Since the 1970s, rates have been predominantly based on relatively static measurements, emphasizing a property’s elevation within a zone on a Flood Insurance Rate Map (FIRM).
With Risk Rating 2.0, FEMA now has the capability and tools to address rating disparities by incorporating more flood risk variables. These include flood frequency, multiple flood types—river overflow, storm surge, coastal erosion and heavy rainfall—and distance to a water source along with property characteristics such as elevation and the cost to rebuild.
IMPORTANT: Elevation of building, use of smart vents are now only a contributing factor, and not the primary driver of discounts. This is VERY IMPORTANT when discussing construction loans.
Limiting Annual Premium IncreasesExisting statutory limits on rate increases require that most rates not increase more than 18% per year. Using Flood Insurance Rate Maps (FIRMs) for Mandatory Purchase and Floodplain Management FEMA is continuing to offer premium discounts for pre-FIRM subsidized and newly mapped properties. Policyholders are still able to transfer their discount to a new owner by assigning their flood insurance policy when their property changes ownership.
Distance to Flooding is more important than elevation The ground elevation is increased in importance. A newly lifted building on -1 elevation is STILL expensive. Replacement cost and property values are factored in.