NEW ORLEANS (WGNO) — Friday, FEMA will have a new way to determine your risk of your home flooding.
In Louisiana, that new method could dramatically raise the cost of flood insurance. FEMA says the change called Risk Rating 2.0 is about equity. The agency maintains the way rates are evaluated will be fairer and better reflect the property owner’s risks.
FEMA will look at each property’s unique flood risk. FEMA will also consider a home’s distance to a flooding source, the types and frequency of flooding and the cost to rebuild.
“It couldn’t come at a worse time post Hurricane Ida,” said Metairie resident Braden Smith.
Smith owns a real estate brokerage and investment company. He does not live in a flood zone, but his insurance agent said he will be impacted.
“He said somewhere between 13 to 1600 per year,” Smith said. “You’re talking triple the amount in an x flood zone where it doesn’t flood.”
In Louisiana, nearly 350,000 homeowners will see monthly increases between $10 and $20 per month. Just over 17,000 people will see a greater increase than that.
According to a study by the Congressional Budget Office, nearly 900,000 policyholders might drop their coverage because of costs creating a bigger issue for FEMA.
“What we are speaking about is current homeowners that at one point were in code that were told this is your risk now they can get priced out,” said Senator Bill Cassidy.
There is a concern in the real estate market that the new rates could be detrimental.
“If these premiums really do jump up that much, not only will some of these homes become un sellable, but it could potentially make values plummet. If the flood insurance is that high, you’ll have to drastically reduce the asking price on it to convince someone to buy it,” Smith said.
FEMA says by April every homeowner will have a new rate. There is an 18% annual cap on increases.
Experts recommend shopping policies to get the best rate.
Click here for a link to FEMA’s map where you can check by zip code to see how prices will be impacted.