Over the years, we’ve always taken pride in giving you the facts and avoiding fear mongering.
That said, this news is a bit scary.
FEMA has announced new rates for flood insurance which will be effective October 1, 2021.
Risk Rating 2.0, as FEMA is calling it, will likely result in drastic increases in flood insurance rates across the state of Louisiana. Some studies estimate 77% of Louisiana residents will feel the increase.
Let’s look at what you can expect and how you can prepare.
Risk Rating 2.0 Details
The new policy marks a significant change in how FEMA determines and prices flood risk on a given property.
FEMA states that this rating system is more equitable than their prior system as individuals will no longer pay more than their share in flood insurance premiums based on the value of their homes.
However, most experts agree that the majority of significant increases in premium are expected in areas like New Orleans, Jefferson, Lafourche, and other parishes nearest the water.
Prepare Yourself & Your Clients
The bottom line is – get flood insurance if you haven’t done so already!
If there is an existing flood policy on a home being purchased, it can be assumed, and the rate can only go up 18% a year, until the new premium is reached.
If there is no existing flood policy, the new rate goes into effect at the time of binding, no scale up over 5 years – meaning a new flood policy could carry a maximum policy as soon as October 1st.
What we’re doing proactively with our clients and referral partners:
- Allowing more room on pre-approval letters for insurance. Every approval letter will be subject to insurance in case the rise is large enough to bust the acceptable ratios
- Addressing insurance issues during inspections, not at the end of the process.
- When we receive a contract and make the initial introductions, we will request the flood declarations page, and explain the situation to all parties
- Having conversations with your client referrals from day one.
We sincerely hope this change isn’t as significant as it sounds right now. However, please know that as always, we’ll do everything we can do to help minimize the impact on you and your customers as we all adjust to the “new normal” of FEMA Risk Rating 2.0.
Please get in touch with us if you have any questions or would like more information.