Insurance

FEMA’s 2.0 Risk Rating Will Raise Most Insurance Premiums

SOUTHEAST NORTH CAROLINA (WECT) — Flood insurance is a must for homeowners along the coast. Now, most policyholders will see their premiums cost more thanks to a new federal system.

“It’s a floodplain, so don’t be surprised when water sometimes gets under your house. It’s normal,” said David Bollinger, whose home in Burgaw was inundated by three feet of water during Hurricane Florence. “What you have to do sometimes is just make a few adjustments, move your cars around, put things in place and put them away.”

FEMA used to determine flood insurance rates based on worst-case flood scenarios that only occur about every hundred years, but these events are becoming more common. That’s why the new system, Risk Rating 2.0, will focus more on your specific property rather than the floodplain it’s in.

“It doesn’t matter if you don’t believe in climate change — your insurance company does,” said Nick VinZant, data analyst at QuoteWizard.

Your next bill will be determined by things like the history of flooding in your neighborhood, the elevation of your home, and the cost of rebuilding if a flood destroyed everything. Data suggests that about 80% of policyholders in Southeast North Carolina will see a $10-20 increase when renewing their policy.

For owners with low risk properties like Bollinger, a slightly higher premium is not a problem.

“These people are going to, you know, they’re going to feel it,” Bollinger said. “If you have a McMansion in Wrightsville Beach or Oak Island or something like that, they’re going to charge a lot more money.”

VinZant says beachfront properties could see up to $100 more on their next bill.

“If you live in a waterfront mansion you’re going to pay a lot more because it’s now based on the idea of ​​risk and the riskiest properties are going to pay the most whereas before everyone paid for everyone,” says VinZant.

Bollinger says he expects his bill to rise much more than that – a whopping $400 added to his current annual payment of $600. It’s not cheap, but after losing everything in Florence, it’s a price he’s willing to pay if disaster strikes again.

“Another Florence would be statistically rare, but that’s what they’ve said before with Floyd and stuff like that,” Bollinger said.

Representative David Rouzer is trying to put a stop to rising premiums. On Tuesday, he introduced the Stop Flood Insurance Rate Hikes Act. This would allow policyholders to maintain their existing premium rates rather than have the higher premiums implemented.

“There are serious transparency issues regarding the 2-point-0 risk rating, and I am extremely concerned to see FEMA move forward with implementation,” Rep. Rouzer said in a press release. . “Combined with the 40-year high in inflation and soaring gas and energy costs, families are paying more for just about everything. We don’t need FEMA to add another layer of uncertainty for policyholders.

With the new risk rating 2.0, around 20% of policyholders will see their premiums drop. VinZant says that for these people, especially in more rural and low-income areas, these premiums will be significantly lower than before.

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