(The Center Square) – Homeowners in flood-prone areas of Illinois are bracing for higher insurance rates after the Federal Emergency Management Agency launched a revamp of its flood insurance program.
Beginning this month, FEMA is transforming the program by bringing more equitable pricing to flood insurance. The insurance revamp comes after a series of devastating flood events this summer, which killed dozens of people and caused billions of dollars in damages from Louisiana to Tennessee to New York.
Nick VinZant, from QuoteWizard, said the prior program caused policyholders in low-risk flood areas to pay too much while others in high-risk flood areas didn’t pay enough.
“Everybody kind of paid for everybody,” VinZant said. “Now the waterfront mansion is much more responsible for their own risk, and that is where the big change is.”
An analysis by QuoteWizard shows 58% of policyholders in Illinois will see a price increase in flood insurance premiums, while 42% will see a price decrease. It also showed 4% of policyholders will pay an extra $20 or more a month, while 28% of policyholders will save $20 or more a month.
“Sixteen percent of Illinois policyholders will see a decrease of $60 or more,” VinZant said.
Sen. John Kennedy, a Republican from Louisiana, is not happy about the new flood insurance program.
“[FEMA] ought to hide its head in a bag,” Kennedy told CNN. “Nobody knows how they’ve arrived at their new pricing, not even the insurance companies through which FEMA administers the program understand how FEMA has come up with what they came up.”
The new Risk Rating 2.0 methodology will base policyholder insurance rates on their level of flood risk. The criteria are based on flood frequencies in specific areas, types of flooding, distance to water source, elevation, and costs to rebuild.
The U.S. average cost for flood insurance is $958. The average cost in Illinois is $1,106, with only 1.1% of households carrying flood insurance.
According to QuoteWizard, Florida has the cheapest flood insurance rates at $597 a year, while Vermont has the most expensive average rates at $1,590 a year.