texas |
768,600 |
86% |
14% |
3% |
Mississippi |
61,300 |
84% |
16% |
4% |
West Virginia |
13,300 |
83% |
17% |
8% |
Florida |
1,727,900 |
80% |
20% |
4% |
Louisiana |
495,900 |
80% |
20% |
3% |
New Jersey |
217,200 |
79% |
21% |
5% |
Alabama |
52,700 |
79% |
21% |
3% |
Nevada |
10,600 |
79% |
21% |
3% |
Georgia |
82,000 |
76% |
24% |
2% |
Arizona |
29,300 |
75% |
25% |
2% |
South Carolina |
208,600 |
74% |
26% |
3% |
North Carolina |
139,800 |
74% |
26% |
3% |
California |
215,000 |
73% |
27% |
4% |
Idaho |
5,600 |
73% |
28% |
3% |
Tennessee |
27,500 |
72% |
28% |
5% |
Kentucky |
19,400 |
71% |
28% |
6% |
Oklahoma |
13,000 |
71% |
30% |
4% |
Minnesota |
10,500 |
71% |
29% |
3% |
Pennsylvania |
51,600 |
70% |
30% |
7% |
Oregon |
24,900 |
70% |
30% |
4% |
Missouri |
19,700 |
70% |
30% |
7% |
South Dakota |
3,700 |
70% |
31% |
4% |
New York |
171,100 |
68% |
32% |
7% |
Vermont |
3,300 |
68% |
33% |
8% |
Washington |
32,500 |
67% |
33% |
4% |
Arkansas |
14,400 |
67% |
33% |
4% |
Maine |
7,700 |
67% |
34% |
9% |
Wyoming |
1,700 |
67% |
33% |
3% |
New Hampshire |
7,700 |
66% |
35% |
7% |
New Mexico |
11,600 |
64% |
35% |
2% |
Connecticut |
35,000 |
63% |
36% |
9% |
Iowa |
12,600 |
63% |
37% |
6% |
Montana |
4,300 |
63% |
38% |
2% |
Delaware |
26,100 |
62% |
38% |
2% |
North Dakota |
13,200 |
62% |
38% |
1% |
Kansas |
9,600 |
62% |
38% |
3% |
Massachusetts |
58,500 |
61% |
39% |
6% |
Illinois |
38,000 |
58% |
41% |
4% |
Colorado |
20,000 |
57% |
43% |
4% |
Nebraska |
9,100 |
57% |
44% |
7% |
Wisconsin |
12,900 |
56% |
44% |
2% |
Virginia |
104,800 |
55% |
45% |
2% |
Ohio |
29,000 |
55% |
45% |
4% |
Indiana |
20,100 |
54% |
46% |
3% |
Rhode Island |
12,000 |
54% |
46% |
3% |
Michigan |
20,500 |
46% |
54% |
1% |
Utah |
3,800 |
46% |
53% |
1% |
Maryland |
65,000 |
39% |
61% |
1% |
District of Columbia |
2,400 |
27% |
72% |
1% |
Alaska |
2,300 |
14% |
84% |
1% |
About ValuePenguin.com:. ValuePenguin.com and its parent company, LendingTree® have a common mission: to empower consumers with tools, information, and resources to help them make smarter, more informed financial decisions. For more information, please visit www.valuepenguin.com, like our Facebook page or follow us on Twitter @ValuePenguin.
Media Contact:
Divya Sangam (Ms.)
646 693 8445
[email protected]
SOURCE ValuePenguin.com
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