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FEMA’s Risk Rating 2.0 to cause most insurance premiums to rise

Flood insurance rates to increase
Published: Apr. 6, 2022 at 4:37 PM EDT
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SOUTHEASTERN NORTH CAROLINA (WECT) - Flood insurance is a must-have for homeowners along the coast. Now, most policyholders are going to see their premiums cost more thanks to a new federal system.

“This is a floodplain, so don’t be surprised when water gets under your house sometimes. That’s normal,” said David Bollinger, whose home in Burgaw flooded with three feet of water during Hurricane Florence. “What you have to do sometimes is just make some adjustments, move your cars, put things up and away.”

FEMA used to determine flood insurance rates by worst-case-scenario floods that only happen every hundred years or so but those 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 QuoteWizard data analyst Nick VinZant.

Your next bill will be determined by things like the history of floods in your neighborhood, the elevation of your home and how much it would cost to rebuild if a flood destroyed everything. Data suggests that about 80 percent of policyholders in southeastern North Carolina will see a $10-20 increase when their policy renews.

For homeowners with lower-risk properties like Bollinger, a slightly higher premium isn’t a concern.

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

VinZant says properties on the oceanfront may see up to $100 more on their next bill.

“If you’re living in a waterfront mansion, you’re going to be paying a lot more because it’s now based on the idea of risk and the riskiest properties are going to be paying the most where before, everybody paid for everybody,” said VinZant.

Bollinger says he expects his bill to increase by 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 in case of another disaster.

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

Representative David Rouzer is trying to put a halt to the higher premiums. On Tuesday, he introduced the Stop Flood Insurance Rate Hikes Act. That would allow policyholders to continue their existing premium rates rather than see the higher premiums being implemented.

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

With the new Risk Rating 2.0, about 20 percent of policyholders will see lower premiums. VinZant says for those people, especially in more rural, low-income areas, those premiums will be significantly lower than before.

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