Penny A. Ayers
Starting October 1, Risk Rating 2.0 will fundamentally change the way FEMA rates a property’s flood risk and prices insurance for the more than five million National Flood Insurance Program (NFIP) policyholders.
The new methodology incorporates more flood risk data variables to more accurately reflect a property’s individual flood risk, including the frequency and types of flooding, such as river overflow, storm surge, coastal erosion, and heavy rainfall — and the distance to a water source along with property characteristics, such as elevation and the cost to rebuild. Including a property’s replacement cost value in the new methodology was a major component in the delivery of equitable rates.
ASFPM developed the maps as a more user-friendly format for floodplain management professionals, practitioners, and local leaders to gain greater insight into the new rating system so they can better understand and communicate what’s occurring in their communities. ASFPM used datasets from FEMA’s NFIP policyholder information to create the easy-to-use data visualization tool. The data are broken down across four categories — ranging from a decrease in premiums to an increase of $20/month or more. A color-coded scale indicates the percentage of policyholders in each category.
The state-level interactive map at no.floods.org/rr2changes breaks down projected premium changes for each state and territory. The interactive map also includes corresponding pie charts and data tables that provide policy and percentage change breakdowns.
For those who wish to take a deeper dive, there is also an interactive map by zip code for existing single-family home policies at no.floods.org/rr2sfh and for all existing NFIP policies at no.floods.org/rr2all.
The data compares a snapshot of policyholder premiums from May 31, 2020 with Risk Rating 2.0 premiums, applying statutory increase limits. The comparison does not attempt to estimate premium increases that might have occurred without the new Risk Rating 2.0 pricing methodology.
“These interactive maps will help local leaders and government officials understand how the new and more equitable flood insurance rates will be distributed,” said Laura Lightbody, director of The Pew Charitable Trusts’ flood-prepared communities initiative, which provided support for development of the maps. “In many cases, people have been overpaying for flood insurance; these maps show us that almost 1.2 million policyholders will see decreases very soon.”
This is the program’s first pricing update in more than 40 years.
“Under Risk Rating 2.0, FEMA is fixing longstanding inequities in the NFIP’s flood insurance pricing and establishing a system that is better equipped for the reality of frequent flooding caused by climate change,” said David Maurstad, senior executive of the National Flood Insurance Program. “Risk Rating 2.0 is not just a minor improvement, but a transformational leap forward that enables FEMA to set rates that are fairer and ensures rate increases and decreases are both equitable.”
According to FEMA, only 4% of policyholders nationwide are expected to see substantive increases. In a national rate analysis of current policyholders, FEMA has said 23% will see premium decreases; 66% will see, on average, premium increases of $0-$10/month (which is around what the average is now); 7% will see, on average, premium increases of $10-$20/month; and 4% will see, on average, premium increases of $20 or more per month.
Individual policyholders should contact their insurance agent for a personalized quote.
Background on Risk Rating 2.0
Risk Rating 2.0 will deliver rates that are actuarially sound, equitable, easier to understand, and better reflect an individual property’s unique flood risk. By communicating flood risk more clearly, the new methodology should help policyholders make more informed decisions on the purchase of adequate insurance and on mitigation actions to protect against flooding.
FEMA is implementing the program in two phases:
- Phase I – New policies beginning Oct. 1, 2021 are subject to the new pricing methodology. Also beginning October 1, existing policyholders are able to take advantage of immediate decreases in their premiums when the policy renews.
- Phase II – Renewals of the remaining existing flood insurance policies will be written to the new plan starting April 1, 2022, allowing policyholders an additional six months to prepare for any adjustments.
If your property is located within a FEMA designated flood area, please contact the County Permitting Dept or Floodplain Management before starting any construction projects on your parcel. This will ensure the County reviews all necessary documents that may be needed, such as an Elevation Certificate, and discuss what flood mitigation strategies should be used before issuing necessary permits. It’s more costly to fix building construction mistakes post-construction rather than properly plan.
If your home is in a high-risk FEMA flood zone (for Berkeley County, those zones include AE, A, and V) the government requires the home be protected by flood insurance if they are backed by a federally regulated lender. Lenders must notify borrowers of their flood risk, prior to closing, if their property is in a high-risk flood area. While flood insurance is not federally required if you live outside of the high-risk area, your lender may still require you to have insurance. The NFIP defines covered flooding as any temporary event where the surface of normally dry land is partially or completely underwater. Flooding can be caused by: Overflow of inland (lake or river) or coastal waters, pooling or runoff of surface waters from any source, such as heavy rainfall, mudflows, or collapse of land along the shore of a lake or other body of water due to wave or water currents.
Because Berkeley County participates in the National Flood Insurance Program (NFIP), most properties in the county are eligible to purchase federally subsidized flood insurance. Standard home insurance policies do not cover flood damage, therefore, if you do not have a mandatory flood policy it’s important to determine if your home is at risk. It’s also important to know there is typically a 30-day waiting period from date of purchase until your policy becomes effective. Flood policies can secure coverage for residential properties up to $250,000 for buildings and up to $100,000 for building contents, which can be purchased together or independently. Commercial property is similar with coverage limits at $500,000 for the building and $500,000 for contents. Rating information and further discussion can be found at www.floodsmart.gov
It is important for residents to familiarize themselves with surrounding flood hazards such as swamps, streams, rivers, lakes, or low areas that hold stormwater. You can use the County GIS Mapping System to research properties by address, tax map number, or owner name, and use mapping layers including FEMA Flood Data, National Wetlands Inventory, Berkeley County Hurricane Surge and Water Layers to gain knowledge of potential flood hazards (gis.berkeleycountysc.gov). The County website also allows you to search for available Elevation Certificates that may give you more information about a homes potential flood threat. (https://berkeleycountysc.gov/propcards/floodcert_search.php).
Floodplains are low-lying areas that are susceptible to inundation by floodwaters from any source. Undeveloped floodplains provide many natural resources and functions of considerable economic, social, and environmental value. They include wetlands, fertile soils, rare and endangered plants and animals, and sites of archaeological and historical significance. Two of many issues that result from floodplain development are: development alters the floodplain and the dynamics of flooding, and buildings and infrastructure are damaged by periodic flooding. It’s important to protect our floodplains by promoting green infrastructure, restoring floodplain habitats, and alleviate littering and/or dumping in floodplains.
If you know your home is in an area that floods and/or in a FEMA designated flood zone, make sure that items subject to water damage such as furnaces, HVAC, and electrical equipment are above the flood level. You should also store important documents in a high, waterproof container. If your home has a crawlspace, check that you have venting on at least two sides of the foundation walls and that the vents are permanently open. Make sure you clear any debris from gutters and downspouts to avoid an accumulation of water. If you have a flood insurance policy, spring is a good time to review the terms and limits. You can find more helpful information about flood preparation at ready.gov/floods.