Under new Risk Rating 2.0, Florida flood ins. premiums are about to go up for most

Published: March 31, 2022 12:45 PM EDT
Updated: March 31, 2022 6:19 PM EDT

A Florida necessity is getting more expensive for many. FEMA’s National Flood Insurance Program is changing the way it calculates what each property owner has to pay.

The new way is called Risk Rating 2.0.

Insurance experts say FEMA’s program has been operating at a deficit since it began and congress has bailed it out a few times already.

But Risk Rating 2.0 is supposed to be a fairer, more accurate model; making sure everyone pays their fair share.

As you know, Florida is no stranger to flooding, and for decades homeowners have relied on FEMA’s National Flood Insurance Program because of the lower rates.

Starting April 1, and when policies renew, policyholders will get a new rate according to the new risk rating.

The bad news; 80 percent of Floridians will see a price increase.

FEMA says the new plan lays out a homeowner’s yearly flood insurance rate based on how likely it is that their home would flood and how much it would cost to repair.

Mark Friedlander is with the Insurance Information Institute tells me this is how private flood insurance works. “It individualizes your risk. So it’s very specific on your individual properties, risks, it’s not a community-wide assessment, like it may have been in the past.”

FEMA has said in the past, the goal is leveling the paying field.

David Maurstad, a senior executive with the National Flood Insurance Program, said in a 2021 interview, “Policyholders with lower value homes that have been paying more than they should. They will no longer bear the cost for the policyholders with higher value homes who have been. They’ve been paying less than they should. Upgrading 2.0 fixes this injustice.”

Your rate will slowly increase until you hit what FEMA thinks you should pay but no more than an 18 percent increase each year.

For example, FEMA might decide someone who pays $1,000 a year for flood insurance should be paying $3,000 because they live on a canal. When their policy renews, the maximum it would go up is $180 dollars the first year.

The next year, another 18 percent, until it hits the $3,000 mark.

But Friedlander said that’s unlikely for most policyholders.

“Roughly 68% of homeowners who currently have a National Flood Insurance Program policy, will see an increase ranging from $0 to $10 a month, so at the most, $120 a year. So a very modest increase”, Friedlander explained.

Senator Marco Rubio recently co-sponsored a bill to try to keep policyholders’ rates from going up.

Some members of Congress worry the increases will cause people to cancel their coverage.

Friedlander says don’t do that, and instead, look at other options if you aren’t happy with your new rate.

We’ll continue to follow what happens with polity holders in Southwest Florida. YOu can email [email protected] to let us know what happens with yours.