Hurricanes can be dangerous. They can cause severe damage through storm surges, wind damage, and flooding. They can occur anywhere along the coast of the United States or on any territory within the Pacific or Atlantic oceans.
The leading cause of deaths from hurricanes in the United States is storm surge. It is crucial to prepare your home for hurricane season, and also have a liable flood insurance policy.
A 25% increase in the cost of insuring property from natural disasters has caused premiums to double over the past 10 years, but now rates are increasing because those costs are coming down and insurers are no longer exposed to losses on that kind of scale.
If you have a home that’s been flooded multiple times, this change is probably a good thing for you. Why? Well because now you’ll be able to get affordable flood insurance with just one or two small floods being enough to trigger an increased premium.
What’s causing flood insurance to go up?
The Federal Emergency Management Agency announced a major overhaul of its National Flood Insurance Program last April. It promised that larger, wealthier homes would be the ones to bear the brunt, while nearly 90 percent of policyholders would have their premiums remain stable or decrease.
Rates rose by more than 80 percent. These gains were estimated that they would be distributed equally between rich and poor areas according to a Redfin report. According to the report, 84% of policyholders saw increases in flood-insurance premiums.
FEMA introduced Risk Rating 2.0 last year. It is based on cutting-edge science, modeling techniques, and other reforms. This new program is more equitable because rates are determined based on individual homes’ risk, rather than the combined risk of all homes within a single risk zone.
It is expected that the new system will charge higher premiums to the riskiest homes while premiums for many other homes would be lower. FEMA stated that the rates would not exceed 18% per annum and that they would be limited to $12,000 in total.
FEMA also stated that premium increases would be borne by the most expensive homes.
How often will flood insurance rates increase?
Flood rates in general are rising, so according to those insurance companies that FEMA regulates, there is a possibility that your rates could increase annually.
However, the NFIP’s director has stated that he does not expect any annual increases for at least the next couple of years because the agency doesn’t want to see people dropping their policies due to affordability issues.
This means that if you have a small flood, you’ll probably have a few years before your rate goes up. If you have a large flood, however, you may see a rate increase as soon as next year.
Keep in mind that instead of looking at your rate as a percentage, you should be thinking about the dollar amount.
That way, you will know exactly how much your rate is increasing and can plan accordingly.
Why this is a good thing for homes that have been flooded before
We’d like to think that no matter what happens, everything turns out perfectly. Unfortunately, that’s not always the case. Flood insurance rate increases are supposed to be a bad thing, right?
After all, these rate increases mean we’ll have to pay a ton more money. But the truth of the matter is that the more often a home floods, the more expensive it is for the government to pay out on those claims.
With flood insurance rates going up, it’s going to be much more difficult for a flood-prone home to collect on a claim.
When it comes to the government, the more expensive something is, the less likely it is to be put into place. So even though flood insurance rates are going up, that’s a good thing for homeowners who have easily flooded in the past.
Private Market Flood Insurance Options
The average cost of NFIP Flood Insurance in Louisiana is $726/year. However, the amount you pay will vary depending on where your home is located.
FEMA has set the formula for NFIP flood insurance. Therefore, any company that sells flood insurance will offer you the same price.
The NFIP is still the largest flood insurer. However, a growing number of private market insurers offer coverage in many areas. Policyholders can now switch flood insurance providers at any time, rather than waiting until their policy expires.
Louisiana flood insurance is just like any other type of insurance. An agent will contact you to help you determine the coverage level and give you a quote. A proof of elevation is a document that proves how high your house is above the waterline.