(KLFY) — FEMA began implementing policy changes for flood insurance holders on Friday, October 1. Risk Rating 2.0 is the new policy, which will “fundamentally change the way FEMA prices insurance and determines an individual property’s flood risk,” according to FEMA.
With the implementation of Risk Rating 2.0, FEMA said they will provide rates that will more accurately reflect an individual’s flood risk, and they will no longer pay based on the value of their home.
Millions of consumers are using QuoteWizard to compare insurance quotes online and on the phone. A senior research analyst for the company helped explain FEMA’s new policy.
“The way FEMA used to base flooding was essentially the value of the home and where you live. It is [now] based on individual risk. That is the big difference” said Nick Vinzant with QuoteWizard.
Key findings in Louisiana show that 80% of policyholders will see a price increase, and 20% will see a decrease.
In addition, only 3% of policyholders will pay an extra $20 or more per month. 12% will save $20 or more per month.
“A lot of people who will see a small increase and a small number of people who will see a big decrease,” Vinzant said.
Beginning April 1, 2022, all remaining policies will be written under the new pricing plan at the time of renewal, allowing them extra time to prepare.
“How this balances out is that for people who are seeing a decrease, they have been paying more, covering for risky homes,” Vinzant said. “Risky homes will see prices go up, less risky prices will go down.”