New FEMA Flood Insurance Rating Starting Fall of 2021
FEMA and the National Flood Insurance Program (NFIP) is totally changing the way flood insurance premiums are calculated. Beginning October 1, 2021 for new policies, you won't be able to rely on the old way premiums were calculated anymore.
You can request a flood insurance quote from us here.
How were Flood Insurance Premiums Calculated Before?
Policies from the NFIP were basically rated using a chart or table. Although insurance agents haven't used tables for a while, the rates were basically determined by several factors such as; coverage amount, deductible, type of foundation, elevation, flood mitigation features, and a couple other things. Don't get me wrong, the premiums could vary quite a bit based on these features, but they were pre-set. At least in Myrtle Beach and Horry County, the majority of properties are in Flood Zone "X". For properties that are in zone "X", and that met a couple other requirements, the premiums were very easy to determine. Many insurance agents even had the premiums memorized based on the coverage amount selected. But this all changes now...
Major Changes to the way Flood Insurance Premiums are Calcualted:
- New policies through NFIP will use this new rating starting with effective date of 10/01/2021.
- Renewal policies through NFIP will use this new rating starting with effective date of 4/01/2022.
- Flood zones are no longer used for rating purposes. That's right, the flood zone your property is in is not used for rating anymore. FEMA basically believes that flood zones do not help accurately determine appropriate premiums based on the risk.
- FEMA will no longer count a crawlspace as a floor. This may not make sense to many homeowners, but agents should understand this. For years, we had to count a crawlspace as a floor. For example; a single story home on a crawlspace was considered a two story home. This would now just be a single story home.
- Your premium could be a little lower if there is no machinery on the ground floor (such as; HVAC, water heater, refrigerator, etc.).
>>BASICALLY EACH INDIVIDUAL PROPERTY WILL HAVE ITS OWN PREMIUM BASED ON GPS AND LOTS OF OTHER DATA.<<
What is Not Changing to the National Flood Insurance Program:
- Flood zones will continue to be used by mortgage company and lenders when determining if the borrower will have to purchase flood insurance.
- The definition of a flood and coverages are not changing.
What Flood Insurance Options Do You Have?
The information above pretty much just deals with flood insurance provided by FEMA/NFIP. Most insurance agents have access to quote and bind these policies either through a Write Your Own (WYO) carrier, or directly through the NFIP.
Davis Insurance Associates does have other options for flood coverage. We have agreements to quote and bind coverage through several "Private Carriers". Not always, but in some cases we can find a more affordable (and maybe ever better coverage) through one of these markets.
Read more about how FEMA is updating the National Flood Insurance Program's (NFIP) risk rating methodology - Risk Rating 2.0.
Disclaimer: This article provides general and basic information about flood insurance updates. It does not outline every recent change to flood insurance nor go into great detail. Always read your entire policy and discuss options with an experienced insurance agent.
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Brad Davis, CIC - Owner