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

April 22, 2021 12:30 PM EDT

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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  Divya@lendingtreenews.com

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/3-8-million-homeowners-will-pay-more-for-flood-insurance-under-new-nfip-rules-301275225.html

SOURCE ValuePenguin.com



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