With the introduction of Risk Rating 2.0, New Orleans flood insurance is changing. With the new program, everything has changed.
What is Risk Rating 2.0?
FEMA will establish flood insurance rates that are fairer and more equitable. Rate increases and decreases will be equally distributed according to Risk Rating 2.0. FEMA has not been forthcoming about the data used in setting new rates. All those flood maps from years ago have been forgotten, and every property is now priced by its individual location rather than by its zone.
If there is no federal levee, properties near open water will take the greatest hits.
Don’t let your insurance lapse
If the home was located in a preferred area, mortgage companies didn’t require homeowners to buy flood insurance. We have always recommended flood insurance for everyone because we have seen too many areas that were “never flooded”, end up becoming waterlogged.
Under Risk Rating 2.0, if a policy in a preferred zone is allowed to expire, the premium to reinstate it will be priced at the current price. This could be hundreds to thousands of dollars higher than what you are currently paying.
Already, we are seeing potential buyers walk away from homes in X, C, and B zones because they have flood insurance quotes.
Although your preferred zone rates may rise to 18% annually, it is cheaper to keep the policy in place than to lose a buyer.
Note to buyers about Risk Rating 2.0
Although it is possible to take out affordable flood insurance, we recommend you ask your agent about the final Risk Rating 2.0 premium. It’s not a good idea to purchase a house only to discover that the price has increased by 18% over the years.
