A new report from the First Street Foundation on flood insurance points to significant cost changes to many Americans in flood zones. Homeowners in high-risk areas could see rate hikes beginning in October 2021.
Source: First Coast News/YouTube
First Street Foundation, a research group, estimates the average insurance rate for flood insurance in high-risk areas will quadruple. The change will help fund federal flood insurance programs and tap the riskiest homeowners to pay a larger portion. Premiums will increase, with premiums rising to $10,000 or more to match the risk.
The current risk versus premium gaps includes places like Florida, South Carolina, and New Jersey, as well as other spots in the Southeast and Mid-Atlantic. Other coastal areas of California, Washington, and Texas will likely be affected.
For example, in coastal Charleston, South Carolina, some homes would need to pay an average premium of $18,211 to cover anticipated flooding costs, according to the report. Their current rates average $2,264.
Federal Emergency Management Agency (FEMA), which operates the federal flood insurance program, calls First Street’s assessments, estimates. David Maurstad, senior executive for the National Flood Insurance Program, shared, “While entities are free to suggest or estimate their opinion of what flood insurance premiums should be, they are offering exactly that – an opinion – and they do not have insight into the Risk Rating 2.0 initiative.”
The report outlines policy changes and estimates based on current climate data. “Climate is not considered in any way in the current mapping structure for FEMA and how they create insurance,” says Matthew Eby, executive director of First Street Foundation, said in Fast Company. “The program started in 1968, and really kicked off in 1970. Some of the maps that exist are still from the ’70s and ’80s.”
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