Risk Rating 2.0: What to Know About FEMA’s New Flood Insurance System (

For the past 50 years, the Federal Emergency Management Agency (FEMA) has used the same flood risk methodology for calculating insurance premiums. The previous methodology, introduced as part of the National Flood Insurance Act of 1968, calculated homeowner’s risk by analyzing what flood zone their home is in using FEMA’s Flood Insurance Rate Map. But climate change demanded a revision. 

Due to climate change, this half-century-old approach no longer reflects a property’s unique flood risk. In fact, a staggering 70% of American homeowners are at risk of flooding. On October 1st, FEMA introduced Risk Rating 2.0, a new pricing methodology for insurance premiums. Rather than relying on flood zones, the National Flood Insurance Program (NFIP) will assess the risk of each individual property. You’ll likely see more reasonable insurance rates that reflect a property’s flood risk, and more accurate flood maps. So, what exactly does this mean? 

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