INDIANA (WANE) — Starting Friday, the amount of money thousands of Hoosiers are paying for flood insurance will change.
“Essentially because the system is broken,” said Nick VinZant, a senior research analyst at Quote Wizard. “The realities of climate change have made the current system, just no longer stable moving forward.”
On Friday, the Federal Emergency Management Agency (FEMA) unveiled its Risk Rating 2.0 plan. FEMA says the plan will bring “more equitable pricing” to flood insurance.
Under Risk Rating 2.0, the cost of the policies will be primarily based on the cost of replacing a home and each property’s unique flood risk, according to FEMA.
VinZant explained that prior to this change, the cost of flood insurance was based on the idea that there’s a 1% chance that your house would flood every 100 years. However, now because of the “new realities of climate change we’re seeing,” those “100 year floods” are happening about every five or ten years.
“So these what used to be catastrophic events are now becoming commonplace events, and the system is not designed for that,” said VinZant.
He said as a result, 54 percent of Hoosiers rates will go up, while 46 percent of Indiana resident’s rates will decrease. VinZant said it would be based on the “individual risk that your property is facing.”
“For the people that are seeing an increase though, it’s going to be relatively small probably between $10 and $20 a month for most policyholders, but for the people who are seeing a decrease, it is a substantial decrease. As much as $100 a month in some places.”
According to VinZant, 819 Allen County homes currently have a flood insurance policy. 332 of those homes will see an increase of about $10 a month, or $120 a year. On the other end of the spectrum, 99 of those policy owners will see a decrease of $100 or more per month.
Statewide, VinZant said about 20,000 Hoosiers have flood insurance. The average cost is $958 per year, or $80 a month, through the National Flood Insurance Program, according to Quote Wizard.
“I think the realities of climate change have made flooding a big problem in pretty much every state,” said VinZant. “And not only is the number of policies that are going to be impacted in terms of a price changing under FEMA’s new rule, but, recent research suggests that the number of people who actually should have a policy is far higher than what it is right now.”
He added that even Hoosiers who don’t live in a flood plain may want to consider insurance.
“Because we have found that FEMA has maps, which typically regulate flood insurance, that in some cases, are 40 to 50 years old,” said VinZant. “They have not kept up with the realities of climate change. It doesn’t matter if you don’t believe in climate change, your insurance company does.”
A full breakdown of what the Risk Rating 2.0 plan means for flood insurance in Indiana can be found here.