Flood insurance rates set to rise for many Florida homeowners as new FEMA calculations take effect

If you are paying for flood insurance for your home, be prepared for sticker shock. Changes to the way FEMA calculates premiums are expected to take effect this Friday, and homeowners across the Tampa Bay area could see significant rate hikes.

The vast majority of Floridians have their flood insurance policy through FEMA’s National Flood Insurance Program – and big changes are about to be rolled out.

“We’re probably seeing that 90% to 95% of homes in the Tampa Bay area that are in flood-prone areas are seeing their rates increase as a result,” said Jake Holehouse, president of HH Insurance Group.

This is the first major overhaul of this program since the 1970s. Currently, NFIP premiums are calculated based on flood zones and altitude.

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The new system is called Risk Rating 2.0, and the goal is that the rates reflect the actual risk of each property, taking into account several factors such as proximity to water and drainage.

“For these owners, this is definitely something to be proactive about in terms of understanding the change and how it affects you, because unfortunately we only had a 30 day window to be able to communicate this. change, ”Holehouse said.

Come Friday, anyone purchasing a new NFIP policy will be billed with the new formula. Whereas anyone with an existing policy will start to see changes on April 1. And there will be heavy hikes.

“We’re seeing some of them go from $ 600 to $ 11,000 a year under the NFIP program,” Holehouse said.

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These increases are capped at 18% per year, so any huge spikes will be phased in.

Still, Holehouse says there are concerns. FEMA has not published exactly how the 2.0 risk score is calculated, nor has it provided all of the factors used by the formula.

“From what we can tell, the main valuation factors are the value of the home,” he said. “We’ve seen examples where you move it from fundamentally different values, and as the value goes up, the premium goes up quite significantly at the same time.”

This means that a homeowner who spent money raising their home could pay the same rates as a non-elevated home because it would be more expensive to rebuild, although the risk of damage is lower.

“It just wiped out those rate credits where someone doesn’t have such a financial incentive to pile up and become storm resistant,” Holehouse said.

Over the past two weeks, local members of Congress have taken action in an attempt to delay the rollout of the 2.0 risk rating due to the burden homeowners could face. Letters were sent to House leadership and FEMA urging action, and on Tuesday Senator Marco Rubio introduced a bill to push back the changes for a year.

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