The change is for new policies starting Oct. 1st, 2021 and kicks off the Federal Emergency Management Agency's plan to reform the program (NFIP) called, Risk Rating 2.0: Equity in Action.
David Maurstad, Senior Executive of the National Flood Insurance Program, says rates have always been based on one factor -- whether a home is located in or out of a flood plain. Now, rates will be based on many factors that more accurately reflect the property's value and actual flood risk. That will prevent inequities such as owners of lower value properties paying proportionately more than owners of higher value properties.
The government already delayed implementation of Risk Rating 2.0 by one year. And Maurstad says rates for renewing existing flood insurance policies won't change until April 1st, 2022 to give policy holders time to prepare.
Not nearly enough homeowners buy flood insurance. So another goal is to increase the number of policy holders. That should eventually reduce the burden on taxpayers who have repeatedly bailed out the program after floods and hurricanes.
