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What happened to flood insurance?

tony • November 19, 2021

Recently, FEMA rolled out Risk Rating 2.0 and the rollout has been quite shocking for many Florida residents.  Risk Rating 2.0 is a methodology used to accurately charge for flood insurance based upon a property’s own unique flood risks.  Prior to Risk Rating 2.0 flood insurance rates were largely determined by what flood zone a property was located in. 

This meant that someone living in Kansas whose property was not located in a flood zone would pay roughly five hundred dollars per year for flood insurance and someone living in Cocoa Beach, Florida whose house was not located in a flood zone would pay the exact same amount.  With Risk Rating 2.0, ratings are intended to be actuarily sound.   In the prior scenario, the person living in Kansas could actually see a rate reduction to roughly four hundred dollars per year whereas the person living in Cocoa Beach, Florida may see an increase to two thousand dollars per year or more.

So here’s what you need to know if you’re buying a home….

First, if you’re buying a property in a flood zone, the mortgage company will require flood insurance.  It has become increasingly important to shop flood insurance at the beginning of the purchase process as we have seen flood insurance rates in coastal counties be five six even seven thousand dollars per year which could jeopardize your ability to qualify for the mortgage.  Interestingly, Elevation Certificates are no longer required so you can get an accurate flood quote in just a few short minutes without having to fork out a couple hundred dollars to a surveyor.

Second, consider seeking alternatives to a federally backed flood insurance policy.  With the passage of the Biggert Waters Act there has been a surge of private flood insurance companies stepping in to offer flood coverage at competitive rates.  In the past, private flood insurance seemed like an expensive option but with FEMA’s Risk Rating 2.0, Private Flood insurance is quickly becoming the most viable option for many coastal residents due to price.

Lastly, inquire about a policy assumption.  This is where you, as a buyer, can assume the current flood insurance policy of the seller of the home.  In so doing, you may be able to continue with their legacy flood insurance rates until their rates increase annual to an amount equal to the risk rating 2.0 rates.  It is possible that this program could be removed in the future but it’s definitely worth looking into.

Want to see what insurance rate look like in your area?  Get a quote online at shopitnnow.chrinco.com or give me a call at 321-586-3754.  Chrinco.com – Insurance simplified.

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The post What happened to flood insurance? appeared first on Chrinco.

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