Starting October 1st FEMA will update their rating system for flood insurance
Some important changes that will affect all property owners is the removal of the Flood Map Zones
There will no longer be any Preferred Flood Zones such as an X Zone
Why is this important?
If you have a loan on a property your lender can now re-evaluate the need for flood insurance to protect their interest
What about Grandfathering?
Removal of Grandfathering will go into effect October 1st as well
A lender will now be able to re-rate your property and determine if flood insurance will be a requirement of your loan
Rating Factor changes to FEMA Flood insurance
Properties will now be rated based on
Cost to Rebuild
Construction type (brick or frame)
Proximity to water (flooding source)
Elevation of property (FEMA will determine this)
When does Risk Rating go into Effect?
Phase 1 is October 1st on new business
Phase 2 is April 1st 2022 on renewal business
Renewal process for Flood Insurance
Your flood insurance renewal will be re-rated into Risk Rating 2.0 at renewal and if the rate is more FEMA can only raise your rate 18% a year until the full rate is realized
If Risk Rating 2.0 produces a lower rate you will get the benefit and your renewal rate will be reduced
September 1st you can see the new rates on your property or any property are interested in
Should you buy Flood insurance now if you don’t have any?
If you believe your property was once in an AE zone but was moved to a preferred zone recently it is possible your lender will make you purchase flood insurance after October 1st
Buying a preferred flood insurance now will cap your rate increase by 18% a year if the full flood insurance rate is more expensive than the preferred rate
If you don’t buy flood insurance and your lender requires you to buy flood insurance you would have to pay the full amount
here is another article on Why you should buy Flood insurance now