The Tennessee Department of Commerce & Insurance (TDCI) is raising awareness of recent changes to the National Flood Insurance Program (NFIP) that it says will raise flood insurance premiums for some Tennessee flood insurance consumers while for others, premiums will drop.
The Federal Emergency Management Agency (FEMA) recently unveiled a new way of calculating flood risk called Risk Rating 2.0 that the agency said will create flood insurance rates that are more actuarily sound, equitable, easier to understand and better reflect a property’s flood risk.
In Tennessee, there are 27,500 NFIP policies in place. Another 2.5 million properties are without NFIP coverage, leaving these homeowners to pay for repairs and rely on federal financial assistance in the event of a flood.
According to the state and FEMA, the changes from Risk Rating 2.0 in Tennessee will mean:
- 28% of Tennessee flood insurance policy holders (7,581 policies) will see immediate premium decreases;
- 59% (16,316 policies) will see premium increases of $0-$10/month on average (which is around the current national average);
- 8% (2,162 policies) will see premium increases of $10-20/month on average;
- 5% (1,448 policies) will see premium increases of $20 or more per month on average.
FEMA reports that the national average annual premium for a single-family home is now $920. The average annual premium would fall to $815.
“While flood insurance cannot stop a flood, it can save homeowners from financial catastrophe,” said TDCI Assistant Commissioner Bill Huddleston. “On the heels of flooding that affected thousands of Middle Tennessee residents in March, I urge more Tennesseans across the Volunteer State to learn how flood insurance is an important tool in preparing for a flood and remaining resilient after a disaster.”
The new rate schedule takes effect Oct. 1, 2021 for new policyholders but not until April 1, 2022 for renewal of existing policies.
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