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FEMA’s new flood insurance plan will sharply raise insurance costs for seaside properties

Codes and Standards

FEMA’s new flood insurance plan will sharply raise insurance costs for seaside properties

Risk Rating 2.0 will have more accurate assessment of flood risk.


By Peter Fabris, Contributing Editor | October 13, 2021
Bench in flood waters

Courtesy Pixabay

FEMA’s new flood insurance plan will drastically raise the cost of insuring coastal properties.

Called Risk Rating 2.0, the recently released plan is widely believed to more accurately reflect flood risks. But it is also likely to lead to a decreased property values along with higher insurance premiums.

Risk Rating 2.0 is the first major update to the government insurance program’s risk analysis system since the National Flood Insurance Program emerged in the late 1960s. The old system provided a flat risk estimate for an entire floodplain. The new system estimates the individual risk facing each home, incorporating new data about water dynamics and replacement costs.

The old system did not consider the replacement cost of a house, so owners of low-value homes subsidized those with more valuable properties. Homeowners will now pay premiums for the specific flood risk for their home, rather than for their general area.

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