Flood insurance rates are on the rise. The National Flood Insurance Program is looking to overhaul its risk assessment model. The NFIP wants to change under-priced policies while they attempt to deal with debt. Congress eliminated some of the debt to help deal with the aftermath of Hurricanes Maria, Irma, and Harvey. However, a new wave of floods has led to a surplus of debt.
According to the NFIP, the premium hike will impact policyholders throughout the country. Some of the areas that are expected to be more affected by the premium hike are nonlinear residences, severe repetitive loss properties, and severely damaged properties. Property owners in these areas may see their premiums increase by more than 20%. The NFIP notes that they are striving to protect property owners who have been victims of inland flooding.
How Your Policy May Be Impacted
If you have a preferred risk policy, your premium may rise by over 10%. If you reside in a special flood hazard area, you are obligated to carry flood insurance. Your premiums are also going to rise by over 12%. If you reside in an area with a new flood map, you’ll receive PRP (Preferred Risk Policy) rates every year at an increase of over 10%.
Projecting the Future
Later this year, the NFIP plans to implement a new risk rating system. The system will use new techniques to assess a property’s flood risk. If your property has a high likelihood of flooding, your rate will rise accordingly. The new system will look at communicating different characteristics for properties, such as multiple flood risks and the distance to a flooding source. The NFIP wants to stop relying on the small annual chance event, which has proven an ineffective metric within recent years. Any premium adjustments will align with price increase limits to ensure that there isn’t a yearly spike in costs. Most of the premium increases max out at 25%.
Handling the Increase in Rates
If you are concerned about a possible spike in your insurance premium, you can offset the costs in a few ways. You can also research coverage options offered by private flood insurance companies. You may find a lower rate compared to purchasing coverage through a federal program. Also, remember that flood insurance is an asset even if you stay in a low-risk area where flooding rarely occurs. A natural disaster can happen at any moment, so it’s important to stay prepared.
Make sure to do your research to learn how the upcoming flood insurance premium hike will impact you. If you have any questions, contact the experts at the Scavone Insurance Agency Center LLC in White Plains, New York today. We can assist you in making sense of the upcoming changes to flood insurance policies and help you determine how you may be affected.