New FEMA rules hike flood insurance prices for some in Illinois
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[October 02, 2021]
By Kevin Bessler
(The Center Square) – Homeowners in
flood-prone areas of Illinois are bracing for higher insurance rates
after the Federal Emergency Management Agency launched a revamp of its
flood insurance program.
Beginning this month, FEMA is transforming the program by bringing more
equitable pricing to flood insurance. The insurance revamp comes after a
series of devastating flood events this summer, which killed dozens of
people and caused billions of dollars in damages from Louisiana to
Tennessee to New York.
Nick VinZant, from QuoteWizard, said the prior program caused
policyholders in low-risk flood areas to pay too much while others in
high-risk flood areas didn’t pay enough.
“Everybody kind of paid for everybody,” VinZant said. “Now the
waterfront mansion is much more responsible for their own risk, and that
is where the big change is.”
An analysis by QuoteWizard shows 58% of policyholders in Illinois will
see a price increase in flood insurance premiums, while 42% will see a
price decrease. It also showed 4% of policyholders will pay an extra $20
or more a month, while 28% of policyholders will save $20 or more a
month.
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“Sixteen percent of Illinois policyholders will see a
decrease of $60 or more,” VinZant said.
Sen. John Kennedy, a Republican from Louisiana, is
not happy about the new flood insurance program.
“[FEMA] ought to hide its head in a bag,” Kennedy told CNN. “Nobody
knows how they’ve arrived at their new pricing, not even the
insurance companies through which FEMA administers the program
understand how FEMA has come up with what they came up.”
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The new Risk Rating 2.0 methodology will base policyholder insurance
rates on their level of flood risk. The criteria are based on flood
frequencies in specific areas, types of flooding, distance to water
source, elevation, and costs to rebuild.
The U.S. average cost for flood insurance is $958. The average cost
in Illinois is $1,106, with only 1.1% of households carrying flood
insurance.
According to QuoteWizard, Florida has the cheapest flood insurance
rates at $597 a year, while Vermont has the most expensive average
rates at $1,590 a year. |