A new process from FEMA will impact homeowners in Louisiana. It is re-evaluating the way it will charge people for flood insurance.
The new process is called Risk Rating 2.0 and gets rid of grandfathered prices. Depending on where your home is in relation to risk factors, your monthly premium could change.
The first phase will start rolling out on Oct. 1 and will impact new policies. Then in April, every homeowner will have a new rate. There is an 18 percent annual cap on these increases.
Patrick Painter with Goosehead Insurance says, a lot of people – especially realtors – are afraid this might impact the way they do business.
“We’ve been seeing a lot of zone X be affected mostly,” Painter said. “The other zone A, AE, some are going down some are going up, some are staying about the same. But the ones that will really be affected are zone X, that’s at least what we’re seeing right now. We’ve seen some go from $572 to $1,000 a year or more.”
Meanwhile, FEMA, in a statement says, “The new premiums are the result of the program’s new pricing methodology delivering rates that are actually sound, equitable, easier to understand and better reflect an individual property’s flood risk.”
In Louisiana, 101,171 homeowners can expect their monthly premiums to decrease. About 343,299 homeowners are set to see an increase of up to $10, 34,350 homeowners can expect a monthly increase between $10 and $20 ,and 17,103 homeowners will see an increase of more than 20 dollars a month.
Painter says this increase has been a long time coming.
Prices will vary from home to home, Instead of rating the premiums by zone, FEMA will now look at each risk individually.
“The homes in zone X will be most affected,” he said. “I think coastal will probably go a little bit too, from what it sounds like the proximity to water, the proximity to flood zones and the replacement costs of the house will rate heavier than they ever have.”
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