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6 Ways a Flood Insurance Rate can be Lower with Risk Rating 2.0 – Equity in Action

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Flood insurance rates can be costly and difficult to understand. FEMA is working to change that with the new pricing methodology: Risk Rating 2.0 – Equity in Action.  The new rating system is easy to understand, equitable and better reflects a property’s unique flood risk.

You may already know that just a single inch of floodwater can cause $25,000 in damage to your home. Understanding the risk your own property faces and how much coverage you need, is more complex. Risk Rating 2.0 – Equity in Action breaks down this information and helps you make informed decisions about protecting your property. 

You can expect to see these changes as soon as Oct. 1, 2021. New flood insurance policies will be subject to the new rating methodology. Existing National Flood Insurance Program policyholders who are eligible for renewal will also be able to take advantage of immediate decreases in their premiums. On April 1, 2022, Equity in Action will be fully implemented and all remaining existing policies will be included in the new rating methods.

In the meantime, you may want to learn about the sources of flooding in your area, see how your rates may change and figure out what you can do to potentially reduce your flood insurance premiums. 

The best place to start is to review the Risk Rating 2.0 State Profiles. These 51 profiles — one for each state and the District of Columbia — give you a bird’s-eye view of if and how much premiums may go up or down and how communities and individuals can reduce flood risk in their state.

Here are six ways you and your community can take action to reduce your flood risk:

  1. Review your state’s Risk Rating 2.0 State Profile. Take the time to read up on the changes coming to your state and learn more about how you can take mitigation actions on your property to reduce flood damage, and possibly reduce flood insurance premiums.  
  2. Move machinery and equipment to a higher floor. Moving your heating and air conditioning compressor or hot water system to a higher level can help to reduce costly replacement and repairs after a flood.  
  3. Install flood openings. These flood openings are intended to equalize pressure on walls caused by standing or slow-moving water.  
  4. Elevate your home. Elevating structures above known flood levels prevents and reduces loss.  
  5. Check to see if your community participates in the Community Rating System. If not, encourage community leaders to take the necessary steps to join this voluntary incentive program that helps policyholders in their area save an average of $162 a year on their flood insurance policy.  
  6. Apply for Hazard Mitigation Assistance. A local community can apply for one of these grants on behalf of homeowners and businesses in their area. These grants fund projects such as the acquisition of hazard prone homes and businesses, which enables owners to relocate to safer areas, or elevation of structures above known flood levels to prevent and reduce damage.

For more information on Risk Rating 2.0 – Equity in Action and what has and has not changed, visit the Risk Rating 2.0 homepage.

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Last updated May 4, 2021