Today we wanted to update you on Flood Risk Rating 2.0, which is an update to the method that The Federal Emergency Management Agency (FEMA) uses for rating flood insurance policies.

Currently, FEMA uses a method that has changed little since the 1970s, using an elevation certificate with basic elevation info of a property and flood insurance rate maps. After decades of storing data, it’s time that FEMA uses it and become more data focused to determine how much each area is truly at risk of flooding.

What Is Flood Risk Rating 2.0?

Under Flood Risk Rating 2.0, FEMA will start rating policies based on the actual risk they face based on harnessing decades of mapping data, loss history, and groundbreaking technologies. By doing this we can get a better understanding of a property’s unique flood risk and how that risk can be reflected in the cost of your flood insurance.

(Click the Video Above to See Michael McMahon Answer Your Most Pressing Questions About Flood Risk Rating 2.0)

How Will Flood Risk Rating 2.0 Affect Me?

The switch to Flood Risk Rating 2.0 will affect everyone. That’s guaranteed. Below are the dates you can expect to see it affect your insurance premiums as FEMA is starting with a phased approach.

  • New policies effective 10/1/2021
  • All remaining policies renewing after 4/1/2022

However, unlike many insurance premiums, yours is not guaranteed to go up because of this major change. In fact, your insurance premium might just go down!

These NJ statistics from FEMA provide some insight.

  • 21% will see premium decreases (23% Nationally)
  • 64% will see increases of about $120/year (66% Nationally)
  • 10% will see increases of $120-$240/year  (7% Nationally)
  • 5% will see increases of more than $240/year (4% Nationally)

Newer, elevated homes are more likely to see a decrease or minimal increase, while older homes are more likely to see a larger increase.

Next Steps For Flood Risk Rating 2.0

Now we know you’re eager to find out if your own insurance premium is going to go up or down, but we don’t yet have that information. Please stay tuned as we will continue to update you as information becomes available.

If you have any other questions about Flood Risk Rating 2.0, please watch the video in this blog post with Michael McMahon or contact us here.