What FEMA’s Risk Rating 2.0 Means for Commercial Flood Insurance Policyholders

Recently, the Federal Emergency Management Agency (FEMA) released Risk Rating 2.0. This is significant as it is the National Flood Insurance Program (NFIP)’s first major update to its pricing system in 50 years. The new pricing system applies to all properties insured through the NFIP, both businesses and homeowners.

Under the new system, premiums will be based on a property’s value, risk of flooding and other factors, rather than simply on a property’s elevation in a flood zone. Changes will take affect on October 1, 2021, for new policies and April 1, 2022, for all other remaining policies. According to Business Insurance Magazine, “Commercial properties account for 4%, or 199,394, of total NFIP policies” which is a small percentage of the $1.3 trillion of flood insurance coverage for more than 5 million policyholders across the U.S. Of those policies, they predict 43% will see premium decreases while 25% will see their premium increase by $240 or more.

This news could affect commercial flood insurance policyholders here in the Northeast. On their site, FEMA breaks down Risk Rating 2.0 by state or territory:

We should note that increases are fairly unique to each business, so if you hold a flood insurance policy and have any questions, please reach out to Rose & Kiernan, Inc. directly. Contact the Business Insurance Team here or by calling (800) 242-4433. We’ll be able to help explain what these changes mean for you and provide guidance on steps you can take to mitigate your property.

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