Politics & Government
New Rules Will Drive Flood Insurance Rates Up
FEMA's National Flood Insurance Program is looking to bring more equitable pricing to flood insurance.
New rules are now in place that change the way flood insurance is priced for Illinoisans and the rest of the country.
The Federal Emergency Management Agency (FEMA) has unveiled Risk Rating 2.0, which transforms the National Flood Insurance Program by bringing more equitable pricing to flood insurance.
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The research found for the most part, property owners in lower-value homes and neighborhoods will be paying less, while property owners in higher-value homes and neighborhoods will be paying more.
Nick VinZant, researcher with QuoteWizard, said there are several factors to determine a property’s flood risk.
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“Historical flood frequency, the type of floods that it has been, river, lake, hurricane, natural disaster, the unique characteristics of your property areas, and the cost of replacing your home,” said VinZant.
VinZant said what it boils down to is that the riskiest properties prone to floods are going to have to pay the bulk of the share.
With miles of waterfront in Illinois, including the Mississippi and Illinois rivers, the data showed 37,677 policies will be affected, with 58% of them seeing an increase in rates. The rest will see a decrease.
Analysts found that Hawaii, Mississippi and Texas have the highest percentages of policyholders who will see a price increase in flood insurance. More than half of policyholders in Michigan, Alaska, Maryland and Utah will see a price decrease.
Last year, the National Flood Insurance Program (NFIP) paid out nearly $578 million in Illinois.
Recent years have seen enormous growth in the number of private flood insurance policies. Some homeowners may pay more through the NFIP than they would through a private company, which is one of the causes for the growth.
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