Many residents received a “Letter D” from FEMA which states that “your property was built before your community’s first flood maps were issued, but now there is a flood map (Flood Insurance Rate Map) that shows the flood zone on your property. FEMA’s flood map informs floodplain management building requirements and the mandatory insurance purchase requirements. Starting October 2021, Risk Rating 2.0 will determine flood insurance premiums based on more advanced tools and capabilities that better reflect a property’s individual risk.
What is Risk Rating 2.0?
FEMA updated the NFIP’s risk rating process using a methodology known as Risk Rating (RR) 2.0. Insurance premium rates are changing to reflect risk more accurately under RR 2.0. Some existing policy holders will see rate decreases while others will see rate increases. Rates will be specific to each individual property’s geographic location and building characteristics.
What is not changing under RR 2.0?
Existing statutory limits on rate increases requiring that most rates not increase more than 18% per year will remain in place. FEMA will continue to offer premium discounts for pre-FIRM subsidized and newly mapped properties. FIRMs for mandatory insurance purchases and floodplain management will remain.
When does RR 2.0 go into effect?
Beginning October 1, 2021, new policies were subject to the new rating methodology. Also beginning October 1, existing policyholders eligible for renewal were able to begin taking advantage of immediate decreases in their premiums. All remaining policies renewing on or after April 1, 2022, are subject to the new rating methodology.
What are the flood risk variables considered in RR 2.0?
In RR 2.0, several flood risk variables such as flood frequency, multiple flood types (river overflow, storm surge, coastal erosion and heavy rainfall) and distance to a water source along with property characteristics such as elevation and the cost to rebuild will be considered in the policy premium.
Are elevation certificates (ECs) still being used?
Yes, but ECs are not required for agents to generate quotes or policies using RR 2.0, nor are they required to purchase an NFIP product. An EC can still be provided by a prospective insured, and an agent can enter its data into the RR 2.0 system, to see if it will lower the insured’s premium.
How will RR 2.0 affect me?
According to FEMA, some policyholders are paying more than their fair share while others (those with higher-valued homes) are paying less than they should. Under RR 2.0, it will be ensured that premiums are fair, based on the home’s flood risk. There will be lower premiums for the same coverage if you have a smaller home (replace cost value is factored into premium). Insurance payout after a flood will be more proportional to the premium paid.
If I sell my property, can the new owner also pay a lower, discounted rate?
Yes, if your flood insurance policy is continuous and you do not let your policy meet the lapsed policy criteria.
Call 1-888-379-9531 The National Flood Insurance Program | FloodSmart
