As you may already know, the FEMA Risk Rating 2.0 program went into effect on October 1, 2021. Through Risk Rating 2.0, the National Flood Insurance Program (NFIP) is looking to create a more stable flood program. 2.0 provides more equitable rates by leveraging technology with industry best practices. By doing so, NFIP will provide a more precise reflection of a property’s flood risk.
What does that mean for the insured?
Insureds will now be paying a rate that is based upon more than just their elevation level. With this change, FEMA is hoping to provide rate decreases to approximately two-thirds of their policyholders. Additional factors will now be taken into consideration, such as: Individual level mitigation efforts, community level mitigation efforts and state and local mitigation efforts.
Watch this video to learn more about how this shift will affect buyers and sellers in the real estate market.
Fast facts about the National Flood Insurance Program:
- NFIP provides over 1.3 trillion dollars of coverage to policyholders
- NFIP currently has over 5 Million policyholders
- NFIP covers properties in approximately 22,500 communities
With the implementation of 2.0, grandfathered rates for policyholders will be disappearing. The good news is FEMA will still have an 18% cap on annual premium increases. In addition, they will still allow policyholders to transfer their discount to a new owner when a property transfers ownership.
For any additional questions you may have in regards to these changes, you can reach out to Destiny Olmstead with Assured Partners, a Downing-Frye Preferred Partner.