Changes Coming To The National Flood Insurance Program Will Increase Pricing For Our Region, But Acting Today Can Help Alleviate The Burden.
Living near water—enjoying the recreation and beauty of our coast—is a lifestyle we appreciate, but it comes with responsibility.
This year, the Federal Emergency Management Agency (FEMA) announced significant changes to the National Flood Insurance Program (NFIP). The program has gone virtually unchanged since the 1970s, but claims resulting from Hurricane Katrina and Hurricane Sandy left it $30 billion in debt. While the government has forgiven a portion of this debt, $20.5 billion of debt remains. Change is imperative for the program to become sustainable.
However, changes will come at a cost to policyholders. Beginning in 2020, premiums will likely increase 15 percent per year for the life of a mortgage loan. Because homes in higher-risk areas will cost more to insure, there is a possibility that the market value of these properties will decrease as homeowners factor in the financial obligation of paying for the NFIP program.
We are monitoring these changes and how they might impact homeowners. The good news is there’s a growing market of options as the private sector moves into the flood insurance space, providing new coverage solutions to deliver necessary, affordable protection. For some, NFIP will still be the only option due to the risk rating of the property.
More good news: under NFIP’s new program, efforts to mitigate flood risk may be rewarded with lower premiums. So, rather than refacing the kitchen cabinets or putting new flooring in a bathroom, you might prioritize infrastructure upgrades to your home and property that can make them more flood-safe.
If you don’t have flood insurance, call us today. You may benefit from NFIP’s current pricing before the 2020 increases kick in. Let’s start the conversation to help you understand the changes, where you stand, and what you can expect. Together, we’ll build a responsible plan to protect your home or business.
Some key facts about the changes coming in January 2020:
- FEMA’s Risk Rating 2.0 initiative ties premiums to actual flood risks facing individual homes. Flood threats per home are based on private-sector data, and prices will be set accordingly.
- The new system will account for variables like the potential impact of different types of flooding and a home’s distance to a coast or waterway.
- About 5 million policyholders will see insurance rates that more accurately reflect their potential flood exposure. Those with the highest risks will pay the most.
- FEMA is evaluating how to minimize financial burdens of the new system, including a possible phase-in program.
We’re working to find practical solutions that will protect your property from flooding at a cost you can manage. The time to protect your home from rising flood insurance premiums is now.
Let’s start a conversation and put a plan in place today. That way, you can enjoy your views and maintain the value of your coastal property.