Will Your Flood Insurance Premiums Rise?
Most people with flood insurance buy it through a government program spearheaded by the Federal Emergency Management Agency (FEMA). However, changes in 2020 could lead to a spike in premiums, which many homeowners are probably not prepared to shoulder. Below, one of our Daytona Beach flood damage attorneys reviews what you need to know.
Risk Rating 2.0
Currently, all homeowners in a high-risk flood zone pay the same rate for flood insurance coverage. The rates can differ depending on the town or village a person lives in, but everyone in the same area typically pays the same rate.
In 2020, FEMA will begin calculating premiums based on how close your home is to the water and how much it will cost to replace the home. It turns out that risk is not the same for all homes, even those in the same floodplain. Instead, some homes in a floodplain are only a moderate risk of flooding, while others are high risk. FEMA is using GPS data to come up with a specific flood risk for each individual piece of property. This new calculation should end up increasing rates for many homeowners.
Why Are Rates Increasing?
FEMA is currently $20 billion in the hole, having paid out many claims over the past decade for major storms. So, to close the gap, they have devised a new way to calculate premiums, which will increase how much many people will pay.
If you are close to the water, you should expect your premiums to go up considerably. The same is true if your home is very expensive to repair. Payouts for storms have outstripped the amount of premiums that FEMA has collected over the years, and they are now moving to put their program on firmer footing.
Other Options for Flood Insurance
The new rates are expected to fully go into effect in October 2020. If you begin choking when you see your new premiums, what other choices do you have?
Actually, now is the best time in decades to try and find different insurance policies. As of 2017, about 33 companies have begun selling flooding insurance themselves. Historically, private insurers avoiding offering flood insurance because they could not calculate risk. But better mapping tools have encouraged some to offer policies, and the increased competition might mean lower premiums for some owners.
Homeowners can also petition FEMA to have a home taken out of the floodplain zone if they can show that it is elevated beyond the reach of stormwater. In doing so, they can often forgo flood insurance—but that is a risky bet.
According to Gothamist, FEMA is considering a new rule that states homeowners without flooding insurance could be ineligible for federal disaster aid after a hurricane. Any rule change like this makes it all the more vital to have flood insurance.
Suffered Flood Damage? We Can Help with a Claim
Bundza & Rodriguez, P.A. is a leading firm in Daytona Beach helping homeowners after a natural disaster. For more information, or to schedule a consultation, please contact us today.