How do the new flood insurance prices affect me?
How do the new flood insurance prices affect me? Starting next October 1, the Federal Emergency Management Agency, FEMA, will implement a new methodology to determine flood insurance rates, for the first time in 50 years.
FEMA, which has $ 1.3 trillion in coverage for 5 million insured properties in the US, wants the contracts to more accurately reflect the flood risk each home faces. This new approach will serve to readjust policy rates at what some consider to be fairer and more equitable rates.
Under the new model, FEMA, in addition to the elevation where the insured home is located, will consider the replacement cost, the origin, and frequency of the potential risk, if it comes from heavy rains, coastal flooding or storm surge. It will also take into account the influence of climate change.
According to experts, with the model still in place, a Montana homeowner of $ 200,000 and a Florida homeowner of $ 1,000,000 pay the same for flood insurance, when the risks are different. On the other hand, 25% of current claims come from homes that are in areas considered by FEMA as low risk of flooding. Something that the new methodology should improve.
Experts believe that more homeowners will be required to purchase flood coverage, especially those who live in geographic areas like Florida.
The new rates will be implemented in two phases: In the first, which begins on October 1, each new policy will be subject to the new regulations. In the second phase, which begins on April 1, 2022, the rest of the policies will be signed under the new methodology. How do the new flood insurance prices affect me?
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