Flood Insurance

For the first time in 50 years, the National Flood Insurance Program (NFIP) is changing how they determine flood insurance premiums.

The Legacy Rating Methodology was based on the following factors:

• •Flood Insurance Rate Map Zones •Base Flood Elevations •Foundation Types •Structural Elevations ( in Special Flood Hazard Areas only) • 

Also included in this calculation was the 1% chance of flooding, FEMA-Sourced data, and fees and surcharges.
 

Under the old system, homeowners in the same zone paid the same premium. So, the home with a replacement cost of $1,000,000 paid the same flood insurance premium as a home with a replacement cost of $500,000.
 

Not exactly a fair system. And, this system helped create an NFIP deficit of 21 billion dollars.

With Risk Rating 2.0: Equity in Action, in addition to FEMA-Sourced Data, and Fees and Surcharges, the New Pricing Methodology will include;

•Additional Data Sources from the Federal government
and commercially available third-party data 

•Each homes’ Replacement Cost

•Distance to flooding sources 

•Building Occupancy 

•Construction type 

•Foundation type 

•Ground Elevation 

•First Floor Height 

•Number of Floors 

•Prior Claims 

•Broader range of Flood frequencies 

All in all, these changes will result in a fairer, more equitable rating system.