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Flood insurance premiums set to change for Delawareans as early as October

University of Delaware/Delaware Sea Grant

Some Delawareans could see changes to their flood insurance premiums as early as this fall, under the National Flood Insurance Program’s new pricing system. 

The new approach—called Risk Rating 2.0—aims to make a property’s insurance premiums better reflect the actual risk it faces from flooding and the cost to rebuild. Rates will be based on factors including distance to a water source, elevation and home value.

Risk Rating 2.0 will be the first overhaul of the way the National Flood Insurance Program prices its policies in 50 years. 

The change is expected to help reduce inequity in the system — since many lower-value homes currently overpay for flood insurance, while many higher-value homes underpay, according to FEMA. An NPR analysis of flood risk data generated by the nonprofit research organization First Street Foundation found that nationwide—and in Delaware—the people who are getting the best deals on flood insurance live in communities that are whiter and whose median household income is higher.

FEMA says Risk Rating 2.0 will decrease flood insurance costs for 38% of active policies in Delaware. 

More than half of Delaware policies will see increases of less than $20 a year under Risk Rating 2.0, according to FEMA. But 10% of Delaware policies will go up by at least $120 a year, with nearly 600 of those policies set to increase more than $240 a year. 

The Congressional Research Service noted in a January report that Risk Rating 2.0 could lead to premium increases for some policyholders that make flood insurance unaffordable. But FEMA is restricted to increasing flood insurance rates for primary residences by no more than 18% per year.

There are things communities can do to reduce flood insurance costs for residents under the new rating system, including taking steps to reduce actual flood risk. Currently only 11 municipalities and counties in Delaware participate in FEMA’s Community Rating System, which rewards local governments for efforts to mitigate and prepare for flooding with flood insurance discounts for residents. 

The majority of active flood insurance policies through FEMA are in Sussex County, but the agency has not said where the properties that’ll see the highest increases are. 

Starting Oct. 1, new policies will be subject to the new rating system, and those up for renewal can take advantage of premium decreases. Then the new rating system will go into effect for all remaining policies renewing on or after April 1 of next year. 

Risk Rating 2.0, first announced in 2019, has already been delayed once. The New York Times reported last month that the plan is seeing opposition again this year.

Sophia Schmidt is a Delaware native. She comes to Delaware Public Media from NPR’s Weekend Edition in Washington, DC, where she produced arts, politics, science and culture interviews. She previously wrote about education and environment for The Berkshire Eagle in Pittsfield, MA. She graduated from Williams College, where she studied environmental policy and biology, and covered environmental events and local renewable energy for the college paper.
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