New Pricing Policy for National Flood Insurance

Florida Flood from Hurricane

Major Changes to the National Flood Insurance Program

On Oct. 1, 2021 FEMA began implementing a new pricing methodology called Risk Rating 2.0: Equity in Action. These changes will apply to new policies. Most existing policies will not be affected until after April 1, 2022.

What’s Changing?

Since the 1970s, National Flood Insurance Program rates have relied predominantly on a property’s location with a zone on a relatively static Flood Insurance Rate Map. With the new methodology, FEMA now has access to modern insurance technologies, catastrophic models and data sets so it no longer requires zones or elevation certificates. The new methodology rates each individual home according to property specific rating factors, such as its unique elevation, distance to water and cost to rebuild.


Previously, policyholders with lower-value homes are paying more than they should and policyholders with higher value homes are paying less than they should. These lower-value homes have some of the highest rates in the program. Under the new methodology, they will see an immediate decrease in insurance costs because it accounts for more risk factors and rates each home individually.

What Does this Mean for my NFIP Rate – Will it Go Up or Down?

Because each home is rated individually under the new system, only a licensed insurance agent can tell you that. Please contact your agent today to prepare a quote for you or view FEMA’s Risk Rating 2.0.

What’s Not Changing Under Risk Rating 2.0?

  • Rate increases will not exceed 18% per year.
  • Grandfathered rates including for newly mapped and pre-FIRM subsidized homes will continue.
  • Policyholders will still be able to transfer discounts to a new owner by assigning their flood insurance policy; and
  • Floodplain Management requirements will continue to be enforced by communities and lenders as usual.